Seanad Éireann debate -
Tuesday, 18 Jun 1946

Vol. 31 No. 25

Finance Bill, 1946 ( Certified Money Bill )— Second Stage.

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

An tAire Airgeadais (Proinnsias Mac Aodhagáin)

Mar is eol do na Seanadóirí, bíonn ar an Aire Airgeadais Bille mar seo a chur ós cóir an Oireachtais gach bliain go mórmhór chun éifeacht in a thabhairt in aghaidh na bliana airgeadais ar fad, do na Rúin Airgeadais lena nglacann an Dáil tar éis na Cáinfhaisnéise. Toisc téarmaí an Achta um Bhailiú Shealadach Cánach, 1927, ní bhíonn éifeacht reachtúil ach ar feadh tréimhse teoranta ag na Rúin sin.

Tá eolas cheana ag Seanadóirí ar abhar furmhór forál an Bhille, mar rinneadh tagairt dóibh san Oráid Cháinfhaisnéise. Tá, freisin, forála áirithe chun faoiseamh ó diúitéthe áirithe in éifeacht anois faoin Acht Cumhachta Práinne, 1939, do leanúint. Bhéarfad tuairisc níos cruinne orthu sin ar ball agus ar chúpla mion-rud eile atá ann.

Ghlac an Dáil leis an mBille seo seachtain ó shoin agus molaim é anois don tSeanad.

The main purpose of this Finance Bill is to give continuing effect to the taxes and duties embodied in the Financial Resolutions passed by Dáil Éireann following the Budget and to provide for the other matters referred to in the Budget speech which require legislation. As Senators are already familiar with the salient features of the 1946 Budget, the majority of the provisions of the Bill will not be new to them.

Opportunity is, however, being taken to incorporate in ordinary legislation certain revenue provisions at present in force under emergency powers legislation and to amend certain revenue laws for convenience in administration. It is, I think, scarcely necessary for me to go into these provisions fully at this stage as Senators will have ample opportunity later of examining them in detail. For the present, therefore, I trust that the House will be satisfied with a brief reference to the various sections of the Bill as introduced.

Section 1 is the customary "charging" section providing for the imposition of income-tax, surtax and excess surtax for the year 1946-47 and for the continuance in force of the existing enactments relating to those taxes.

Section 2, which repeals Rule 8 of Schedule E of the Income-Tax Act, 1918, is designed to remove an old and obsolete provision from the income-tax code.

Section 3 brings up to date the existing exemption from income-tax in respect of wounds and disability pensions and gratuities under the Army Pensions Acts.

Section 4 extends, by reference to the emergency years 1939-40 to 1945-46, the period within which losses incurred in a trade or profession can be carried forward for income-tax purposes and deducted from subsequent profits. The section will benefit those concerns which, because they fared badly during the emergency, did not make sufficient profits to absorb the losses carried forward.

Section 5 provides for a special allowance in respect of revenue or capital expenditure on scientific research in the industrial field. Revenue expenditure within the scope of the section will be allowed as an expense in computing the profits of the trade, while the allowance in respect of capital expenditure will be spread over a period of five years.

Section 6 provides for a special allowance in respect of capital sums expended on searching for, discovering and testing mineral deposits, and on the construction of works whose value is likely to be little or nothing when a mine finally ceases to be operated.

Section 7 provides for a basic increase of 12/6 the proof gallon in the rates of duty on foreign spirits and for an increase of 12/6 the proof gallon in the case of home-made spirits.

Section 8 provides for an increase in the full rates of customs duty on wines to double the existing rates, which were imposed in 1930, and for corresponding preferential rates in respect of wine produced in and consigned from countries within the British Commonwealth of Nations.

Section 9 terminates the existing customs and excise duties on sugar and molasses and provides for the continuance of the duties and drawbacks on glucose and saccharin.

Section 10 provides for a reduction of 6d the gallon as from 1st June, 1946, in the rates of customs and excise duty on mineral hydrocarbon light oils. The bulk of the customs duty is received from petrol. The effect of the reduction in excise duty is nil as there is no production of home refined oil at the present time.

Section 11 provides for similar reduction in the customs and excise duties on hydrocarbon oils. In view of provisions for rebate the duties are, in effect, chargeable only on oils intended for use in propelling motor vehicles. The effect of the reduction in excise duty is nil as there is no home production of this oil at the present time.

Section 12 incorporates the provisions of Emergency Powers (No. 217) Order, 1942, under which second copies of certain cinematograph films may be imported at half the existing rate of duty. Transport difficulties in this country, which still remain, and a world shortage in films, which is likely to continue for some time, have a bearing on the position. The question of withdrawing the concession will be considered when there is an improvement both in transport facilities and in the supply of films.

Section 13 abolishes as from 1st August next the entertainments duty on payments for admission to céilithe and dances.

Section 14 follows on the decision to establish a customs-free airport at Rineanna. The section provides (1) that all goods imported direct from abroad into the customs-free airport shall not be liable to duty, and (2) that any goods removed from the airport to any other part of the State shall be chargeable with duty in the ordinary way.

Section 15 is designed to incorporate in ordinary legislation Emergency Powers (No. 303) Order, 1943, which exempts gifts of food from the fixed minimum duty of 2/6 (or 1/- in the case of goods from the United Kingdom or Canada). The effect of the section is that imported parcels of food sent as gifts will be charged only with the actual duty without regard to the minimum duty.

Section 16 provides for the exemption from package duty of (a) goods imported as gifts, and (b) goods for the personal use of the importer brought in by the importer or his servant or a member of his family. Under Emergency Powers (No. 348) Order, 1944, the package duty on gifts of food is at present suspended. Extension of this exemption and its incorporation in ordinary legislation will make for convenience in revenue administration and remove a possible source of irritation.

Section 17 provides for permanent exemption from customs duty of goods imported by the Irish Red Cross Society as gifts or on loan from a Red Cross organisation abroad and imported solely for the purposes of the society.

Section 18 exempts from customs or excise duty articles required for use in connection with the establishment and maintenance of international air services using Irish airports. The main purpose of the section is to implement the customs provisions of the draft Convention on International Civil Aviation drawn up at Chicago in November, 1944. Section 21 of the Finance Act, 1936, and Section 20 of the Finance Act, 1941, which are being repealed, provided for similar exemptions, but in respect of transatlantic air services only.

Section 19 provides for the exemption from payment of customs duty of articles required temporarily for rescue, salvage and repair of damaged aircraft registered in another State. The section implements agreements on this subject adopted by each member State at recent meetings of the Provisional International Civil Aviation Organisation.

Section 20 reduces the minimum quantity of beer, wine and spirits which may be sold by wholesale dealers to licensed retailers. Since the legal minima were originally fixed, the increased cost and scarcity of liquors during the emergency have made it difficult for small retailers to purchase and for wholesalers to distribute available supplies and the position has been regulated by Emergency Powers Order. The position will be reviewed when the supply position returns to normal.

Sections 21 and 22 provide for amendment of the statutes under which excise duty on refreshment house licences and tobacco dealers' licences, respectively, is charged by reference to the "poor law valuation" of the premises. The sections provide for the charging of the duty by reference to the valuation of premises under the Valuation Acts. The amendments, which are purely technical, are necessary consequent on the substitution of the municipal rate for the poor rate in the county boroughs.

Section 23 repeals Section 32 of the Excise Management Act, 1827, and is intended to be in substitution therefor. It rectifies defects in the 1827 statute which has been found to be insufficient and inappropriate to present conditions.

Section 24, which applies only to accounting periods ending on or after the 1st January, 1941, enables assessments to corporation profits tax and excess corporation profits tax to be made at any time. It also provides that, in the absence of a return of the necessary information, the Revenue Commissioners may make an assessment according to the best of their judgment.

Section 25 provides that profits arising on or after the 1st January, 1947, shall not be chargeable to excess corporation profits tax.

Section 26 is a "construction" clause for corporation profits tax (including excess corporation profits tax).

Section 27 applies to certain cases where proceedings in revenue matters are taken in the High Court or in the Circuit Court for the recovery of a tax or penalty which is due and payable for the benefit of the Central Fund. The section, which specifies the form of execution order to be granted in such cases, is designed to remove certain defects and archaisms in the existing form of the order.

Section 28, when enacted, will enable effect to be given to the proposals in the Budget statement in relation to interest on deposits in the Post Office Savings Bank and the trustee savings banks. As matters stand, the interest payable on Post Office Savings Bank deposits is at the fixed rate of 2½ per cent. per annum as laid down in Section 7 of the Post Office Savings Bank Act, 1861; in the case of the trustee savings banks, the position is governed by Section 5 of the National Debt (Supplemental) Act, 1888, which prescribes that interest on a deposit in a trustee savings bank shall not exceed 2½ per cent. per annum. Present conditions require greater flexibility in this matter and, in lieu of the fixed statutory rate of 2½ per cent. for the Post Office Savings Bank, the Bill confers an enabling power to prescribe the interest, by Order, at such rate or rates as may be considered desirable from time to time.

It is my intention in the first Order to fix the interest rate of 2 per cent. per annum for deposits of £300 and under and on the first £300 of larger deposits; for deposits exceeding £300 the rate will be 1¼ per cent. on the amount of the excess. Section 29 is consequential on Section 28 and ensures that the trustee savings banks will remain free to fix their own interest rates subject to the limitation that the rate shall not exceed the rate for the time being appropriate to a deposit of like amount in the Post Office Savings Bank.

I indicated in my Budget statement that the third issue of savings certificates was being withdrawn on the 8th May, and that a new issue of lower-yielding certificates would be introduced. The cost price of a unit certificate will continue to be 16/-. The value after ten years will be £1 and after 11 years, 21/- The yield at compound interest if held to maturity is £2 10s. 1d. per cent. per annum. The necessary printing arrangements are in hands and it is hoped that the new issue will be on sale about the end of this month.

Section 30 legalises the establishment of the Transition Development Fund referred to in my Budget statement last month. On that occasion and on the Second and Committee Stages of the Finance Bill in the Dáil I gave some indications of the purposes for which I intended the fund would be utilised. When the Bill becomes law it will be necessary to introduce a new Estimate and I hope then to be able to indicate in greater detail the purposes to which the moneys in the fund will be devoted.

Section 31 repeals the enactments cited in the Fourth Schedule. The repeal of Section 32 of the Excise Management Act, 1827, is consequential on Section 23 of the Bill and the repeal of Section 21 of the Finance Act, 1936, and Section 20 of the Finance Act, 1941, is consequential on Section 18.

Section 32 is the customary care and management provision, and Section 33 is the usual section relating to the short title, construction and commencement of the Bill.

Mr. Douglas

As the Minister has indicated, there is very little in this Bill that was not foreshadowed in the Budget speech. Generally speaking, we may say that, taking the advantages and the pleasant surprises with the disappointments and other things which might have been expected, we may say that the Budget was welcomed pretty generally in the country. It is always easy to criticise any Budget statement which imposes taxes, but we must recognise that, taking this Budget as a whole, it was well received. Many persons with a good deal more financial knowledge than I have have expressed the opinion that our total taxation is still too high having regard to our total earning capacity, and that before we can bear this high rate we must increase our earning capacity. There have been many speeches made on that point, and I do not propose to develop it further at this stage.

Having regard to all the circumstances, I think the Minister was wise in reducing income-tax. I would have preferred that the reduction be only 6d., if the other 6d. could be given to the old age pensioners, but I doubt if my view is shared by many other income-tax payers. I think the vast majority would prefer the income-tax to be reduced by 1/-. There are many matters into which the Minister did not go in detail and on which I would like to put some questions with a view to their clarification, but the time for that is in Committee, and I do not propose to deal with them at this stage.

The Budget was a good old British type of Budget, and I believe that every Budget will be the same until some Government is formed which is prepared to admit that British income-tax law and practice is not suited to this country. As long as the British Act of 1918 remains the principal Act dealing with income-tax in this country, it will be almost impossible for any Minister for Finance to make any substantial change in order to meet our special circumstances.

I made a plea in this House some time ago for a commission to examine and revise our income-tax law and I will not take up the time of the House in repeating what I said then. I do not think I ever made a speech in this House about which I received more expressions of approval from persons outside, and I still believe that the proposals I made were wise and sound. The practical result so far has been nil, but that was more or less to be expected.

In that speech, I drew the particular attention of the House to proposals relating to the taxation of business profits which have been made by the Dublin Chamber of Commerce. They were as follows:—

"(1) An all-over addition, not less favourable than has been granted in Great Britain and Northern Ireland, to the standard rates of wear and tear of plant and machinery.

(2) The necessity of granting obsolescent allowance where replacement does not occur.

(3) Allowances, by way of depreciation or otherwise, in respect of those wasting assets used in commercial activities, for which no allowance whatever is made at present.

(4) Revision of the present allowance of one-sixth of the Schedule A Assessment in respect of factory buildings (If leasehold, revision might take place under (3)).

(5) More equitable treatment of development and research expenditure, whether of a "deferred revenue" or "capital" nature, the cost of which at present—that is, where they made their statement— invariably falls entirely on the proprietors, without any tax relief."

The last of these proposals has been met to some considerable extent by the proposals in this Bill relating to expenses on scientific research, and I welcome these so far as they go. They have met with the comparative approval of everyone I have consulted. But the Minister appears to have done nothing to meet the other matters under which manufacturers and traders in this country are in a worse position than their competitors in Great Britain.

It is true that the income-tax is 6/6 here as against 9/- in Great Britain but, in addition, corporation profits tax has to be paid here on profits over £2,500, which bring the tax up to, approximately, 8/-. I was told, a week or so ago, by a company secretary, who also has a business in Northern Ireland and has to deal with British income-tax law, that he thought the concessions made by the British Chancellor to help industry to recover after the war were in many cases so advantageous that he would prefer the British taxation as it affects industrial profits to that in Éire even though income-tax has been reduced to 6/6. Whether this is correct or not I am not skilful enough to be able to say, but it is undoubtedly true that while a wealthy individual pays considerably less tax on his income here than he would in the United Kingdom, Irish trade and industry are not substantially better off as regards taxation than British industry.

It will never be possible to judge adequately what taxation industry can bear until an attempt is made to provide for the measurement of business profits for taxation purposes as near as practicable to true profits actually made. I dealt with this in some detail before and will not go into it again now. Every business man knows what I mean.

I am personally rather disappointed that the new Minister has not made any attempt to draw a clear distinction between income which goes into the pockets of individuals and profits which are available for increasing the efficiency of our agriculture and our industry—which would increase employment and reduce the cost of the home-produced commodity. The money made by a company may roughly be divided into two parts, one part which is paid to individuals whether as salaries, wages, fees, or in the distribution of profits. The other part is retained in the business. At present the State taxes the first part more lightly than the second part. Both income-tax and corporation profits tax are payable on the second part. I am ignoring excess profits tax, as that will come to an end at the end of this year. It is almost an encouragement to pay out money in salaries rather than retain it in the business. It is true that there is a surtax on high incomes but the proportion of surtax payers at the rate of 2/- in the £ (which is the rate of corporation profits tax) is relatively small.

It seems to me that it would be wise national policy to encourage the keeping of profits in a business, as in the vast majority of cases this would gradually lead to a higher profit in the future with a greater yield to the State and would discourage the paying out of too much of the profit to individuals.

I am also somewhat disappointed that this Bill does not contain sections amending the 1944 Finance Act in respect of the inequities which have been found in the working of Part II of that Act. There is a good deal of dissatisfaction with the way in which these provisions have operated. Apparently, the provisions of the Act have given the authorities a good deal of trouble, with the result that there has been a considerable delay in the making up of assessments. To my own knowledge, the assessments for 1943-44 trading years, in some cases, were not made until this year. It is a serious handicap when persons in control of a business cannot ascertain their tax liability for quite a long period. It is almost impossible to plan new developments or extensions if one does not know one's liabilities.

In particular, I would like to ask the Minister if he has received any representations as to the working out of Section 13, sub-section (1) (c) of the 1944 Act, which deals with new companies. If he has not, I would suggest to him that he should invite accountants to submit cases of hardship to him for consideration. I am not personally interested in any new company affected by this section, but I am informed that there has been a number of cases of real hardship, especially in relation to smaller companies. If the Minister doubts my word that there is a good deal of genuine and reasonable dissatisfaction, he can consult some of the leading accountants in this city, whose view may be much more impartial than mine.

Excess corporation profits tax comes to an end on January 1st next, but that is no reason why the law should not be amended to deal with cases where it can be proved that individuals or companies have been harshly treated as compared with others. It also seems to me that it should be possible for any company to apply that the excess profits tax should be applied to its profits for the whole period of the emergency. In fact, excess corporation profits tax only came into operation as from January, 1941.

It is well known that in the years 1939 and 1940 prices were rising and it was in many trades very easy to make higher profits in these years. I should imagine that most businesses made excess profits in those years. In the small number of cases where the profits from the outbreak of war to December, 1940, were below the pre-war standard it should be possible for them to receive the benefit of the fact that they did not profiteer in the early years of the emergency. If in fact the company can prove that its actual profit from September, 1939, to December, 1946, was not in excess of its pre-war rate of profit it should not have to pay any excess corporation profits tax. A promise was made by the Minister's predecessor. I gathered from a sentence in his Budget speech that he proposed to carry it out, and I hope he will make some provision for a possible loss in stocks which would occur after the date on which excess profits came to an end. There was some provision made of that nature after the last war but I cannot remember the details. I know that many businesses got some money back because of the heavy loss that took place in the drapery trade, for instance. I imagine something of that kind might be done again.

I am both surprised and disappointed that the Bill contains no provision to meet the case of companies which because of the emergency, have been unable to carry out repairs which are essential to the running of the business. If these repairs could have been done they would have been allowed as an expense before computing income-tax, corporation profits tax, and excess corporation profits tax. The result is that a certain number of manufacturing companies have been assessed on fictitious profits, because they could not do essential repairs and any reserves they made to provide for the carrying out of repairs after the emergency were not allowed for tax purposes. It is well known that the war has made the proper repair of machinery and plant impossible in many cases, and repairs which are really necessary have accumulated in some businesses to an alarming degree. In some cases, companies have become liable to excess corporation profits tax which would not be so liable if they could have carried out adequate running repairs. In these cases the State has collected 75 per cent. of what are really properly described as fictitious profits.

In a number of cases it will be quite impossible to do the necessary repairs this year and unless some provision is made in law the companies will be unable to claim a refund of excess corporation profits tax paid by them and which was only paid because of the fact that they could not do the necessary repairs. I think that is a matter that requires Government consideration. In any case I think it should be provided for. I think the Minister will not have to worry very much in providing for it because the general indications are that stocks now are very small whereas in 1918 stocks in many businesses were abnormally large. I do not believe that in this case they could be anything like as large as they were then. The Minister should, I submit, take into consideration the question of deferred repairs.

I would be glad if the Minister would indicate the Government's intentions with reference to Part II of the 1944 Finance Act after the end of this year. According to the Minister's predecessor this Part of the Act was introduced to enable him to deal with extensive legal evasions of the excess corporation profits tax.

Many of the provisions will not be required for this tax after the end of the year except in so far as Estimates relating to previous years are concerned, but as excess corporation profits tax is an extension of corporation profits tax, it was inevitable that many of the sections would also apply to corporation profits tax. People engaged in business would like to know as soon as possible what are the Government's intentions.

In my opinion the provisions with regard to subsidiary companies ought not to apply after this year to new companies which were formed for the purpose of a bona fide new business or trade or industry. As the law stands, it is a discouragement to new industry. At present any person who is a shareholder in one company cannot invest money in a new company without running the risk that it will be regarded as a subsidiary.

It also seems to me that the provisions under which a director controlled company may be penalised if it allows its managing director or any other employee to take shares in the company and under which an employee may reduce his chances of becoming a director if he buys shares ought to be abolished or drastically amended.

In my opinion it is good that directors and managing directors should, where practicable, be appointed from the staff of companies engaged in trade or industry, and that they should invest their savings in the businesses in which they work. I therefore urge strongly an amendment of the corporation profits tax provisions which are a bar to such action. The provision that if a whole-time managing director owns more than 5 per cent. of the ordinary share capital the company must pay corporation profits tax on his salary in excess of £1,000 is unjustifiable and, I think, should be amended.

Many companies pay bonuses out of profits to their employees and would much prefer to pay part of these bonuses in shares rather than in cash but for these provisions of the law relating to corporation profits tax. I think that is a short-sighted policy for the Minister because the more money retained in the business the better chance the Minister has of obtaining further tax from that business. Why the Government should place any difficulties in the way of employees obtaining an interest in the businesses in which they are working has always been and still is beyond my comprehension.

The sum of £1,000 was, I think, taken from a British Act passed in 1920 which has long since disappeared, and it is much too low having regard to the present value of money. It is not unreasonable that a man who manages a business which he controls should be allowed to earn more than £1,000, without paying more taxation than another person in a similar position would pay if he did not have an interest in the business. It seems to me that £1,000 is much too low a figure having regard to the present value of money. It is not unreasonable, to my mind, that a man who gives his whole time to a business, managing it, should be allowed to earn more than £1,000 per year without paying more in taxation than another person in a similar position would pay if he had not an interest in a business.

There is another matter which, I think, should be remedied. The Revenue Commissioners have power to disallow certain salaries which they consider excessive for the purpose of the business, or because of the law relating to corporation profits tax. When this is done the amount is added back, and the company may possibly have to pay income-tax, or corporation profits tax, or both. The individual who received the salary also pays income-tax and surtax which, in effect, means double taxation. Where the amount is disallowed by the Revenue Commissioners and the company pays the tax, an individual should not, in my opinion, be assessed for that part of his income-tax for which the company pays tax.

I think it is rarely it is disallowed for the purpose of income tax, though I think the power is there to do so, if I read the Acts correctly. But if, as I think is the normal practice, the company is only disallowed for corporation profits tax purposes, to my mind that amount should be allowed as a deduction from the individual's surtax assessment. I do not think it is right that both surtax and corporation profits tax should be paid on the same income. I do not believe that was ever intended. It is an anomaly which has arisen, and it is surely a matter which could be adjusted without very grave difficulties.

Take the case of a person with an income of, say, £2,000. If he earns it in a business in which he has not more than 5 per cent. of the capital, the State collects income tax on £2,000 or on £2,000 less whatever allowances he is entitled to, and collects surtax on £500. If he happens to have more than 5 per cent. of the capital of the company which he works, and if that company is a director-controlled company which would probably be the case in the majority of small private companies, the State collects an additional tax of 2/- in the £ on £1,000. I have never been able to understand why this individual should pay £100 in extra taxes. If there is a good equitable reason for it, I would be glad if the Minister would explain it to the House when he is replying.

I should also be glad if the Minister would explain the full significance of Section 27. He more or less glossed over it in in his introductory speech. I am not criticising it—it is probably all right—but I would like to know what actual difference will be made by the form of execution of the judgment set out in the Schedule. I do notice, however, that it is a continuing provision, and that it provides for six months' imprisonment. Personally, I have been, for a very long time, totally opposed to imprisonment for the non-payment of debts or taxes. I would not object at all to a form of compulsory work by which a person could be made to earn the amount of the debt or the taxes due. I rather hope that some day that will be the method that will be adopted—to have it done by means of a work camp, although I suppose that at this time I could hardly expect the Minister for Finance or the Revenue Commissioners to undertake the setting up of a work camp as part of their duties.

It seems to me that if there are no goods or chattels which can be seized, it is simply throwing good money after bad to send the person to prison. Why should the State provide him with board and lodging for six months at its expense? The only case where I would favour imprisonment would be where the court was satisfied that the person had acted dishonestly, or that he actually had money in a form that could not be seized. In that case, I suggest he should be brought again before the court and sentenced not for the non-payment of a debt or for the non-payment of taxes, but for dishonest action on his part. Every one who is in business has to face a certain number of bad debts from time to time. They know that it would be simply throwing good money after bad if they were to take legal action in these cases. As far as I am concerned, I would not be in favour of doing so unless I was satisfied that the person had acted dishonestly. In that case it might be in the interest of the public good to take action, even though you knew that you were not going to recoup the money. Inevitably, the State will find itself in a similar position. I do not see why the taxpayer should have to pay for the board and lodging of such a person as we are considering for six months when no good purpose whatever will be achieved.

There is another matter of a different character to which I should like to refer. The accusation is usually made by Ministers for Finance that our criticisms of proposals would, if accepted, reduce the total sources of income. I want to make a suggestion to him in collaboration with the Minister for Posts and Telegraphs which, I think, would bring in quite a substantial amount of income if properly carried out. It is that I think much more use could be made of the sale of Irish stamps to stamp collectors. For instance, you have all over the world an enormous number of collectors of air mail stamps. We have an air mail service and, speaking from memory, I think there are three principal rates: 5½d. to Great Britain; 8d. to the Continent, and 1/3, I think, to America. I think that if three suitably designed stamps were prepared and issued, in not too large numbers, they would bring in quite a bit of revenue. I have some knowledge of what I am talking about. If these stamps were well designed and had on them pictures of Rineanna they might also serve to advertise our air service. The fact is that we are playing quite a part in the air services of the world at the moment.

Apart altogether from these air stamps, I think that, when commemorative stamps are issued, there should not be too many of them. I think that one or two every year should be sufficient. The number announced for printing should not be more than twice the number that would be required for normal postal services during the period within which it is intended they should be in use. The reason why I say that is that stamp collectors will buy them much more freely if there is only a certain limited number of them. I think I am probably right in saying that 95 per cent. of our commemorative stamps can still be bought in the Post Office. By reason of that they lose a good deal of their potential speculative value, and will not have the same interest as they otherwise would have.

In making this suggestion to the Department of Finance, I hope they will not follow the practice of certain European countries in which commemorative stamps are issued almost every week for sale, in many cases with a charity sum added which makes them a high price. The result of that is that in a short time they lose all philatelic interest because of the large numbers that are issued. In regard to this matter, I do not think that we have got anything like the monetary gain out of it that we should have got. I put this suggestion to the Minister for Finance—he will, I take it, be mainly interested in it—and to the Minister for Posts and Telegraphs, and hope that they will give it consideration.

Mr. Baxter

The Bill to-day, and the statement of the Minister in the other House are, so far as I am concerned, a new approach, and a welcome approach, by the Minister for Finance to our problems here. There is less of the negative about it. As far as people in rural areas are concerned, there seems to be, if only in a delicate and tentative sort of way, some better appreciation of what is their due than anything we have had from any of the Minister's predecessors.

In fact, I do not know why the Minister did not get that opportunity earlier in his Department. There are a number of matters I wanted to touch, but I do not want to hold the House any length on them. But, while complimenting the Minister on the number of proposals he has made, I would like to have some better information from him of what is exactly behind some of the proposals, and the absence of some other proposals, so far as I can read the debates in the other House. I am glad to see the decision he has taken regarding the relief of rates on agricultural land.

In a report—quite true, a minority report—on derating as far back as 1929, I made somewhat similar proposals, and if these had been implemented then we would have gone further on the same road to-day, but while the Minister may classify this step of his as a relief of rates, I do not think it can really be so styled. It is true that the net result of the decision of the Minister will be, from my experience anyhow, to bring the rates in the counties back approximately to where they were last year. The Minister probably is well aware of the fact that there has been a very steep increase in the rates all over the country.

In my county, it is calculated that the proposed remissions will bring the rates down to approximately last year's figure. The Minister may say that this is not a relief of rates but an increase in the assistance for the relief of agricultural workers. I think that that is what the Minister has actually in mind. But, where is all this going to lead us? Apparently, approached from one angle, there is a justification in the Minister's mind for a relief of rates. He realises that there are limits to farm incomes in this country, and unquestionably, from the point of view of the rate-paying community, those limits have been reached in 1946 and 1947. The ratepayers were shocked and astonished at the rates struck in these years. They felt there was a genuine case for the relief of rates, but I think that what the Minister is really doing is attempting to subsidise the wages of those engaged on agricultural work. You cannot do two rather contradictory things at the same time with the same sum of money, but I would like to know what the Minister is trying to do.

We are to have an increase of wages for agricultural workers, starting this week all over the country generally. I am not disputing the justification for the increase in the wages of agricultural workers. I have taken the view for a long time that it is not only unsatisfactory but discreditable in an agricultural country that the agricultural workers must be the most lowly paid people of the country. The status of an industry cannot be raised without raising the status of the people who are toiling in it.

Many farmers may not subscribe to that view but it may be that the higher standard of life and the receipt of better incomes generally are really due to the activity of agricultural workers. But, this is what I wish to call the Minister's attention to, from the point of view of agricultural policy. Farmers' incomes in 1946-47 are not higher, so far as price regulations go, than they were in 1945-46. We have much higher rates and we are to have increased wages for agricultural workers. Where is all this extra money to come from? I say that the Minister and the country as a whole must give more study to that problem. The whole approach to the problem whether it is by Ministerial Order, regulation, or the laws of the Oireachtas must have a scientific basis. To-day it has not.

No one can tell what the capacity of the farmer is to meet the charges which are levied on him. No one can tell how all the land that is available can be used in such a way as will enable the farmer and those living on the land to bear these extra burdens. I hope the Minister has a new approach to the problem, because I am satisfied that he has considerable knowledge of what is going on in the country. I feel he appreciates that we want in this country some form of organisation which will determine what the actual income of a farmer is, and what is the farmer's capacity to bear those extra charges when they are imposed upon him.

The sort of rule-of-thumb procedure which has existed up to to-day is thoroughly unsatisfactory. Some farmers are able to bear the burden: others are quite unable to bear it and the effect on agricultural productivity may be the very opposite of what is anticipated. The result of the recent decision in regard to wages will, in a number of cases, be fewer people employed on the land. None of us can look forward with equanimity to developments like that. So much for the problem of the relief of rates and the subsidy for agricultural workers. Closely linked with that is the Minister's decision to reduce the rates and to make available for local authorities loans for development purposes at a reduced rate of interest. I think that proposal from the Minister is to be welcomed. Some of us have been shouting for it for years in the other House as well as in this House. We felt like voices crying in the wilderness, and all sorts of stupid suggestions were made about the theories we were enunciating.

I do not know whether any of these people have held that point of view, but anyhow the decision of the Minister is, in my opinion, the most welcome decision that has been made by any Minister for Finance—I say by any Minister for Finance—since this State was established. If action along these lines had been taken years ago, the burden of local rates up and down the country would be much less than it is to-day. I notice that in the Minister's statement he has referred to the fact that we are not able to reduce the charges on the payment of capital issues, because it cannot be done until a certain period has been reached, when these loans mature, but I would like to ask if there are any difficulties confronting the Minister in making available to local authorities this cheaper money to repay debts which they have incurred over the years.

In my county, the annual charge on the ratepayers for the repayment of loans is over £20,000. In other parts of the country, there is the same story. I believe that the Minister should investigate the possibility of enabling local authorities to pay off those loans and so reduce the charges on the ratepayers. These are issues made by the Board of Works and I cannot understand what the difficulties are in regard to paying them off. There may be difficulties which are not obvious to me. In any event, there is a problem which the country must face. It is absurd that, on loans incurred 30 years ago, we are paying this high rate of interest while the Minister is able to make available money at much lower rates. The Minister proposes to make possible development work which the country very badly needs. Any step like that will give effort on the part of local authorities the fillip which it requires. In all our counties, demands are being made for housing, sewerage, hospitals and so forth, which local authorities must do their best to meet. With rates mounting as they have done over the years, with hardly any expenditure on new schemes, development schemes must necessarily be held up unless the burden incurred in the past can be lightened, in addition to making new money available at a low figure. No group of people representing the ratepaying community can indiscriminately commit that community to an expenditure which is beyond their capacity to bear.

I do not want to go into a lengthy examination of Government agricultural policy. That would come better on the Appropriation Bill. I miss from the Ministerial statement reference to a matter which I regard as vital in the reconstruction and development of our agriculture. I raise this matter because I want to ascertain what is in the Minister's mind. I do not know what his view is regarding the development of our agricultural resources. I have not heard him discuss the question at any length. What has come from the Minister's colleague in the other House, I regard as very disappointing. It shows no evidence of courage, imagination, vigour or appreciation of the necessity for the pioneering development which we require and which I was expecting in view of the reports which were available to the Minister. In the statement of the Minister for Finance, we have an examination of the national income with regard to agricultural production. The figures would indicate that farming incomes are considerably swollen over the 1938-9 level. We all know that the prices of some commodities have risen steeply but there is no use in pretending that the volume of physical goods has increased. Here and there, there are slight alterations but we have done nothing more than maintain the status quo. That will not be adequate to the demands of the future. The Minister charged with responsibility for levying taxation must ensure that Government policy is so designed as to increase productivity and national income so that, when he levies his taxation, the money will be there to meet it.

I could discuss at length steps which might be taken to increase our agricultural productivity, but I propose to turn to one aspect of Government policy which, I think, is fundamental, if there is to be that improvement in agricultural technique, opportunity and equipment which will make increased production possible. Nowhere in the Minister's statement is there evidence that, in his view, the capital necessary for increased production can come from any source except the farmer. I am aware that the Post-Emergency Committee on Agriculture decided that the problem of agricultural credit could be passed over to a committee.

That was the recommendation in the majority report. In the minority report, Dr. Kennedy gave his view as to the dimensions of the problem and the amount which would be required properly to capitalise agriculture. I do not see anything in the Minister's statement regarding agricultural credit. I do not see in it any evidence that he regards it as necessary to do anything about it. In his statement in the Dáil, he gave particulars of gross output and net output for the two years 1944 and 1945, and he made a comparison with 1938. Then he went on to say:—

"With intelligent use of their savings during the last few years to improve their soil, farm buildings and stock, our farmers can ensure for themselves and their children a better income than the normal income enjoyed by themselves or by their fathers. They can also ensure for the nation a good output of farm products at a reasonable price."

He went on to make a point about Land Commission annuities which I shall link up with this question in a few moments. I am raising this matter because the Minister's statement appears to carry the conviction that the farmers themselves have available the capital resources necessary for the development of agriculture, from the point of view of the improvement of their soil, their buildings and their stock. I do not accept that at all and I regret very much that it should be the Minister's approach to the problem.

It is true that one of his predecessors in office seemed to have an idea like that. On previous occasions here I raised this matter and always was met by the then Minister for Finance, Deputy Seán MacEntee, with what I regarded as quite a hopeless attitude. I expected more from the present occupant of the office. Whether or not it may be that he has withheld making a statement on this by virtue of the fact that the recommendations of the majority on the Post-Emergency Committee suggested the setting up of a committee, I would like to have had some evidence from the Minister of an appreciation of the fact that the proper capitalisation of agriculture was an immense problem and that the State recognised the immensity of it and was prepared to make, so far as it could, a major contribution to that big task.

Amongst the reports made by the Post-Emergency Committee that have been examined and decided upon to a certain extent is that on veterinary services. The Government has given an indication of an improvment in that respect. If Senator Seán O'Donovan were here at the moment, he would have pointed out—as he did on other occasions—the necessity to tackle urgently the health problems in our stock. I am with him in that and am convinced of the urgent necessity to do so, from my personal experience. It cannot be done except by the expenditure of an immense amount of capital. It is of no avail whatever to establish a veterinary service up and down the country unless 90 per cent. of the farm buildings are virtually reconstructed.

An Chathaoirleach

The Senator stated a short time ago that he considered that matter more a subject for the Appropriation Bill than for this measure.

Mr. Baxter

I did, and I do not want to go wide of this Bill. What I have been coming to is that there is absent from the Minister's statement any evidence of appreciation of the necessity for the proper capitalisation of the agricultural industry. I was hoping to get some elucidation of what was in the Minister's mind with regard to the statement he made in the other House.

An Chathaoirleach

It is not necessary to enter into all these details.

Mr. Baxter

That may be so, but I never like to be met by somebody else saying I did not make something clear and they did not know what I was saying. However, if you regard it so, I need not go further into that point, but I want to indicate to the Minister that his is the greatest responsibility, that the policy he pursues in the matter of making it possible for farmers to increase production will determine the availability of the incomes from which he will collect his revenue. In my considered judgment, the most vital and pressing problem the farmers are faced with to-day is the reconstruction or construction of farm buildings all over the country. The health of our stock is not what it ought to be and it can never be put right until our buildings are properly constructed and in a healthy state. Within the farming community there is not the capital necessary for that great undertaking and I see no evidence in the Minister's statement of an appreciation of that fact. Indeed, it may be said that he has been following his predecessor in office in that regard.

I know previous occasions when many members of this House were rather impatient with me when I was stressing the need for credit for farmers. I was looking over some of the debates here in 1939, and they make rather interesting reading to-day, in the light of events since then. It may interest some members to know that the Minister for Finance then, Deputy MacEntee, said in the Dáil, as reported in Columns 1890-91 of Volume 74 of the Official Dáil Debates:—

"But so far as encouraging any small farmer with limited capital, or with no capital, to launch out now into livestock, or any thing like that, is concerned, I certainly, looking at the world as a whole and the position which at the moment is developing, do not think that such a thing should be encouraged by providing him with cheap money at this moment."

In the debate here on the Central Fund Bill in 1939 I quoted that point and I went on to say, as given in Column 1166 of Volume 22 of the Seanad Debates:—

"Now in the first place, the farmer has had such a bad time and has incurred so many debts that no credit except cheap credit will be any good to him, but if trouble is coming to Europe, what sort of condition will we be in with a third of our lands unstocked? If anybody thought that we were really going to have a war, we should be striving with might and main to get every sod turned that we could get turned, and every possible beast put on the land that we could get put on the land—yes, we would even buy them at an inflated price and prevent them going over to England, put them on our own land, and keep them there until they would reproduce themselves."

The Minister, in reply, made this interesting remark:

"If there is going to be a financial collapse or a settlement which would lead to the cessation of expenditure on armaments, then it undoubtedly means that there is going to be a restriction on the British market and a contraction in purchasing power and, accordingly, on one or other of these hypotheses, the man who goes too rashly into production would be bound to lose.

The only event in which he might win would be in the event of a European war, and what the Senator is asking the Government to do is to induce the Irish farmer to gamble on the prospect that there will be a European war. I do not think any Government is justified in taking that sort of speculative attitude towards a serious international situation."

There were two points of view in 1939 and I do not think the Minister will quarrel with my expression of opinion then. I do not know what his colleague would say about it now, but there can be little doubt that, to the extent that we had made pre-war an effort to increase the productivity of our land, we would be able to benefit during the war and be able to harness that to a greater extent in the future. I hoped the Minister would have done something more about that. In referring to the incomes of our farmers, as taken from the publication on national income and expenditure, the present Minister went on to say in his Budget statement:—

"By the way, an excellent use for £474,000 of their 1945 income of £97.2 million would be to pay off the arrears of land annuities outstanding on the 31st January this year."

That is exactly the point. I do not know what information the Minister has with regard to the condition of the farmers who owe that money to the Land Commission, but the Land Commission ought to have information about it and I would like the Minister to have it. In my opinion, the truth really must be that the farms against which that debt stands are depleted of stock and equipment and the money cannot be repaid until something is done for those farmers. In my view, a policy of reconstruction is necessary before that money can be recouped to the Exchequer, and I think an examination of the position would reveal that fact.

I want to point to a statement made by the Minister for Agriculture on his Estimate in the Dáil the other day. It is, in a way, very interesting to see the different treatment we can accord to two groups of borrowers within the State and who to all intents and purposes are the same people. The Minister for Finance will make available to local authorities loans at 2½ per cent. for the purpose of development and reconstruction work such as the building of houses. The Minister for Agriculture, speaking in the Dáil on the 4th June, said: "Regarding sub-head N, Loans and Grants for Agricultural purposes, the rate of interest is 4½ per cent. on all these loans." Now what is wrong with agriculture when the position is apparently so insecure that the State has to levy a charge of 4½ per cent. on grants to a man borrowing to buy a bull, a boar or a stallion, or anything of that nature? I think the Minister ought to look into that whole matter. There are two other matters to which I want to draw the attention of the House. Both of them have been referred to by the Minister in his speech and they relate to the development of our rural electricity and of our drainage schemes. I do not know when the Minister expects our rural electricity schemes to take shape or when the people in rural Ireland will benefit from them, but I suggest to the Minister that it is not going to be much good to the people of this generation to have the country electrified when they are dead. I suggest that the Minister instead of permitting to continue a situation in which engineers, and such people, who should be doing this work and the men with the spade who will have to do half of the job, perhaps, are allowed to leave the country to find employment outside, he should tell the Electricity Supply Board to double their staffs and get on with that job now. I believe it could be done if the people are there and surely by the time they will have all the staffs and workers ready the necessary equipment will be available.

We have the same problem in relation to our drainage schemes. It must be more than 12 months since these drainage schemes went through the Seanad. Perhaps something may be done here and there but, so far as we can observe, the official point of view is that it is going to take 15 years. I think that is the time we were told it would take. What has to be done in relation to drainage that such a lengthy time as that must elapse before the scheme can be made operative? I think there is no excuse for that delay at all. We must get on with the rural electrification and the drainage scheme because there is other work to be done when these schemes are completed. It would be a mistake to make up our minds that we have to spread out the period of the operation of these schemes, because when they are finished there will be nothing for the people employed on them to do. The fact remains that there is going to be a great deal else for the people employed on these schemes to do when that work is finished.

Another matter I wish to raise is the position of this country in relation to the Food and Agriculture Organisation. That is an international gathering. I raised this matter on a previous debate here.

An Chathaoirleach

There is a motion on the Order Paper in regard to the same subject and the matter will be discussed on that motion.

Mr. Baxter

But that does not prevent me from speaking on it.

An Chathaoirleach

You are anticipating the motion, Senator. It would be more properly raised on the motion.

Mr. Baxter

But when will the motion come up?

An Chathaoirleach

Perhaps this afternoon: I really cannot say, but it is a motion on to-day's Order Paper.

Mr. Baxter

Very well, then. I did not notice that but I am raising this matter particularly now because the Minister will recollect that on the previous Finance Bill I put this matter before the House and I pressed the Minister on that particular occasion. I did not press him for a statement, of course, because I realised that at that stage there were certain difficulties.

An Chathaoirleach

It would be anticipating the debate on the motion to refer further to that now.

Mr. Baxter

If that be so, then I will pass from it. There is a final point I want to make. From this document on national income, the general impression conveyed is that things are far and away much better in agriculture than they were a few years ago. Judged by money standards it is true that farm incomes are higher, but neither from the point of view of productivity, improvement in technique or betterment in capital equipment or resources—in none of these can we show an improvement. In not one particular can we declare that we are better prepared to meet the demands of the future than we were pre-war. Outside this island, however, that is not the story that has to be told. Certainly in Britain and in the north of Ireland they are far in advance of us in improving the condition of their soil and in the servicing they have provided for themselves all during the war. In a dozen things that are essential to progress these people have gone ahead of us and we have got to make up our minds that we are either going to keep up with them or fall behind. That is going to demand considerable expenditure of intellect, of capital and of energy. I hope that the Minister in his approach to our agricultural problems will show some better appreciation of that fact than is evidenced in the speech of his colleague, the Minister for Agriculture. One of the disadvantages we labour under in this House is that we are not able to have the Minister concerned here to say these things to.

I can only confess to very considerable disappointment at the lack of initiative that has been revealed in Government policy regarding our future, agriculturally. Unless the Minister for Finance is prepared to go out and indicate something of the aggressive spirit in backing up agriculture which other Ministers are displaying in their various fields I greatly fear that agriculture in this country is not going to be able to meet the future with the vigour, independence and courage which is necessary if we are going to stand against world competition in the future years.

Mr. McGee

Somebody wanted to know if I would take a half an hour to make my speech, and I would like to say that I will not take that long. I would like the Minister to know how relieved public bodies are by the present Finance Bill because of the encouragement it gives us. The Minister said something about the reliefs only applying for this year and next year, but I would hope that these limits which the Minister has mentioned are only limits in words and that he really did not mean them. We all must appreciate the remission of taxes which he has granted. There is just one tax with which both political Parties that we have had experience of up to the present have been concerned and to which I would direct his attention to to-day. I intend, on the Committee Stage, to move an amendment asking the Minister and the House to remits the duty on travelling shops. It was imposed, I think, in the year 1926 or 1927. Reading the debates that took place at the time any one interested in the rural community must say that it was unfortunate that such a duty was ever imposed. In 1938, when the duty of £10 on these travelling shops was doubled, it practically finished them. This hardship on the rural community could be relieved at very little cost to the State.

Those of us who are familiar with rural conditions are well aware that these travelling shops served the very poorest section of our people. They were of great benefit to those living in remote areas. Since 1938 it has been almost impossible to get delivery of goods from vans owned by shopkeepers down the lanes on which so many thousands of our best families live. Those people rightly contend that they contribute their share to all State services. One can easily imagine how hard it is on a ploughman to have to walk home three miles in the evening after a hard day's work, and of the further hardship that is imposed on him, on his family and people like him, when they are denied the convenience which was supplied by these travelling shops. People in remote areas are suffering greatly through the operation of this tax. Senators can imagine what hardships are imposed on the mother of a family as well as on farmers engaged in the production of milk, and on farmers who are carrying on stud farms. I think that, instead of having this tax, the Minister should grant a bounty so that there would be competition between these travelling shops. The owners of them were of as good a class as one could find in Grafton Street.

This tax was first imposed by one political Party and doubled by another political Party. I hope the time has come when it will be abolished by all Parties, so that suitable provision may be made for meeting the convenience of our people who live in remote areas. We see that certain organisations have been interviewing the Minister of Agriculture and other Ministers urging that taxes of various kinds should be kept on. The Minister for Finance knows well—it is his own constituency—the areas that I am speaking for. He must know, too, the effect which this tax is having on the people. He knows, too, of the money which the packers in South Armagh were able to make when they were free to operate in another country. I hope, therefore, that he will be able to wipe out this tax. If he does it will give encouragement to the people in our rural areas to continue the good work which they are doing.

Mr. Summerfield

Senator Douglas, in the course of his speech, covered so much ground that I have no intention of going over again the points that he made. I feel, however, that it is due from me to say that, in the opinion of industrialists generally, the Minister has shown that courage and that vision which, in the latter part of his speech, Senator Baxter denied that the Minister possessed. The reduction in income tax will, of course, give a decided fillip not merely to manufacturing industry but to industry in general. The sentence of death on the excess profits tax will, in itself, be a further stimulus to that industrial expansion which is necessary if we are to get back to a decent, healthy and economic life.

One of the features in the Finance Bill which, I think, will prove of great importance is the provision relating to the establishment of a customs-free airport at Rineanna. I think that our heartiest congratulations are due to those who had the foresight and the vision to make a start at Rineanna at a time when no one could have prophesied that it would occupy the important place which it does in the world to-day. That airport is, as I may say, only in its infancy, but I am firmly convinced that it is bound to extend to a most extraordinary degree, now that customs-free facilities are going to be afforded there. Before the war, customs-free ports for shipping proved their worth throughout the world. One example was that at Antwerp from which goods radiated all over the Continent. I hope that airborne goods are now going to radiate from Rineanna to all parts of the Continent, with consequent benefit to this State. The provisions in the Bill which propose to give tax remissions for scientific research and for mining development must commend themselves to everybody. They are a tribute to the way in which the Minister is facing up to his problems.

I should like, without going into details, to emphasise the appeal that was made to the Minister by Senator Douglas to look into the whole question of subsidiary companies and corporation profits tax. The Minister will have had before him the detailed statements on that which have been prepared by the Federation of Irish Manufacturers and the Chambers of Commerce. In these statements the position has been analysed in an exhaustive way. Without dealing further with that matter, I hope the Minister will see his way to take up some of the suggestions which have been made to him.

At this point, I think I am quite in order in referring to what Senator Baxter said in the concluding portion of his speech. I am sorry, by the way, that the Senator has left the House. The Senator informed the House in his eloquent appeal for further help for agriculture generally, that agriculture was neither better equipped nor had it, perhaps, a better technique, nor was it better prepared than it was before the war. I would like to refer him to a speech which he made in the House within the last two or three weeks when he was good enough to give manufacturing industry a lecture on the need for efficiency. He even questioned whether agriculture itself could afford the industrial development that we have seen in recent times. He tried to draw comparisons between agriculture and industry. On this Finance Bill one can say that all citizens hope that the inevitable burdens of taxation will be borne equitably as between the different sections in our community. Quite a considerable number of industrialists who were so badly hit in recent years look with envy on the apparent affluence of their agricultural friends. I would, again, stress the appeal made by Senator Douglas that there must be room for an immediate revision of our income-tax laws to see whether, in fact, the much criticised farmer is, according to to-day's order of things, bearing an equitable share of the taxation that all of us have to bear. The industrialist gets quite readily into the forms of assessment which apply to industry, but it cannot be said in the same positive way that the same applies to the successful farmer.

Mr. M. Hayes

Of course there are no successful farmers ex hypothesi.

Mr. Summerfield

All one can say of the farmer is that he occupies a rather unique position. He is the only person in the community who has an assured market for everything that he has to sell; he has a guaranteed price for most of his commodities, and there are his undisclosed profits. I shall leave the matter there. I think that the Minister is to be congratulated on the Bill that he has brought before us. I hope that the proposals set out in it are a happy augury of the still further reliefs that he will be able to give next year, and that these will be more realistic and more in tune with Irish needs.

Professor Johnston

I have not much to say on this Bill, but I would like to begin by observing that I recognise that the Minister has the defects of his qualities. He has also the qualities of his defects. I would like also to say that I received this Budget of his and this Finance Bill with, on the whole, admiration and agreeable surprise. I think it displays a certain amount of constructive imagination and practical realism that perhaps was not so evident in former Budget statements.

On a former occasion, I think the Minister accused me of having made no practical suggestions. I would like to think that any practical suggestions I made would be received by the Minister with respect, even if he would not guarantee to carry them out, but in connection with this particular Bill, I do not think that practical suggestions are called for to any extent. When it comes to the Appropriation Bill, I may have certain practical suggestions to make which I am sure will be given every possible consideration.

Rightly and naturally, this Finance Bill takes advantage of the present persistently cheap money policy from which we as a country are able to benefit, and I certainly applaud any action on the part of the Minister which contributes to the diminution of the burden on the taxpayer or one which at all events, does not unduly increase it, while at the same time securing for the State additional capital for every necessary development. But, at the same time, we must remember that this cheap money is not an Irish invention. It is essentially an American and British policy and there are certain aspects of it that are by no means an unmixed blessing to this country. They may possibly turn out to be a not unmixed blessing to Britain, and America too.

However, so long as the cheap money era lasts I would like to give the Minister a practical suggestion. That suggestion is to borrow while the borrowing is good, and to borrow even more money than he can see an opportunity of spending at the present time, because my guess is that there may come another time, not many years hence, when the whole system of things built on this shaky foundation of artificially cheap money may come clattering down and we may go back again to where we were. My guess is that even America is heading for dangerous inflationary intoxication.

Cheap money is a grand thing from the point of view of the Minister for Finance and from the point of view of the taxpayer, but from the point of view of the country as a whole, we must remember that we are a capitalist country, and that, in proportion to our population, we are the greatest creditor country in the world, which means that we have hundreds of millions invested in foreign parts, and cheaper money means that we get a mighty poor return on the great bulk of our foreign investments. So, from that point of view, a cheap money policy is not an Irish policy and is not a policy which brings the greatest income to the Irish people.

Of course, a great many patriots would desire repatriation of our investments to use them in the development of our own industrial resources. In normal circumstances, I would applaud a policy which would have the effect of repatriating a considerable portion of those investments, but while they must remain invested abroad, it is not unnatural that the rate of profit which they bring in to our citizens should be as low as it now is.

Private individuals are losing income in consequence of that policy of cheap money and that foreign invention of cheap money will also have its repercussions on the banking system of this country. It is important to the banking system, as well as it is important to the individual. These repercussions of the cheap money situation are not going to be too good either from the point of view of the banking system, or from the point of view of would-be private borrowers from our banking system, whether they are merely private individuals or industrial borrowers.

Our banks at the present time, are getting next to nothing in respect of their investments abroad, especially in respect of their short term investments abroad. The rate they can get on their stock exchange holdings of securities has gone down and down and down. Consequently, however much they may want to reduce their rates of charge, they would find it difficult to reduce them to private borrowers, with the present volume of credit-worthy borrowers, because those private borrowers have become almost their only worth while source of income—at least so far as the Irish banks are concerned.

Consequently we may see the total net profits of the banking system vanishing day by day into thin air. The British Government are pursuing a policy of cheap money, but cheap money for the public borrower means dearer money for the private borrower, or alternatively, the disappearance of banking profits which would shake confidence in the credit and stability of our banking system, and lead the country almost to disaster.

All this modern theory of cheap money with a view to capital development, originated a decade and a half ago in the fertile brain of the late Lord Keynes, who developed the theory that with a given propensity for consumption you could do pretty well within wide limits what you liked with the long term rate of interest, and the lower the rate of interest became the greater would be the volume of real investment and the greater, automatically, would become the total of monetary savings. That theory, in those times, had a lot to recommend it, and was perhaps a sensible view of the facts in the 30's when the world was full of unwanted goods and unemployment was rife in almost every part of the world and there appeared to be no scarcity of anything. At that time it appeared in substance to be a sensible policy. There seemed to be a need for discouraging over-saving and encouraging the increase of capital goods.

The tragedy of economists is that they develop theories for one set of circumstances, social and economic, which are thoroughly appropriate to those circumstances, but by the time they penetrate the minds of politicians and Governments, the chances are that those circumstances have become completely different, with the result that what originally might have been a tonic to the economic body becomes a toxin when it is finally adopted by Governments. It may assume even the character of deadly poison when it is put into effect, and I think that something like that may have happened about over-saving and cheap money. It is now persisting into an era in which cheap money has ceased to be natural and cannot be maintained except by rigid controls, which, if broken down, would lead to the most disastrous consequences everywhere. There is one practical point to which I should like to draw the Minister's attention. Reducing the rate of interest on post office savings and trustee savings bank accounts is a positive invitation to depositors in those institutions to spend their money rather than save it. It is a positive discouragement of thrift. Do we want to discourage those people from saving a few hundred pounds and getting a reasonable return on their money? I understand that we are now about to reduce the rate of interest on post office saving accounts below the level which the British still maintain for their post office deposits in their area. If that be so, one of two things will happen: either our depositors will transfer their accounts to post offices and other institutions in the United Kingdom area or they will not save to the extent they formerly did. You will, therefore, encourage them to spend, with consequent accentuation of existing inflationary tendencies.

An aspect of this cheap money business is that the British Government and the banking system, between them, must take steps to prevent any serious depreciation in long-term Government securities. If the public, for their own reasons, started a selling movement in respect of British 3 per cent., or whatever may be the characteristic long-term stock, and nothing else happened, the stock exchange value of these 3 per cents. would depreciate and up would go the yield on investments in these long-term securities.

Bang would go the cheap money policy. To prevent that happening, if any disposition is shown by the private holders of these stocks to sell them, the banking system has to step in and buy and buy so long as may be necessary to maintain the stock exchange value of these securities at or near their par value, which means that, from the point of view of the private holder of even long-term securities, that amount of money may be treated as the equivalent of cash. He knows that he can turn it into cash at almost its par value at any time he likes, simply because the banking system and the British Government, between them, cannot allow the value of the security to fall much below its par value. The result is that almost the whole of the £20,000,000,000 of the British National Debt may be regarded as the equivalent of ready purchasing power. At any time the holders of that debt, whether in the form of long-term or short-term securities, might elect to turn that money into goods—which are not there. If they did, the inflationary effect would be terrific. The State simply cannot tolerate the idea of that being allowed to happen and they maintain, in peace time, the war-time control on the price of goods, on exchange relationships between different currencies, on the capital market, and rationing, until, in the end, our alleged free economy continues to be shackled by all the restrictions which were so common in war time and from which there seems no immediate prospect they will ever escape. Is it worth while, for the sake of borrowing money for the State at 2¾ per cent., instead of 3½ per cent., to maintain all these restrictions and pile up all these continuing inflationary dangers? I readily admit that the Government here are in nowise responsible for the situation which has been created for us and all the world. I think that they are quite right in profiting by it, so far as they can profit by it in the national interest, but they should also recognise its essential artificiality and be prepared to adjust their policy to the situation that may exist if and when the cheap money policy comes to an end and to recognise that, should slightly dearer money come about in the near future, there might be a lot to be said in its favour from the point of view of our national interest.

Mr. Duffy

Certain features of the policy enshrined in this Bill, which are very commendable, have not received in this House the recognition which, in my opinion, they deserve. The Minister is to be congratulated very heartily on the steps he has taken to reduce the rate of interest at which money will be made available to the local authorities. That action will have very far-reaching consequences outside the immediate interest of the local authorities themselves. It will have the effect of bringing down rents very materially. If a local authority is to embark on a large housing scheme, it will be a matter of tremendous importance whether it can get money at 2½ per cent. or at 5 per cent. I understand that one of the last contracts entered into by the Dublin Corporation for the building of houses in the Cabra area would normally involve the payment of a rent of 20/- per week if an economic rent were charged. It is hardly necessary to remind the House that the average Dublin workman, for whom these houses are designed, could not afford to pay 20/- per week in rent. That fact is recognised by the State and by the local authorities. Consequently, we have housing subsidies from taxation and from rates, the effect of which is to bring down the rent to, I think, 13/- a week in the case I have mentioned, the difference of 7/- per week being met out of rates and taxes.

In making a calculation as to what is involved in the rate of interest, it might be worth while to point out that, if we disregarded the cost of the service of money, the economic rent of one of these Cabra houses would be 10/6 per week, the balance being the contribution we make to the moneylenders to provide us with credit to enable the citizens of Dublin to provide their own houses through the local authorities. It is, therefore, most gratifying to find that the Minister will make money available for the needs of the local authorities at 2½ per cent.

Further, the Minister is proposing to borrow money for the State at 2½ per cent. That is a tremendous advantage and is in keeping with what is being done elsewhere. It was always a mystery to me why this State was required to pay considerably greater interest rates for money than the rate at which that money would be lent by the Irish investors to a foreign borrower. I am very glad that the Minister is taking steps to correct that situation, so far as it can be corrected within the limitations placed upon him by the Central Bank Act. In my view, he is going to be hamstrung in those efforts so long as we are required by our own laws, made by this Parliament, to maintain parity with sterling, irrespective of the consequences or regardless of what changes there may be in the fiscal relations between the two countries. I do not desire at the moment to pursue that matter further than to remind the Minister that having taken the bold step he has taken in regard to interest rates, he ought to examine closely how far his efforts are being frustrated by the shackles placed on our economy when both Houses of the Oireachtas accepted the provisions of the Central Bank Act.

I am afraid that, apart from the steps taken by the Minister to reduce interest rates, there is not much in the scheme outlined in the Budget to suggest that the Minister is using the power he undoubtedly possesses as Minister for Finance to devise an economic policy calculated to raise the standard of life of the whole of the people. For large sections of the people, the standard of living has deteriorated very considerably over the last seven years and is likely to deteriorate further in the absence of a deliberate plan to utilise fully the resources of the country in men and materials.

Under the scheme which is implemented in this Bill, we are proposing to raise in taxation approximately £1,000,000 a week. That in itself is a very considerable sum of money, but it is particularly onerous as a burden on the community, when one has regard to the fact that the physical output of commodities has declined during the war period and that relatively we are poorer in manpower and in productivity than we were, say, ten years ago, when the amount of taxation levied in the State was very little more than half what it is in the present year.

There was an excellent report compiled by the Statistics Branch of the Department of Industry and Commerce and published shortly before the introduction of the Budget this year, under the title of National Income and Expenditure and a perusal of that document will repay anybody who desires to understand the economic tendencies in this State. The main impression that will be derived from that study is the fact that the volume of trade—which represents the consumption, the production and the export of commodities—declined very considerably between 1938 and 1944. For instance, in terms of 1938 prices, imports fell from £41.4 millions in 1938 to £12.8 millions in 1944. Exports fell in the same period from £24.2 millions in 1938 to £13.9 millions in 1944. In both cases, I am endeavouring to relate the export and import figures to 1938 prices. A very extraordinary fact flows from these alterations in the volume of imports and exports—it is that the volume of consumption of goods and services in this State declined by 14 per cent. between 1938 and 1944.

An effort has been made to calculate the manner in which that decline in consumption has expressed itself over the whole field of economic activity. It would appear that in 1944 we consumed £2.3 millions less food than we did in 1938; £5.7 millions less fuel and light; £8,000,000 less clothing; and £11.3 millions less of other goods and services. The total of these figures is £27.3 millions. One can see what effect that decline in consumption will have, not merely at the present time, but in the future, on the community as a whole. There is bound to be more illness, more tuberculosis and more demands for money for the social services, because of that decline in the consumption of goods and because of that decrease in the use of clothing.

Following from the figures which I have given, one turns to the figure of unemployment which I think is the acid test of the success or failure of an economic policy. Here, in this country where so much remains to be done, in a country in which it is calculated that we need to spend £100,000,000 to £150,000,000 in the rehabilitation of agriculture, we have 60,000 or 70,000 people unemployed, and that in the most favourable circumstances.

According to the published figures, 195,000 people were issued with exit permits, work permits, to leave this country to produce wealth elsewhere between 1939 and 1944. I think there has been some discussion and debate in relation to the net figure of emigration, and I do not want to deal with that. It is sufficient to point out that on the published figures the number of work permits issued between September, 1939, and the 31st December, 1944, totalled 195,000, and yet in 1944 of the persons insured under the Unemployment Insurance Acts 11.3 per cent. were unemployed. That, I think, is a very serious situation. It is serious because of the failure to utilise the resources which we have got—men and materials—it is serious because of the burden it imposes on the community in respect of social services.

When we complain, for instance, that the country is burdened with taxation amounting to £1,000,000 a week, we will be reminded, no doubt, that a great deal of that burden is due to the provision made by the Government for the poor and generally for the improvement of the social services. My reply to that is that we require to spend these vast sums on social services, on hospitals, on medicines, on unemployment insurance, on public assistance and on poor relief, because we permit a large number of our people to remain idle and in poverty. Had the Minister outlined in his finance scheme for the coming year a policy which would promote employment for the whole of the work people in the country I think he could safely face, if not this year, at any rate, in the immediate future, a considerable reduction in the amount of money which he will require to provide in his Budget for the social services.

We are building sanatoria because there is an increase in tuberculosis. We are building hospitals because of infirmities of various kinds. We are providing large sums of money to provide vouchers for boots and shoes for people who are unable to clothe themselves; money to give food vouchers to people who would willingly earn their own living and buy their own food and clothing with their own money if they were permitted to earn sufficient wages with which to maintain themselves. Because we neglect to provide them with these resources they need, we fall back on this policy of taxing where we can, taxing the food we eat and the clothes we wear to supply the deficiency.

In order to provide funds for what we call social services and which, in the present year, are costing somewhere between £13,000,000 and £15,000,000 may I remind the House that if we were in a position to provide employment at a proper rate of wages for all these 60,000 people who are now unemployed we would immediately raise the standard of life not merely for the 60,000 but for the whole community. By providing work and wages for these 60,000 people we would leave more money in the pockets of the remainder of the people to buy commodities they need. Not only that. These 60,000 people would produce wealth. They would earn money and they would spend that money in buying commodities and in creating wealth, so that, generally speaking, there would be a considerable increase in the circulation of money and in the demand for food and goods of various kinds. I do not know whether any calculations have been made as to what would be involved in its effect on the national income, for instance, if we were to provide full employment for all our people. It seems to me that the effect would be enormously beneficial. It may be indeed that the national income would be increased by £50,000,000 a year, giving us, thereby, a considerably larger pool from which to draw the taxation we need to maintain the services of the State.

Another matter which arises in the same connection is the policy of the Government in regard to wages and incomes. Most of the Emergency Powers Orders—at least a very large proportion of the Orders which were made under the Emergency Powers Acts—have been, or are about to be repealed and to disappear, but I think the Government still adheres to the belief that we can keep the economy of the country intact only by keeping down wages. Keeping down wages is not an exciting subject to discuss by itself. Let us remember, however, that what we are doing is not merely keeping down the amount of money a man receives at the end of the week, but in fact what we are doing is limiting the quantity of food his family shall eat, and the class and amount of clothes they are going to wear as well as the other amenities they shall enjoy.

Consider, for instance, what is the present position of a Dublin craftsman in relation to his position in 1939. In 1939 he probably had £4 a week in wages and with that amount of money he was able to pay a certain rent for his house. He was able to buy a certain volume of goods for the use of himself and his family. In the interval between 1939 and the present date he may have received an increase of wages amounting to 16/-. Lawfully he cannot receive more than 16/- and actually there is no guarantee that he is going to get 16/- when one of the tribunals sitting under the Emergency Powers Act authorises that increase. In many cases he is still obliged to fight for it. Let us assume, however, that in fact all Dublin craftsmen were permitted an increase of 16/- a week and have, in fact, received it. This workman has now £4 16s. 0d. a week with which to buy commodities which, if they are the same commodities which he bought in 1939, will cost him £6 16s. 0d. per week; obviously he cannot buy the same quantity of such goods which he bought in 1939 and he has, therefore, a lower standard of living.

To put it another way. The index of the cost of living increased 71 per cent. between 1939 and 1946, but in that period wages in the building trades increased by 15.2 per cent.; for factory workers the increase was 24.3 per cent.; for transport workers 31.8 per cent. and for agricultural workers 47.7 per cent. The agricultural worker, as Senators will have observed, has received a substantially larger increase in his wages than the other classes of workers I have mentioned. That, of course, is due to the fact that in 1939 the agricultural rate was disgracefully low. A modest increase on that rate shows a considerable percentage increase. Senators will observe, of course, that 16/- a week on 24/- represents, as a percentage, a very much larger increase than would 16/- on £5 a week.

Another aspect of that matter to which I have referred is the deterioration in the proportion of the national income which reaches wage earners and salary earners. In 1938, wages and salaries accounted for 44.4 per cent. of the national income. In 1944 that proportion had fallen to 34.5 per cent. There is, therefore, abundant evidence that, because of the wages and taxation policy of the Government and of general economic trends, those who live by earning wages and salaries are getting a considerably smaller part of the total national income than they were getting eight years ago. After all, the national income is not some mere mechanical device for assessing wealth and poverty. As I understand it, national income means the volume of goods produced and consumed in a community. You do not add anything to the national income if you cut a turf bank and merely build up the turf on the roadside. If you leave the turf there in ricks it will fall into mould. You only increase the national income when you have produced the goods and permit the community to consume them. One of the things we are doing very skilfully is preventing the poorer sections of the community from consuming even their accustomed proportion of the national income.

I have said already that this is partly accounted for by the tendency in legislation, and the tendency of the Government's financial policy. For instance, take this position in regard to the incidence of taxation. 56 per cent. of the tax revenue of the State is derived from indirect taxation—the taxation levied on goods and services —while 44 per cent. comes from direct taxation. If I remember correctly, the position is completely reversed in Great Britain. I think that, roughly, 70 per cent. of British tax revenue comes from direct taxation, and only 30 per cent. from indirect taxation. Consequently, we have this position that the rich in this country are becoming richer, and, if we are that way inclined, we may applaud ourselves on the fact that they are becoming a bit more numerous, too. In the financial year 1939-40, 3,000 persons had incomes ranging from £1,500 to £10,000 per year upwards. Now, despite the war and the conditions brought about by the emergency, we find that for the financial year 1943-44 the number increased to 3,450, so that during the war, when people were leaving this country in thousands to obtain work in munition factories in Britain, there was an increase of 450 in the number of people with incomes exceeding £1,500 a year. The total income drawn by the 3,000 persons, to whom I have referred, for the financial year 1939-40 was £9,879,606.

The total income drawn by the 3,450 persons for the financial year 1943-44 was £10,966,617. Therefore, while the number of rich persons increased by 450 in these years, their total income increased by £1,087,011. The average yearly income for the 3,450 persons was £3,178, or just over £60 a week. On the top of the income scale, it is interesting to note, there were for the financial year 1943-44, 84 persons with incomes of £10,000 a year or over. That represents an increase of five from the period 1939-40. These 84 persons divided between them a total sum of £1,533,369, or an average of £18,254 each, or, expressed in another way, an average of £351 each per week.

How did poorer people fare? It is hardly necessary to recall the conditions under which the unemployed, the destitute, the sick, the infirm and those suffering from disease are living. Every year new proposals are introduced to spend additional money on social services, simply because it is recognised by the State that the conditions under which the submerged classes are living are becoming so desperate that they cannot be ignored.

Senator Douglas mentioned that those engaged in trade and manufacturing industries had increased their profits very substantially. One of the things that has occurred to me is that anybody in a position to engage in trade during the war years—during that period which we called the emergency—was able to make profits, to make a fortune that would have gladened the heart of the worst black marketeer in the world.

I looked into one transaction which will enable the House to appreciate how these profits accumulated. I took the component parts of a child's frock which was sold for 25/6 and investigated how it came to reach that figure. I discovered that the cost of the material, which was imported, was 5/-, and that there was a tax or import duty of 1/, making the price of the material to the manufacturer 6/-. Now, the firm that imported that material—an ordinary retail firm in Dublin—sold it to a manufacturer for 9/-, having added 50 per cent. profit, as he was entitled to do under the Emergency Powers Order made by the State.

He sold the cloth to a manufacturer who was to turn out the child's frock. The manufacturer paid in wages, and this includes insurance and all other charges that go with wages, a sum of 5/-. Therefore, the price to him, the manufacturer, was 14/-; he added a profit of 3/- and sold the frock to a Dublin retail shop at 17/-. The retail profit permitted on 17/- was 50 per cent. or 8/6 and that frock made of South American material was sold in Dublin for 25/6.

Let us analyse the figures. The cloth cost 5/-. The wages paid to make it available for wear were 5/- more, and there was a tax or import duty of 1/-. But the cost of distribution was 14/6 out of 25/6. That profit, of course, is reflected in the published reports of the principal houses in this country, those which publish financial reports, or reports of shareholders' meetings, showing clearly that during a period of emergency, during a period of stress, these exorbitant profits were being extracted from the public.

This was happening during a period of stress, when 195,000 persons sought work permits to leave this country; those who were simply handling goods to the extent I have mentioned were permitted to make enormous profits. I am informed that the case I have quoted is not an extreme case, that there have been much higher profits made in many branches of business.

I commend these matters to the Minister because I have no doubt that he is as perturbed as any member of the House about what conditions are likely to be when prices begin to fall and when goods will be available on foreign markets which may be purchased here at prices lower than they can be produced now. After the last war, there was an onset of deflation which threw thousands of people out of work, which closed factories and which injured industries to an extent from which some of them have never recovered.

I do not know whether the Minister has in mind methods and plans and policies for dealing with this situation, should it arise, as it will probably arise, again. If he has these plans and policies and programmes I think he should tell the public what they are like, and indicate the measures which will be taken in the event of a similar onset in anything approaching the proportion which developed at the end of the last war.

My own view is that there are two courses open to the Minister, and I would urge him to consider the submissions I am making. One is so to set the State machine in motion to ensure that there will be full employment for the whole of our community and that it will not be provided at the kind of wages that are paid to those employed on relief works. There should be good wages, wages adequate to maintain a man and his family in reasonable comfort.

There is no use in saying that this country cannot afford a higher standard of living for its workers. It can afford a higher standard of living if we organise our resources properly. We must face up to the problem that one of our chief evils and obstacles is low wages. We have yet to see the country in which low wages created prosperity. No country has ever had extensive poverty for the masses of the people through maintaining a high wages policy. It is in countries with low wage policies, countries in which incomes are kept down, in which we see the extremes of poverty and distress, if not hunger. I think the Minister recognises the problem. I think he probably feels—he should feel—that we must overcome the difficulties which are likely to arise during the next three or four years.

The second matter to which I would direct his attention—I want to refer to it briefly again—is the problem which confronts us because of our tie-up with the British monetary system. So long as the Bank of England, whether in private ownership, or as it is now, in State ownership, can determine the value of our pound, can determine the number of pounds which will flow into our economy, the Minister's best efforts will be frustrated because he has no control over the volume of currency and therefore over the purchasing power of our people.

Mrs. Concannon

Senator Duffy, like the fat boy in Charles Dickens, has made our flesh creep with the gloomy picture he has painted. After that it is a relief to turn to the Finance Bill and to find it very much more cheerful in regard to the country and its prospects.

That view has been emphasised by nearly all those competent to speak with knowledge on both sides of the House. I do not propose to say much more than that we ought to thank God fervently that, after six years of disastrous war which has left so many nations in ruins, the Minister is in a position to give us the reliefs which he proposes in this Budget and that we can, with some hope, plan for a better and brighter future.

I propose to refer to only a few points in which I am interested. One of those is the reduction of the rate of interest on Post Office Savings Bank deposits. To make cheap money available to the public authorities and, therefore, to give us cheaper houses, the Minister may have thought that step necessary. A large amount of the money which will be lent to the public authorities may be drawn from the Post Office Savings Bank but, in a way, I think it is a pity that this reduction of interest should have to be made. It is very important to teach our people habits of thrift and it is through the savings bank our people learn those habits. That is a very valuable thing and one which I should not like to jeopardise. The savings of these depositors are counted in £'s and 6d. in the £ means a great deal compared with 4 4/5d. in the £. It is a pity that it should have to be done but I recognise that, if we desire to give the local authorities cheap money wherewith to build houses, it may be necessary. It is very important that houses should be built at such cost as will permit of their being let at a reasonable rent. The burden of rent on young people is terrific and it is discouraging marriage. That is one of the reasons why I feel that it is very important that the money made available for housing should carry such a rate of interest as would not be an undue burden on the community.

Senator Duffy has referred at great length to expenditure on the social services. He seemed to draw the conclusion that the rising expenditure is caused by rising needs. That may not necessarily be the case. I think that it is due to the fact that our social conscience is more sensitive than it used to be. In olden times, if people were sick or unemployed, except for aid from private charity, not much could be done about it. Private charity expanded and the community became conscious of its duty to its poorer brethren. That is why we have a larger expenditure on social services than we had. The Senator referred to the great burden of taxation —£1,000,000 a week. He should reflect that it is a good thing that all that money, with the exception of about £3,000,000 which goes to the relief of distress in Europe, circulates in our own country. These are things which we must bear in mind when we are trying to get a true picture of the financial and economic position of the country.

A question arises: Why did the Minister remit the duty on dances? I cannot see very much reason for the remission. The people who attend dances would not mind paying a little extra and that money could be usefully devoted to the relief of the distress which still exists, despite the efforts of the Minister and those who have charge of our social services. People should not be encouraged to go to too many dances. Excessive dancing is not good for our people. Perhaps the Minister had a good reason for remitting that tax. If so, I do not think that he has disclosed it.

Mr. M.J. Ryan

I do not intend to speak at length on this Bill, but there is one matter to which I should like to call attention. The Bill does not contain—as I expected it might contain—some provision for the relief of double taxation in respect of estate duty payable here and federal estate tax payable in the United States in respect of persons who may have been domiciled there, or here, and who had property in both countries. In 1923, a committee was set up by the League of Nations, which included the late Lord Stamp, representing Great Britain, and some continental professors, to make a report on the incidence of double taxation throughout the world. A very comprehensive report was made and, as a result, a number of conventions have been concluded between different countries for the relief of double taxation.

That double taxation may relate to income-tax or to death duties. As between this country and Great Britain, we have what might be called treaties or conventions for the relief of double taxation in respect of income-tax and death duties, including estate duty, succession duty and legacy duty. We have no convention, so far as I am aware, with any other country. A convention for the avoidance of double taxation in respect of income-tax with the U.S. is not as important, from the point of view of this country, as a convention for the avoidance of double taxation on the estates of deceased persons. Income-tax is ephemeral and may vary from year to year and the persons liable for double taxation in the U.S. and this country are, as a rule, wealthy. In my opinion, the double taxation which at present prevails in respect of the estates of deceased persons who die in this country or in the U.S. presses very hard on the citizens of this country. While our emigrants who go to the U.S. prosper, they do not leave millions. Their estates may be reckoned in hundreds or, perhaps, thousands of pounds. They leave next-of-kin in this country who are generally members of large families. When the estates are divided up, very little is left for each member of the family who succeeds either on intestacy or under the will of the deceased person.

As a result of the efforts of the League of Nations, a number of conventions were concluded between different countries for the relief of double taxation in respect of death duties. As far as I am aware, at least 36 were concluded. On the 16th April, 1945, a convention was signed in Washington on behalf of the United Kingdom of Great Britain and Northern Ireland of the one part and the Government of the United States of the other part, for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on the estates of deceased persons. That convention has been published by the Stationery Office, London, as a White Paper, Command Number 6625, 1945. As a result of that convention estate duty will be payable only in respect of the property where it is located, notwithstanding where the person may die domiciled. That, of course, is in accordance with the principle of taxation, that a country is entitled to levy tax only on goods and assets within its territory.

I am of opinion that there is a case to be made for a convention between this country and the U.S.A. for the relief of double taxation on the estates of deceased persons. We hear a lot at the present time about conventions, in regard to air traffic and many other things, conventions in Montreal to-day, in Dublin to-morrow and in London the day after. In fact, we have now become convention-minded. This convention signed in Washington applies to Northern Ireland. As Article IX says:—

"The present convention shall apply in respect to the estate duty imposed in Northern Ireland as it applies in relation to the estate duty imposed in Great Britain...."

Therefore, our fellow-countrymen in the north of this island get the benefit of that convention, while we in the south, who have many relations in the United States, are still suffering under the burden of double taxation.

In order that lay people may understand what double taxation in respect of estate duty means, it is laid down here that, in the case of movable property, estate duty must be paid in the country of domicile of the person, no matter where that movable property may be situated. If a person should die in the United States, having $10,000 in the bank there, and £100 in cash in the bank in this country, he will have to pay in America federal estate tax on his $10,000 at whatever the rate may be, and will have to pay in this country estate duty on the same money—that is, if he is domiciled here.

The estate duty authorities will fight to the death to say that a man who left this country 40 years ago and had £100 in the bank here before he died was domiciled in this country. That has been the case over and over again. Of course, the revenue authorities always make the contention that will bring grist to the revenue mill. Every man born has a domicile of origin; he may change or lose it by acquiring a domicile of choice. Very many of our men and women who go to America may intend to return some time, but in the end they become American citizens, swearing allegiance to the United States, and decide to remain there. I know cases where people have sworn allegiance to the United States and were citizens of the United States for 30 or 40 years, and when they died, with money both here and in the United States, the estate duty authorities claimed that those people were still domiciled in this country. As a result, both the Government of the United States and the Government of this country are exacting double death duties on comparatively small estates. The people who suffer are the not-too-well-off-people in this country who are the next of kin and relations of the person who dies in the United States.

It should be the duty of this Government to take the necessary steps to approach the Government of the United States for a convention for the avoidance of double taxation on the estates of deceased persons, in the same manner as the Government of Great Britain approached the United States or vice versa. If the proper steps are taken, I think such a convention would be arranged. The path has been made smooth by the convention entered into by Great Britain just a little over a year ago. I urge the Minister to investigate this matter, as it is now ripe for investigation and solution.

In conclusion, if I may descend from the sublime to the ridiculous, I do not quite agree with Senator Mrs. Concannon that there are too many dances or that dancing is not good for people. Apparently, the collection of the tax on dancing was not a profitable matter and I am sure it was dropped, not because of any desire of the Government to make dancing more popular but because the cost of collection was so high and the opportunities of evasion so great that it became a worthless task. In dropping the tax, the Government was losing nothing and certainly gained a lot of credit from the bright young things in this country.

Business suspended at 6 p.m. and resumed at 7 p.m.

Mr. Kingsmill Moore

There is one section of this Bill which interests me as a lawyer, namely, Section 27, to which the Minister has referred as a section merely giving modern dress to a well-known figure. Now, that may be literally a correct remark but it is at the same time a very profoundly misleading one. I do not like the section and it is necessary that the Seanad should understand what is done.

The provisions of this section are shortly as follows: If a man is sued by the Revenue Commissioners for the recovery of any tax or duty or any fine, penalty or forfeiture and the court finds against him, the court is bound by this section to draw up an order in the form which is set out in the schedule which you will find on page 20. To make a long story short, that schedule tells the sheriff: "Go into this man's house and see if there are any goods you can find and seize in order to satisfy the amount of the debt." So far there is no objection. But it also tells the sheriff: "If you cannot find any goods take this man by the back of the neck and hand him over to the nearest inspector of the Guards." The inspector of the Guards has then to take his hold on the back of the man's neck and take the man to the nearest prison where he has to stay for six months or till the debt is paid. That is a very compendious statement of what the order requires. There is no intervention of the court to protect the genuinely impecunious debtor.

It does happen that a man may find himself owing a considerable amount of income-tax in respect of profits made the year before, but in the meantime his business may have gone down and he may have had unexpected losses. If he is not a business man, if he should be a barrister, let us say, he may have been on the broad of his back all during the year and may have made no money. His wife may have had to undergo a serious operation. He may have had the money the year before but he has not got it then to satisfy the exactions of the revenue. If that man has been subjected to the slings and arrows of outrageous fortune so that he cannot pay the money, he is to be flung into prison simply because he cannot pay it. I say that is an outrageous form of persecution for dealing with that debt. It is to be justified on the ground that it is not a new procedure but is simply giving a modern colour to what is an old procedure.

It is perfectly true that since 1880 we have had a provision whereby the revenue authorities could issue a warrant themselves to put a person into jail. That was re-enacted under the 1918 Income Tax Act but it has always been a dead letter as far as I could make out from inquiries. It once had to be resorted to in Ireland in the case of a man who owed a debt, had the money, and was going to flee the country. The intelligent revenue officer who dealt with that particular arrest took care to see that an account of the proceedings appeared in the evening paper. The officer had a number of prints of that report printed and he showed them to other reluctant people as an example of what had happened to this man in Suffolk Street. As an ingenious procedure in relation to the revenue operations that commands my admiration! There is another method by which a debt may be collected—a writ of levari facias. You will find the procedure set out at great length in the rules of the Supreme Court of 1905. You will also find set out there the procedure in relation to a writ of outlawry and the reversal of such a writ. One procedure is as much out of date as the others. I have made inquiries, not exhaustive inquiries, because unfortunately my time did not allow it but I have been told that so far as officials know there never has been a case in which that procedure of levari facias was operated to put a man in jail since the 1905 rules were drawn up.

I am inclined to think that is probably wrong, but if it be so, there have been very few cases, and it has become, as far as I understand, a dead letter. Now, what we are doing is this. We are providing an up-to-date procedure for a procedure which has become a dead letter. Not only that, but we are stretching it, because by the writ of levari facias there was a return made to the court, and although a man might be temporarily incarcerated while he was being brought before the court, at any rate he was brought rapidly before the court, and the court had a discretion then as to whether or not he would be imprisoned. Now, if there is any meaning at all, according to this form, what happens is that:—

"The Commissioner and officers of the Gárda Síochána are hereby commanded upon the receipt of this order by such Superintendent or other officer with a certificate endorsed thereon signed by the said sheriff, under-sheriff or county registrar to take and convey the said debtor to the nearest prison and there deliver him to the governor of such prison there to remain and to be kept by such governor until satisfaction be made of such debt and costs, or until the expiration of the period of six months, whichever shall be the shorter."

Now, there is no resort to the court. There is, apparently, no option, and the man who cannot pay has to expiate his misfortune by six months in jail. It may be that regulations will be made which will mitigate the severity of this order, but, as far as it goes, there is no alternative. If any Senator thinks that he may suffer misfortune which renders it out of his power to pay his income-tax and is not anxious for a new experience—it will not be a new experience in some cases, because many members of this House have already had a taste of the inside of prison walls, but this time it will be for a debt and not because of political idealism—then, I think he will prick up his ears and inquire of the Minister as to what this provision means.

I have stated that my inquiries as to the actual use of the writ of levari facias have not been so extensive as I would wish them to be. I will inquire again if the Minister so desires before the Committee Stage is reached, but I think I am broadly correct in stating that the writ of levari facias, used for putting a person in jail when he cannot pay without any reference to the court, has, for all practical purposes, been a dead letter for half a century. Instead of a dead letter, you are now going to foster a living viper.

Liam Ó Buachalla

Ós é seo an chéad Bhille Airgeadais a thug an tAire Airgeadais seo isteach chugainn, ní maith liom gan a rá ar an ócáid seo, chomh mór agus atámaid go léir sásta leis an mBille. Ba chóir go rachadh an chabhair atá le fáil faoin mBille-go mór do leas na tíre.

Chuir an Seanadóir Douglas roinnt moltaí ós ár gcomhair, ar son cumann lucht tionnscail. Le cuid mhaith de na moltaí sin tá mé ar aon intinn agus tá súil agam go scrúdóchfar go mion iad agus go ndéanfar rud éigin dá réir.

Is maith liom go háirithe an faoiseamh atá i gceist in Alt a cúig a mholadh. Is céim mhaith ar aghaidh é liúntas éigin a lomháil ar aon airgead a caithtear ar obair thaighde a déantar ar mhaithe le tionnscail na tíre. Go dtí seo is beag, taobh amuigh de na hollscoileanna, atá déanta i gcúrsaí taighde tionnscaldha. Tá súil agam go n-aontóchaidh lucht gnótha iad féin agus scéimeanna rathúla a cheapadh a chuirfeas taighde tionnscaldha chun cinn.

Cuirim an-spéis i mbrí ailt a 28, 29 agus 30 den Bhille. Moladh an tAire as ucht a bhfuil déanta aige le rátaí úis a chur i n-oireamhaint don tsaol atá anois ann. Tá súil agam go mbeidh ar chumas an Aire go luath ceist na n-iasachtaí atá ag na húdaráis poiblí le fada a scrúdú go mion agus más féidir dó é cead a thabhairt dhóibh na hiasachtaí seo a aisíoc agus iasachtaí nua d'fháil ar rataí fabhracha úis.

Ba mhaith an rud é cead bheith ag na Coisdí Gairm-oideachais go mórmhór an muirear trom atá ortha, de bhárr úis ar a gcuid iasachtaí, a laghdú. Tá tórainn le ioncam na gCoisdí seo, is obair mhór náisiúnta í an obair atá ar bun acu 'na gcuid scoileanna. Ar na hábhair sin is Coisdí iad seo go mba chóir, chomh luath agus is féidir é, an deis a thabhairt dóibh an fiacha a bhíos ortha ar scáth úis a laghdú.

Is seift an-mhaith é an ceann tá i gceist in ailt a 30, an Cisde Oigearteach nó transition fund atá mé a rá. Is iomdha beart atá déanta ag an Rialtas seo d'fhonn tighthe a sholáthar don phobal. Is dóigh liom gurb é bunú an Chiste seo ceann de na nithe is fearr dá ndearna fós le teacht ar an scéal sin. Cuirfear in áirithe faoi nach mbeidh aon stop ar obair na dtithe cheal airgid nó de bhárr deachrachtaí ó thaobh luachánna.

Tá poinnte eile ar mhaith liom tagairt do dhéanamh dhó. Ní hé seo an ócáid lena phlé go mion ach ni féidir liom gan a chur in iúl don Aire chomh mór agus atá muintir na Gaeltachta féin, agus gach duine sa tír a bhfuil spéis aige in obair na Gaeilge, buíoch de as ucht deontais na Gaeilge da mhéadú ó £2 go £5. Is fianaise é seo gur mian leis an Rialtas an Ghaeilge a shábháil chomh fada agus is féidir le hairgead é dhéanamh. Támuid ar fad ar aon intinn leis an Aire nach leor é, áfach, ach go gcaithfimid féachaint le slí bheatha rathúil a fháil dos na Gaeilgeoirí. Tá súil agam go bhfuighidh an tAire an chabhair chuige sin a d'iarr sé nuair a bhí sé ag trácht ar an gceist sa Dáil.

Tá aon rud amháin eile le rá agam sul a n-éirighim as. Rinneadh tagairt cúpla uair tráthnóna don Cháin Siamsa a bheith a cur ar cheal. Chuir an Seanadóir Ua Choincheannain ina choinne sin. Is duine í a bhfuil meas mór againn ar a tuairmí. Is beag duine a thuigeann scéal na tuaithe nó scéal an bhaile mhór chomh maith agus a thuigeann sise, ach i dtaobh an phoinnte seo, caithfidh mé a rá nach bhfuil mé ar aon intinn léi beag ná mór. Dá dtuigeadh sí an chluanuíocht agus an chleasaíocht a bhí ar bun ag daoine i dtaobh na cánach seo, ní bheadh an dara tuairim aici ina taobh. Bhí baint agam fhéin le siamsaí agus le cumann a bhí i mbun siamsaí agus ní mór dom a admháil gur beag ní is mó a chuir áthas orm le fada chomh mór agus a chur an socrú seo faoi cháin siamsaí a ligint ar lár. Má theastuigheann aon fhianaise ó aon duine ar an dochar a bhí á dhéanamh de bhárr na cánach seo níl le déanamh aige ach dul go dtí teach custaim ar bith sa tír agus gheobhfar an fhianaise sin go tréan ann. Gheobhfar é i dteach custaim na Gaillimhe ar aon nós.

Sir John Keane

I am afraid I had not the opportunity of listening to the greater part of the debate this afternoon, but I did hear the end of Senator Duffy's speech and I was very much puzzled by it, because what appears to worry the Senator is the occurrence of a deflation similar to what followed the last war. I think he is rather unique in fearing that, because every authority on this subject fears just the opposite, that is, inflation, and in the course of my remarks I propose to direct the Minister's attention to the dangers in that respect and to ask him what steps he proposes to take to counter that very real danger of inflation.

Incidentally, Senator Duffy trotted out the old, weary shibboleth about our being under the control of the Bank of England. I thought that had long since died a natural death. I agree that in our association with sterling there is a danger of inflation —a very real danger—but it is not in any way due to the Bank of England; it is due to the policy of unbalanced budgets and very heavy spending in the neighbouring country, and I hoped that the Seanad would have some suggestion, at least, to make as to how we would protect ourselves against the wild inflation of sterling even now. It is a real danger, and it is a matter, I am sure, which the Minister has in mind, and I am sure he must have consulted his advisers about it, because if things really became bad—I do not say they are—if things really got bad in Britain we would have to do something to protect ourselves— and I have no doubt that the Minister and his advisers have already given consideration to that possibility.

With regard to our own attitude to this inflation, I think the Minister's policy to a certain extent contributes to that danger. He has, no doubt, satisfied everybody by his tax remissions, and I do not think that one is ever inclined to criticise or be displeased at any direct personal benefit that comes from a remission of taxation and, undoubtedly, I agree that the Budget is popular and that it shows a very imaginative approach to our problems. But I suppose that the Minister does realise that in releasing this money in the way of income-tax, he is adding to our already heavy purchasing power, and to that extent aggravating or encouraging the danger, and even more so, in this proposal to borrow from the banks, he is also adding to the danger.

I think that the Minister will say that this is only temporary, and I hope it is, because it is very necessary to draw upon the savings of the people as quickly as possible for finance purposes, and to have a public issue. Again, I am not altogether too happy about this proposal to abolish excess corporation profits tax in advance—in advance, I say—of an adequate supply of goods. So long as there is an adequate supply of goods, I think there is a certain protection against these rising prices, but so long as goods remain scarce I am very apprehensive about undue profits being drawn from the public in the form of increased prices. I think the very volume of excess profits tax in the past shows that there has been a considerable amount of undue profit drawn from the public as a result of the scarcity of goods.

I ask the Minister to say if he is satisfied with our present cost-of-living figure and our present price-fixing machinery. The figures themselves are distinctly disquieting. Taking the 1914 price level as a base, our present price level is 300. It has gone up threefold since 1914. The corresponding figure in Great Britain is, roughly, about double. That is not the end of it. If these increased prices ended by people being merely hard up and bearing their suffering in silence, that would not be nice but there would be finality. These unstable prices mean continued unrest. There is a tendency to be continually refixing prices. We have tribunals and all the uncertainty that follows from unstable price levels. I feel that the outlook is disquieting. Until there is an increased supply of goods, I am not at all certain that the effect of this development fund, which, in principle, is quite sound, will not also be inflationary. I feel that, in that respect, the future gives cause for anxiety. I hope the Minister will tell us, in reply, how he feels about the prospect of inflation or whether he can assure us, as the Chancellor on the other side told the Labour Conference, that the danger is past. Does the Minister agree that the danger of inflation is past? If it is not, there will be a troublesome time during the next couple of years.

Another matter which is a hardy annual with me is the revenue which the State derives from betting shops. I ask the Government to consider their moral responsibility in this matter. These betting shops are, undoubtedly, a great evil. It does not do to say, as the Minister's predecessor said, that the rich man can have his bet and why not the poor man? Their positions are quite different. The rich man can, presumably, afford his bet. In many cases, the poor man cannot. It is out of the bread of his wife and children he makes his bet. It is a great inducement to getting money by wrongful means. It encourages the gambling habit of getting rich by chance without any personal sacrifice.

It is thoroughly bad and I am surprised that the churches—I use the word in the plural—have been so complacent and silent about the whole matter. I do wish the Minister would consider whether this practice might not cease. The Government should not be a party to this great social evil.

Mr. Aiken

Senator Mrs. Concannon and Senator Sir John Keane have rebuked me because I afforded relief in respect of certain taxes. All I can hope is that, before the 1st August, when the entertainment duty will come off ceilithe and dances, Senator Sir John Keane will ask Senator Mrs. Concannon to go for a "hop". Until that date, they will have the pleasure of paying the entertainment duty. In opening up the debate, Senator Douglas reviewed the income-tax law over a long number of years. He referred to sections of the various Acts which he would like to see amended. I do not suppose that the amendments to the income-tax law contained in this Bill will be the last. I expect that every financial year the Minister for Finance will examine the question whether he can give reliefs of income-tax or not and, if he decides that he can do so, will bring in amendments to dispose of the amount available to him to the best advantage. I received from the Chamber of Commerce the memorandum to which Senator Summerfield and Senator Douglas referred. I received also a number of memoranda from various other business organisations throughout the State. We examined them all and I picked out what I thought were the two best of the suggestions put forward to promote the development of the country by way of relief of income-tax.

I am, like Senator O Buachalla, hoping for great things, as time goes on, from the relief given in respect of scientific research. Whether anything comes of it within the next year or two years or not, I believe it is a step in the right direction. Senator Douglas asked for a couple of reliefs which were mentioned in certain memoranda. I do not believe that these reliefs would be justified even if we had more money to dispose of in that way than we had this year.

One of these suggested reliefs was a 20 per cent. allowance for new machinery in the year in which it was installed. During the war, our industrialists were not taxed to the same extent as were industrialists in Great Britain. The British Government have recently given industrialists a 20 per cent. allowance in the year in which machinery is installed to encourage them to install new machinery and to make some restitution for the short capital position in which they left them. We did not take all from our industrialists during the war as the British did. We left them the 25 per cent. for the purpose, as explained by the Minister for Finance time after time, of creating a nest-egg out of which they could re-equip their factories. I do not think we should go further than that. I am hoping that the abolition of the excess corporation profits tax will encourage industrialists to expand their business and to open new factories. The prospects are, I think, sufficiently good to attract capital from the general public if an existing company has not sufficient capital. One has only to watch the current stock exchange reports here to see that, whenever there is a new industrial issue floated, there is no shortage of money forthcoming in order to build up new business. If an industrialist can spend more money on new machinery, new equipment and new factories than he has put aside during the war, he will have no difficulty in getting the extra capital from the general public.

Another point to which Senator Douglas referred was the question of wear and tear of machinery. He wants us to follow the precedent established over in England whereby they give an allowance over and above the calculated wear and tear. The British added a completely arbitrary percentage, at first 10 per cent., and then 20 per cent., to the wear and tear allowance. The law here states that the commissioners shall make a fair allowance for wear and tear, that is, they will calculate the life of the machine in consultation with the management of the concern and arrive at a figure. I do not know that we should do any more than that. After all, if we did anything more than give an allowance for the life of the machine, then we are giving, by way of hidden subsidy, a free of interest loan. If we are to give that subsidy, I would prefer, if it were necessary, to give it for machinery of all kinds —farm machinery and industrial machinery—and I would prefer to do it openly and above board, so that the State could get credit for giving it to industrial income-tax payers, rather than do it through the Revenue Commissioners. A fair wear and tear allowance is fair both to the State and to the industrialist and anything more would be unfair to the taxpayers.

I and my predecessors before me have asked those who have complaints to make about the wear and tear allowance on machinery to come along and give us an example. Although there has been a lot of talk in public and reference to what the British manufacturers are getting by way of extra wear and tear allowance, no case has been put to the Minister for Finance driving home the case that there is anything unfair in the estimate the Revenue Commissioners make in regard to machinery depreciation. If any such case is still around in some corner, I will examine it, if it is brought before me.

Senator Douglas said that some manufacturer unnamed told him that he could do very much better by starting a business in England than by starting a business here.

Mr. Douglas

I am sorry to interrupt, but I did not say that.

Mr. Aiken

In the Six Counties.

Mr. Douglas

I said that a secretary of a company, who did business in both, stated that there was not any difference. I did not talk about starting there or starting here.

Mr. Aiken

The idea was that if he had the option of starting a business here or in England, there was not much encouragement to start here.

Mr. Douglas

I am sorry to interrupt again, but this is very important. I made no reference to starting. I was referring to the taxation of existing businesses. I do not know what the effect of starting here or there would be.

Mr. Aiken

Well, if there is a difference in existing businesses there must also be a difference in new businesses. If Senators will go to the trouble of reading debates on Finance Bills in other countries, they will find that the Minister for Finance is told always that, somewhere else in the world, conditions are better, and that he is ruining business development by the existing level of taxation or by not giving this, and the other relief. I would advise Senator Baxter to read a report which I saw of the South African Parliament. It would do him good. A man over there, a representative in the South African Parliament, was making against his own Government the same sort of complaints as Senator Baxter and Senator Douglas want to make against the Government here. He gave as an example of the ideal Government the Government of Ireland. It shows what Oppositions will do.

Mr. Douglas

Far-off fields are green.

Mr. Aiken

They are. However, I am not very worried about Senator Douglas's allegation through the secretary that a man could not do better by starting a business here. It is pretty obvious to everyone that, with our level of taxation, if a person wants to start a new business, this is the place to start it.

Senator Douglas went on to ask what would happen to stocks if they were sold under cost in future years, whether there would be a drawback of excess corporation profits tax. I think we can wait until next year to see what is going to happen to the stocks, and I do not know that there will be losses. We have given an indication to those who have stocks to have a stocktaking at the end of the calendar year, on the 31st December, so that they will have their books right for any future relief, if reliefs are necessary because of loss on sale.

I have got only about three cases put to me about this question of hardship on new companies owing to the operation of the excess corporation profits tax, and after a full detailed examination of the cases presented to me I must say I see no hardship at all in the operation of that tax on new companies. This writ of levari facias companies.

This writ of levari facias dealt with in Section 27 was referred to by Senators Kingsmill Moore and Douglas. As Senator Kingsmill Moore pointed out, it is no new thing to put people in jail for refusing to pay their income-tax. I would like to emphasise the word “refusing” to pay. A person does not refuse to pay if he has not got the money. He simply cannot pay, and I have not heard of the Revenue Commissioners at any time putting anyone to jail who was not able to pay, whether it was a small or a big sum.

Mr. Kingsmill Moore

But there is no option under Section 27.

Mr. Aiken

They have the option of not proceeding against him. Section 27 is only giving the legal instrument to put him into jail.

Mr. Kingsmill Moore

If they get judgment for the money, he goes to jail for six months unless he can satisfy it.

Mr. Aiken

If they operate the writ against him. Senator Moore was asking whether this ancient form of writ that we have had been operated and I have been informed by the Revenue Commissioners that it has been operated several times.

Mr. Kingsmill Moore

Several times in the course of this century, I believe. It is in single figures, I think.

Mr. Aiken

There are two methods by which a man can be put into jail for income-tax. If he is a small income-tax payer and owes £25 or less, the Revenue Commissioners can take him before the District Court and get an order. The court order that is given in that case is set out in the District Court rules.

Mr. Kingsmill Moore

I think, subject to correction, there would be an investigation of means to pay in the District Court.

Mr. Aiken

No.

Mr. Kingsmill Moore

Then that ought to be altered, too.

Mr. Aiken

Do not let the Senator go away from this particular case by asking me to cure all the evils in the world, because I cannot do it.

Mr. Kingsmill Moore

I will ask it and if I get you to do it I will be delighted.

Mr. Aiken

We will keep to this particular case. If we have a man who owes the Revenue Commissioners £25 they can take him to the District Court and get this order and if they operate that order they can put him in jail for six months, if he does not pay. The order in this Bill is the same as the order made for the subordinate courts by the rule-making authority for the District Court some time ago.

The Revenue Commissioners asked me to get the same type of modern order made for the higher courts and that is all we are doing in this Bill.

Mr. Kingsmill Moore

It is a hell of a lot.

Mr. Aiken

If the Senator wants the whole procedure changed and to make it the law that we cannot put in a man for refusing to pay his income-tax then that is another day's work. I think that the vast majority—99.999 per cent.—of the people who pay their income-tax are entitled to see that the Revenue Commissioners make other people pay up, even if it means going to jail. The Revenue Commissioners will not put them in jail unless they are satisfied that they will not pay. They do not try to take the breeks off a Highlander.

I am grateful to Senator Douglas for his suggestion about the stamps. I hope we will make a few million pounds out of that, but really I have not much hope of making more than a few tenners out of it. Senator Baxter and Senator Ó Buachalla wanted me to go back on the loans that were issued in the past from the Local Loans Fund and reduce the rate of interest charged upon them. The way they put it was that we should advance money to them to repay these old loans. The loans outstanding at the moment from the Local Loans Fund bear the rate of interest that had relation to the rate of interest upon which the moneys were borrowed by the State in order to give them to the local authorities. If we reduced the rate of interest on these loans that are outstanding, allowed local authorities to repay them or gave them fresh loans, and substituted existing loans by new loans at 2½ per cent., that would leave the State carrying the difference between the 2½ per cent. and the rate of interest which it still has to pay on the old loans outstanding, some of which carry 5 per cent. to the public.

There were two contracts entered into, one was by the State to the public from whom they borrowed the money, paying 4¼ per cent., 4½ per cent. or 5 per cent. The other contract was by the local authority when they got that money which the State got from the public, to repay that 4½ or 5¾ per cent. or whatever it was. We simply could not change these old outstanding loans. If we can get ahead with our work the rate of interest on these old outstanding loans will become a decreasing burden on the local authorities. If we can get the local authorities to go ahead and build houses they will be adding to their valuation and these old loans will be paid off by degrees, and the local authorities will be carrying on on the new rate of interest.

I do not agree at all with Senator Baxter that the Minister for Agriculture or the Government has given no evidence of a vigorous approach to agricultural development in the postwar world. I think that even Senator Baxter, assiduous reader of blue books and White Papers as he seems to be, only quoted from one book published by the Department of Agriculture in the last six months dealing with agricultural development. He only referred to the majority report of a committee that was set up on postwar agricultural policy. I would like to remind Senator Baxter that within the last six months three White Papers have been issued by the Department of Agriculture detailing policies. One dealt with general agricultural policy. That paper was issued the other day. Before that we had one on dairying and there was another one on bacon. I would advise Senator Baxter to read them and then I do not think he will be able to repeat the particular phrase he used.

Mr. Baxter

Because I have read them, I have said what I said.

Mr. Aiken

If that is so, let it be so.

Mr. Baxter

We will have that another day.

Mr. Aiken

The Senator spoke about the lack of credit for agriculture. I said in my Budget speech that I hoped the farmers would use the moneys they made throughout the war to improve their land and improve their farm buildings.

I do not see any reason why Senator Baxter should object to that. The farmers of this country have had a better time during the past five or six years than they had for a long time before that. I believe that, if they utilised the profits that were made in those years for adding to the capital value of their farms, it would be better for themselves and for their children in the future. The cheapest possible credit that the farmer can get is to withdraw the money that he has on deposit at 1 per cent.

Mr. Baxter

But if he has not any?

Mr. Aiken

If he has not, the Agricultural Credit Corporation will give it to him. It has been in existence for some years. I think the Act governing the Agricultural Credit Corporation has been amended from time to time, and it may be amended again in order to help that body the better to perform the work for which it was set up, and that was to give credit to farmers who had development work to do for which they could not get credit elsewhere.

Senator McGee referred to the existing duty on travelling shops. He wants the duty abolished. There are a lot of other people who want it doubled, so that between Senator McGee, who wants it abolished, and those who want it doubled, I think that the best thing I can do is to keep to the middle of the road and stay where I am.

Senator Johnston and Senator Sir John Keane dealt with the policy of cheap money. Senator Sir John Keane dealt in particular with the dangers of inflation. One who is responsible for the financial affairs of a country always has to watch the trend of the volume of money because there are two dangers into which a country can be led if the volume of money is not correct in relation to the output of goods. A lot of other factors enter into it. These are the outstanding ones. I think that, at the moment, we are collecting in taxation what is necessary to carry on our public services. We are not borrowing to any extent; we are not creating bank credits in this country to any extent; we are not printing notes, and I do not think that, in our situation at the present time, there is active inflation. We have to watch out and see that inflation does not come about. I am as anxious to keep an inflationary trend from setting in as I would be to stop a deflationary trend. What we want to do is to see that there is sufficient volume of money in active circulation at all times to enable the community to do its business. Any more money than that is damaging, and any less money than that is also damaging.

If we take this question that Senator Johnston went into at length, the effect of a cheap money policy on the development of the State, I think that those who want to see the community carrying on as private individuals, utilising their own money to build up their own business, employing people to make goods and giving them wages to buy goods, will be anxious to see that the State borrows as cheaply as it can. If we get back to the time when goods are fairly freely available, with the market so free that it is a buyer's market; in such situation, if there were inordinate savings by the public, it would mean that the State would have to spend an amount at least equal to the savings of the public if the goods that were made were going to be sold. If there was that situation the higher the rate of interest that the State offered for money—and the more money the people saved in the form of public debt—the greater would be the need for the State to start business on its own, business of various kinds, in order to distribute purchasing power to meet the flow of goods. I am firmly convinced myself that, granted certain disadvantages of the policy of cheap money, those who want to see the State interfere as little as possible and keep out of activity of a manufacturing kind, will stand by the policy of the cheapest possible rates for State debt apart altogether from any other considerations.

Now, apart from that rather broad view of the policy of low rates of interest for State debt, there is the very practical effect that it has on development activity. I think that a lot of very desirable work was not undertaken by private individuals simply because they could get a high yield on gilt-edged securities. While I would like to see the policy of thrift by private individuals, particularly those with low incomes, encouraged, I would not like to see it encouraged to the extent that the individual concerned would scamp the food that he would give to his family or scamp the ordinary household comforts that he should provide for them in order to get a high interest rate.

I think that the interest which we have offered to the depositors in our Post Office Savings Bank, and which we propose to offer them under the Order made in this Bill, is reasonable, having regard to the present situation. I want to build up a fund out of which we can give loans at 2½ per cent. for development purposes. I propose to give the public at least three options, three different ways in which they can subscribe to that fund and get interest on it.

One is through the Post Office Savings Bank, which is a day-to-day business, which enables a person who puts in £100 to-day to withdraw it in the morning, and for that I propose to give him 2 per cent. up to £300. Senator Douglas was afraid that the difference between 2 per cent. and 2½ per cent. would discourage thrift. It is a difference per £ in the year between 6d. and 4 4/5d.—that is a drop of 1 1/5d. I do not think that 1 1/5 of a penny decrease in interest per £ per annum—up to £300—is going to affect the issue very much.

I think that if the person feels thrifty getting 6d. on the £ per year he will not feel very much less thrifty getting 1 1/5d. less than that. Over £300 we propose to give 1¼ per cent.— that is on the excess over £300. If a person has £1,000, he will get 2 per cent. on £300 and 1¼ per cent. on £700, and that works out at approximately 1½ per cent. per annum on the average. I do not propose to give any more examples, but at about £500 or £600 the rate will be still about 1¾ per cent.

That is one option for the public. If an individual wants to put his money into the Post Office Savings Bank, if he does not want to invest it for a term of years, if he wants to be in a position to recall it the day after he deposits it, we give him 2 per cent. up to £300 and 1¼ per cent. over £300. We also propose to make a new issue of savings certificates and a person can hold, for each member of his family, up to £350 worth on maturity. He pays in 16/-, and at the end of ten years he will get £1 back, or, after 11 years, 21/-. That means that a person who is not satisfied with 2 per cent. interest in the Post Office, may put his money into certificates, and if he holds them to maturity he will get 21/- for every 16/- he invested, or a rate of interest of £2 10s. 1d. per cent. We are restricting the amount of money people can put into savings certificates, but they can put in £350 worth at maturity for every member of the family.

We propose, if necessary, through the year to offer to the public at 2½ per cent. a long term loan. I think, under present conditions, when you see how interest rates are going throughout the world, we are not discouraging thrift by giving these three options to our public—to go into the Post Office at 2 per cent. up to £300; alternatively, to take savings certificates with a yield of 2½ per cent. plus a penny for 11 years, or further, when the new loan is issued, to give them 2½ per cent for a long-term loan. I hope that people who have money, particularly the people with lower incomes, will not spend it foolishly, and that if they have money to spare over and above what will give themselves and their families a healthy standard of living, they will save it. I hope also that people with the larger incomes will not be competing with each other, and with poorer people, for the insufficient supply of goods that is available at the moment.

I think that people are foolish to be buying things that are scarce and that they could do without now, at inflated prices. They would be far wiser to tuck their money away, and to put it on deposit in the ordinary banks or in the Post Office Savings Bank than to buy unnecessary goods at the present time.

But, on the other hand, if there is a capital business that persons can start —if a man can build a house, or improve his land or factory—I think it is a time for spending, if the material is available, or if the person concerned can make do with the native material that is fairly plentiful. I do not think there is a potential inflationary situation sufficient to estop us from capital development at the moment, and my answer to Senator Keane is that the taxes we took off, the reduction in income-tax, the abolition of the excess profits tax and corporation profits tax were designed to induce people to spend for capital purposes, and not for immediate consumption purposes—not to buy consumption goods that are short at the moment.

Sir John Keane

Might I ask the Minister, is there an opportunity for capital development now with the present scarcity of capital equipment?

Mr. Aiken

The principal industry in this country is the agricultural industry. It can be expanded by taking in the people who are idle at the moment and giving them spades. The agricultural industry could do more capital development inside the next year than has been done in industry over the past five or six years. I hope they will do it. They can build outhouses for their cattle and so on, and that is the type of capital development we want in that particular industry.

There are no imported materials worth while used in that development, and I hope that that desirable type of capital development will go on. We can see around the country that there is capital development, in certain industries anyway, and there is that other great, big industry that was practically shut down during the war —the building industry. I am prepared to do everything in our power to get the building industry going if the people concerned in it—the master builders and their employees—are prepared to do a reasonable job at a reasonable price.

I should say that even if we were to devote the £5,000,000 to that purpose —unfortunately, there is no hope that that amount can be spent on house-building this year—we could take that £5,000,000 in our stride and not fear an inflationary result. I trust, therefore, that master builders and building operatives will not endeavour to take advantage of the present situation in respect of scarcity of materials and demand for houses. If that were to happen, it would, certainly, lead to a dangerous inflationary spiral.

I think I have dealt with practically all the points which were raised. I do not propose to follow Senator Sir John Keane into the betting shops, nor do I propose to enter into a debate with Senator Duffy on the question of parity with sterling. I asked Senator Duffy on a previous occasion, if he had a proposition to put up in regard to the link with sterling, to put it up and I should examine it. I do not believe in changing parity with sterling just for the fun of doing so. If Senator Duffy puts forward a proposition that we should appreciate our money as against sterling, I shall be prepared to examine that proposition and discuss it with him. If he puts forward a proposition that we should depreciate our money as against sterling, I shall be prepared to discuss that proposition with him also. But I do not propose to change from the present system just for the sake of pleasing him or those who talk as he does throughout the country. Our volume of money is not controlled, as he contended, by the Bank of England. It is controlled by the operations of the Central Bank and the commercial banks here. If we are not satisfied with the volume of money, we can change it; it is not controlled by the Bank of England. Neither is the number of our £ or other notes so controlled. As I said before, the changing of the exchange rate between the Irish and the English £ is question of policy for ourselves. That is an operation which would have a greater effect on our internal economy, creating differences between exporters and importers, than on our external economy—our external trade with Great Britain.

Mr. Baxter

Have you any control over the money which comes into the country?

Mr. Aiken

No. We take all we get. Money comes into the country. What does that mean? It means that other countries are admitting a liability to us. That is what a dollar bill means. That is what a cheque drawn on a New York bank means. That is what an English £ and a cheque drawn on an English bank means. They admit that they owe us a sum of money. We have not stopped that money from coming in. Personally, I am prepared to take all I can get of it. If Senator Baxter has any which he wishes to pass on, I am prepared to accept it.

Mr. Baxter

That is not meeting the point.

Mr. Aiken

It is meeting the point. The Senator put the question as if some moral delinquency were involved in accepting foreign promises to pay. I do not think that that is so. If the Senator goes further and asks whether I would rather have capital development within the country than foreign promises to pay, then I reply that I should prefer internal capital development. During the past five or six years, we were stopped from that simply because we could not translate foreign promises to pay into goods which we could utilise for capital development. As soon as we can do that, we shall go ahead.

Question put and agreed to.

Committee Stage fixed for Wednesday, 26th June, 1946.