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Seanad Éireann debate -
Tuesday, 17 Jun 1947

Vol. 33 No. 20

Finance Bill, 1947 ( Certified Money Bill )— Second Stage.

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

An tAire Airgeadais (Proinnsias MacAodhagáin)

Bille é seo chun éifeacht do thabhairt, in aghaidh na bliana ar fad, do na Rúin lenar ghlac an Dáil taréis na Cáinfhaisnéise, mar ní bhíonn éifeacht reachtúil ach ar feadh tréimhse teoranta ag na Rúin sin, do réir téarmaí an Achta um Bhailiú Shealadach Cánach, 1927.

Ghlac an Dáil leis an mBille seachtain ó shoin agus molaim é anois don tSeanad. Bille gearr é agus is beag fóráil atá ann nach bhfuil a brí ar eolas ag Seanadóirí cheana trí léamh an óráid cháinfhaisnéise ar a bhfuil sé bunaithe. Pé rud nua atá ann, leireod é agus mé ag dul tríd an mBille alt ar alt, rud a dhéanfad anois.

The main purpose of this Bill is to give continuing effect to the Financial Resolutions passed by Dáil Éireann following the Budget as these Resolutions have statutory effect for a limited period only under the Provisional Collection of Taxes Act, 1927. There is very little in the Bill that was not forecast in my Budget speech as will be apparent when I go through the Bill section by section, which I now propose to do.

Section 1 is the usual section providing for the charge of income-tax and surtax for the current tax year and for the continuance of previous enactments relating to those taxes. As I explained in my Budget speech, excess surtax will not be imposed this year.

Section 2 implements the announcement I made in my Budget speech regarding the income-tax personal allowances. It enacts that the allowance for an unmarried person shall be raised from £120 to £140, and that the allowance for a married person shall be increased from £220 to £260.

Section 3 is designed to secure that that part of the profits of life assurance companies which is allocated to, or reserved for, policy holders will be excluded from computation for income-tax purposes under the rules of Case 1 of Schedule D. The section also provides that, where a life assurance company carries on both an "ordinary" branch and "industrial" branch, the business of each branch shall be treated separately for income-tax purposes. The section is so worded that the latter provision will not apply unless the company has availed itself of the benefit of the former provision.

Section 4 will be of help to local authorities. When a local authority pays interest on its loans or stock it deducts income-tax and is naturally obliged, in some form, to account to the Revenue for the tax deducted. It will normally have a certain amount of taxed income available for "set-off" as it is called against the interest from which it deducts tax. In so far, however, as the interest is payable out of rates, which are not chargeable to tax in the ordinary way, a special charge is raised to cover the balance of tax deducted. Under the existing law the tax, if any, ultimately borne by the local authority under Schedule A in respect of any of its property which it occupies cannot be taken into account for purposes of set-off. This is the result of an old legal decision. Section 4 is meant to overcome the effect of that decision and thus to bring relief to the local authority.

Part II—Customs and Excise—Section 5 is related to the First Schedule. Reference Nos. 1 and 3 in the Schedule are not new duties and are aimed at simplifying the charge to duty in the case of calendars and almanacs and at removing certain doubts and ambiguities in the previous tariff definitions in the case of dressed stone works, etc. The net effect of reference No. 2 is to extend for protective purposes to display figures and stands of plaster of paris or papier-máché the existing duties on statues, statuettes and busts.

Section 6 raises the existing rates of customs and excise duties on tobacco, the basic increase being 5/- per pound, and raises by 1/4 per pound the rebate on hand-pressed tobacco, that is, plug, roll, twist, etc., thus advancing the rebate on these tobaccos from 1d. per ounce to 2d. per ounce. The increase in the rebate means that the prices of the cheaper pipe tobaccos go up by approximately 1d. per ounce less than do the prices of the dearer tobaccos.

Section 7 is designed for the most part to obviate difficulties in administration of certain duties where it was found that the existing definitions duplicated duties on certain articles or extended to articles which they were not intended to cover. In the case of toys, however, which are referred to at reference No. 7 in the Third Schedule, the intention is to raise the exemption limit on wooden and soft toys generally from 9d. to 1/3 so as to allow the cheaper toys in duty free for the poorer section of the community, having regard to the increased cost of toys, while affording approximately the same measure of protection as pre-war to the industry in this country.

Section 8, in effect, merely repeals the duty on novels in English. The other tariffs repealed are reimposed in the First Schedule. Section 9 is designed to enable the benefit of licensing provisions for free import to be extended to (a) articles stored in bonded warehouse on importation, and (b) articles which had been imported duty free for a particular purpose and which it was subsequently desired to divert to other use. Section 10 raises the entertainments duties at present in force on cinematographic and other forms of entertainments by an average two-thirds. The scale of duties on cinema exhibitions has been unchanged since 1936; the scale for other entertainments has been unchanged since 1932. The new duties do not come into operation until 15th August next owing to the necessity of printing new stamps and tickets.

Sections 11-13 are consequential on the enactment of the Auctioneers and House Agents Act, 1947, which provided for the grant of an auctioneer's licence, an auction permit and a house agent's licence, subject to the payment of an excise duty, and this Bill provides for duties of £10 in respect of the first two mentioned instruments and a duty of £2 in respect of the last mentioned. The duty on existing auctioneers and house agents remains in effect the same but the definition of house agent has been widened to include parties not hitherto covered, in that agents for lettings of all valuations—not £25 and over as hitherto— and of unfurnished as well as furnished premises are covered.

Part III — Corporation Profits Tax. — Section 14 extends for a further three years the existing exemption from corporation profits tax afforded to certain public utility concerns. Section 15 provides that, in the case of a director-controlled company, the maximum deduction allowable for "ordinary" corporation profits tax shall be increased from £1,000 to £1,500 per annum. Section 16, with which is connected the Fifth Schedule to the Bill, deals with a matter to which I referred in my Budget speech of last year. Its purpose is to provide for relief from excess corporation profits tax in respect of stock held at the 31st December, 1946, which subsequently might not realise the value then placed upon it. Section 17 is the usual "construction" provision.

Part IV—Stamp Duties.—Section 18 is designed to double the ad ralorem stamp duties payable on conveyances or transfers, by way of sale or voluntary disposition, of stocks, shares or marketable securities. The scope of the section is confined to such sales or dispositions as are effected by deed. Section 19 grants stamp duty exemption as regards any agreement, conveyance or other instrument entered into for the purpose of transferring the business of the Industrial and Life Assurance Amalgamation Company, Limited, to the Irish Assurance Company, Limited. This transfer was provided for in an agreement made in September, 1938, and scheduled to the Insurance (Amendment) Act of that year. The transfer of the business of the Industrial and Life Assurance Amalgamation Company, Limited, to the Irish Assurance Company, Limited, represents the final stage of the amalgamation into one company of the life assurance business and industrial assurance business carried on by certain insurance offices in this country.

Section 20 is consequential on Section 13, as the only live provisions of the Revenue (No. 1) Act, 1861, are those relating to house agents' licence duty and provision in this respect is being made in Section 13 of this Bill. Section 21 is the usual care and management section and Section 22 that relating to the short title, construction and commencement of the Bill.

I would like first of all, if I may, to congratulate the Minister once again on the type of speech which he made during the Budget. My experience of Budget speeches, most of which I have listened to, has been that you waited more or less patiently until you got the real news of the speech, and that you did not listen to anything else after that. There are two reasons for this. One of them is due to a certain amount of laziness, and the other is that intelligent Budget speeches are hard to follow and can much better be read and studied afterwards. Therefore, I think the Minister's method of letting us know what his proposals are at once is the much more sensible one, and I am glad that the Minister has made a change from the old practice in that respect.

But, so far as any other change he has made is concerned, I am not able to congratulate him to the same extent. His changes have been disappointing. It has been more or less usual, for what I may call the Opposition side of the House, to take up a certain amount of time saying that we are overtaxed, and that the cost of government is far too high. I still believe that to be true. I do not, however, propose to spend any time in arguing it here, because I do not believe there is any remedy for it, until you change the Government, and that is not going to happen while we are discussing this Budget. Therefore, I think it would be much better to follow the Minister's line and to deal with specific points, rather than generalities at first, leaving any general remarks to the end. But, in that connection, I would say that I have a certain amount of sympathy with the Government because everyone who is in business knows that whether money is available either from capital or increased profit, it is extremely easy to spend it. To sit down and retract expenditure or to try to persuade your Departments to retract, is nearly impossible.

That being the case, it would take something like a revolution to get anything like a substantial change in Government policy. All the indications are that Government spending is going to be higher in future. At some point the people will decide that they are paying too much per head, and then we will get a drastic change.

To take the various points in the Bill, I will not make any long comment on income-tax, beyond saying that no one expected that the basic rate of income-tax could be reduced below 6/6, and I do not think anyone could have had the temerity to say that it should be increased. On the section which deals with personal allowances, I would like, first of all, to refer to one disappointing feature which, although not in Section 2, is most closely allied to it. On several occasions in this House, and in conversations with the Minister's predecessor, I have pressed very hard for an alteration in the system with regard to children's allowances. It seems to me that we make a mistake when we make provision for granting these allowances only in the first financial year after the birth of the child.

In Britain and Northern Ireland, I think the allowance is made from the date of birth, in the actual year, but whether that is so there or not, I maintain it should be so here. I do not think it would cost much, if it cost anything at all, because the actual length of the period for which the allowance would be paid would not be any longer. Anyone who has experience knows quite well that, particularly in the case of those with lower incomes, the heaviest expenditure is at the time of birth and immediately afterwards. That is a thing which the Minister's predecessor promised me he would look into. He was very sympathetic. I had a talk with him privately. That seems to be a small thing which at very little cost might very well have been introduced at this period, especially when the Government could not see their way to increase the personal allowances to a greater extent than has been done in this Bill.

Personally, I am glad that there was an increase in the personal allowances but honestly I do not believe it is at all adequate to meet the circumstances. There is a case to be made that everyone, no matter how small his income, should pay some income-tax but, if you admit that as a desirable proposition, it seems to me then that we should have a strictly graduated income-tax which should start at a very low figure. The practice in Great Britain, which we have carried on, has been to allow the first hundred pounds at half rate — it did vary a little during the war in England — and after £100 to assess at the full rate. If you adopt that practice it seems to me that there should be some kind of common consent as to what is to be the basis on which there is to be exemption. It is extremely difficult to know what is to be regarded as a fair minimum standard of living but I think an effort should be made to arrive at that and that that basis should vary with the cost of living just the same as salaries and other things in Government service vary.

I do not believe that £20 more on £120 or the corresponding increase from £220 to £260 is adequate having regard to present prices of essentials. An amendment was moved in the Dáil proposing that they be increased to £220 and £440, if my memory serves me right. I think the Minister replied that that could not be done because it would cost £3,500,000. He will correct me if I am wrong but I believe that was the approximate figure given by him. That figure rather staggered me because it means, if it be true, that the present value of the £ is approximately only 10/- in purchasing power, as compared with 1939, that we are extracting at the present time £3,500,000 from persons who are really no better off than they were in 1939 so far as wealth is concerned. It may be that such persons should pay something but that seems to me far too large a total amount to extract from persons who are clearly persons on what might be regarded as on the lower income levels.

I do not suppose anyone thought that, having introduced the Budget, the Minister would accept that amendment. One thing about it is that it introduced the principle of doubling the allowance for single persons in the case of married persons. I have always been in favour of that. Whatever the allowance is for single persons, I think it should be doubled for married persons. I know there is a kind of theory that if two people with £120 income each live together they will find it cheaper to live together on £240. I think that is a complete delusion. I am prepared to accept that two people with £2,000 each might possibly save if they were living together but in the lower incomes, particularly if they are going to do anything in the way of setting up house, I think that is completely mistaken. I hope at some point we will accept the principle that the allowance should be doubled. I know that £140 represents £175 for earned incomes and £325 in the case of married persons, but even those figures do not seem to me to be adequate if you accept the general principle, which I hold strongly, that when you have a high rate of income-tax it is a serious mistake to tax heavily — and it is a fairly heavy tax— people who are definitely on a low income level.

The Minister said the amendment could not be accepted because it would cost £3,500,000. The Minister, I think, enjoys a smoke. So do I. But from the figures he gave in his Budget speech it could have been done by putting, approximately, 3d. on the packet of 20 cigarettes and a corresponding increase on tobacco. It would have been a terrible calamity to have to pay 1/11 but the people across the water appear to survive, paying 3/4, and I am not at all prepared to accept the principle that it could not be done. I, personally, do not want to see cigarettes at 1/11 but, as a smoker, I would prefer to pay the difference and have an adequate personal allowance. Therefore, I think it is not correct to say that it cannot be done.

Another amendment which was also moved in the Dáil would seem to me in the present circumstances a practicable one, one which I would still urge the Minister to consider before this Bill is passed, that was the proposal that the £100 limit on which half rate is paid should be increased to £200. The figure the Minister gave as to the cost of that was £900,000. On his figures for tobacco, that would represent 1/9 for cigarettes, and I seriously put it to the Minister that, although it would create some trouble, he might increase the packet of cigarettes to 1/9 and he might increase that limit from £100 to £200. That is practical politics and it would mean a great deal of easement to people who are definitely on the lower income level. It would not mean very much, as compared with the benefit, to people who are not well to do.

In connection with that, I want to say a word or two about the question of earned and unearned income. In theory it seems reasonable that you should have a lower rate of tax on earned income as against unearned income, and when the unearned income represents large sums of money I think everyone agrees that it is a good principle but when you come down as low as £140, I am not at all satisfied that it is fair or equitable to make that distinction on lower incomes, particularly in the case of older people.

Persons in the Civil Service and a very limited number of persons in business occupations are entitled to pensions, but the vast majority of our population have no pensions coming to them. The only hope they have of living in any measure of comfort in their old age is from their own savings or from the income that may be derived from insurance. The same applies, possibly, to a greater extent, in the case of widows who have to live on their husbands' savings, or insurance, or rather the income from them. Indeed, rates on investments are very low and in many cases when a man dies, the widow has to live on what she can get by investing whatever he was able to leave her out of his savings. She will not get a very big income from it. Her personal allowance would be only £140 and it would be treated as unearned income. I would like to press on the Government the consideration that, if not now, at any rate in the next Budget, some steps should be taken to provide, (1) in the case of older people of retiring age, say from 60 onwards and (2) in the case of widows, that an exemption up to £175 or £200 should be granted whether it is earned or unearned. That would prove an easement to a number of people whose income is really earned income in the sense that the savings from which they derive it were earned and are for the purpose of providing for old age or illness. I know there are difficulties. I know there would be difficulties to provide adequately for the case of illness but I think they are not insurmountable and I would urge that that distinction which in general I approve as far as higher incomes are concerned might be removed in the case of incomes up to £200 and that there should be the same exemption limit for unearned income as there now is for earned income.

There is also the question, which I believe has been raised again and again, of persons who have purchased annuities to provide for their old age. Income-tax is charged in full on the income from their annuities. That is to some extent in the nature of a pension and some concession should be made. I see difficulties in doing so, but it should be carefully considered, as it causes great hardship in certain cases. My main point is that the distinction between earned and unearned income is not so valid when the man or woman has reached the age at which they would have normally retired and, if in the public service, would have been receiving a pension and would have to live on the interest or dividends from their savings.

Regarding the other portions of the Bill, I agree with the proposals in Section 3, which seem reasonable. I do not understand Section 4, but apparently it applies only to public bodies and when the Minister stated that I did not attempt to look into it, as I have no doubt it was very carefully checked. With regard to customs and excise, I have no personal knowledge from which to make any comment, except to say that I am a little puzzled why a few things are chosen to be dealt with in the Finance Bill whereas most changes and tariffs are dealt with in other Bills. This has been the practice for many years. It used to be the case that you could turn to the Finance Bill for the year and know what the changes were in customs and excise, but that method has completely gone. For my part, it would be better if they were kept out of the Finance Bill and put into special Imposition of Duties Bills, as had grown to be the case normally before the war.

When the Minister is replying, I would be greatly obliged if he could tell us a little more about the reasons why the duty on novels has been abolished. It seems to me to be an excellent step. I imagine there is a lot of difficulty in deciding what is fiction and what is not: a lot of things that come in by way of biographies and autobiographies may well be fiction, and I am told that quite a few of the histories could be regarded as being novels. I know that recent Irish histories are regarded as fiction by some people who disagree with them. It would be interesting to know what led to the decision — of which I generally approve—and I would be glad to know what benefit we got through the duty on novels, which were taxed 1d. each, I think. I would like to know if the Minister is correcting a blunder made by one of his predecessors which yielded practically nothing, or whether he has some other good reason. I do not think he gave information on that point in the Dáil nor has he given any here. It may be that, when he was in charge of censorship, he came across certain information which led him to the conclusion that this was a useless tax. It seems to me to be a good move to abolish it.

I do not propose to discuss the tax on tobacco any more than to say that, if it is the case that the Government is intent on a very high level of State expenditure and determined that it must be kept on that level, he might as well tax tobacco as anything else, and I would certainly prefer it to a tax on any other commodities.

A point I overlooked when speaking about personal allowances — and one which is of some importance — is that the poorer people, who are exempt up to £140 or £175, £260 or £325 as the case may be, do pay quite a considerable amount of tax, including income-tax. Income-tax and corporation profits tax are part of the overheads which have to be provided in any business, and if a business does not provide for its overheads, and for a reasonable amount of reserve, it will go out of trade very soon. Therefore, there is not the slightest doubt in my mind that the prices which are to be paid will be and are affected by income-tax and the people exempted from the personal tax, owing to their small income, are paying a certain amount of income-tax on the commodities they purchase.

The Government propose to continue corporation profits tax and make only one change, with which I do not propose to deal at length, as it is really a Committee matter. As far as it goes, it is probably a good change, but it does not seem to get over a fundamental difficulty. This change refers entirely to what are known as director-controlled companies. The difficulty of the State is that, if there were no restriction at all, the directors in such companies instead of paying any dividends might vote themselves sufficient salaries to avoid corporation profits tax. I am not so sure that that is as great a danger as it is said to be, but anyone who looks into it realises that there is a danger and while you keep the corporation profits tax you must provide against that danger. The present position is that a part-time director may be paid up to £1,000. That is to be increased to £1,500. It also applies to a whole-time director if he owns 5 per cent. or more of the share capital. It does not apply to a managing director or to a director who owns only 2 or 3 per cent. or possibly does not own any of the capital at all. The Government have increased the figure from £1,000 to £1,500. I do not want to appear to take any exception to that. For my part I would have been well content with the £1,000 in the case of part-time directors, but I think it is not at all sufficient in the case of a person who gives substantially the whole of his time to a business and whose only crime is that he happens to hold more than 5 per cent. of the shares.

I recognise that this is a matter of some difficulty, but it is having some unfortunate effects and I believe there should be a way out, if the anomalies and the difficulties were fully appreciated. It is recognised by most people that it is highly desirable that staff who have spent some time in a business and who rise to a position of manager or managing director should be encouraged to put capital into the business. It is admitted and accepted that the more capital which can be retained in the business the better for the business, provided that it can be used in trading. From the Minister's point of view, it is better, too, as he is more likely to get more tax from the increased profits.

The effect of the corporation profits tax is that privately owned companies —which represent a very large number of the companies in this State—are unable to make an arrangement with the senior staff by which they will pay them a certain amount of salary and a certain amount in shares, in order to become directors, since if they do so they will probably be liable for this tax, for which they would not otherwise be liable. I believe that a way could be found out of the difficulty. I admit that there are certain technical difficulties. The biggest trouble really lies in the fact that there is an element of double taxation. If that were removed the other would not matter. If we take the Minister now present, his salary is £1,700—which I believe is going to be raised—and if the same Minister happened to be operating in a privately-owned business in which he had shares, the State would have said: "On £700 we are going to tax you 2/- in the £"—in addition to income-tax and surtax it works out approximately at 1/6 when the income-tax is adjusted—"because you are not a Minister or a professional man and because you have the misfortune to operate a business and the misfortune also to have your own money in it." On the face of it, that is not equitable, but now it is to be on £200 of the £1,700 where it was previously on £700. Where the salary is £2,500, £1,000 will be disallowed.

I do not much mind, and I do not think anyone would mind, the disallowing of £1,000, if that disallowing did not mean that a man—remember that we are dealing with privately-owned director-controlled companies— would have to pay full surtax as well as corporation profits tax on the £1,000 disallowed. It seems to me that you could get over the whole difficulty and avoid any double taxation by providing that the actual amount payable by the company on that salary in respect of corporation profits tax should be, first, deducted when surtax is chargeable. That would not prevent the full surtax being charged on the salary, whether it was £2,000 or £20,000. It would obviate the difficulty which the Government undoubtedly experience in extending the £1,500 limit because of the danger that these salaries will be paid out, and it would be fair because there would be no fundamental difference, on the basis of a £2,000 salary, because what was paid in corporation profits tax, would not be payable in surtax.

My own feeling is that corporation profits tax as devised at the moment wants revision. I do not know the reason—I have tried to find out from various people but have never got what seemed to me to be an adequate reason —why there should be a special tax on being a corporation. I can quite understand a business tax of 2/- in the pound on business profits. I do not know whether it is wise or not to have a higher rate in present circumstances, but, assuming that the State, in its wisdom, says that business profits shall be taxed at a higher rate than individual income, I can understand it being applicable to all profits. I cannot see why it should be applicable only where business is carried on by a corporation. I have never been able to get a reason for it and I could not find any in the Minister's speeches in the Dáil, but quite possibly a reason was given which I overlooked.

Section 16 seems to me to be an extraordinarily unsatisfactory section and one which will operate in a most unfair and inequitable manner. I do not profess to understand all the subsections in Section 16, or the implications of everything in the Fifth Schedule, but two things appear to me to be quite clear. One is that it operates only if an actual stocktaking took place on 31st December, 1946, and the other that it applies only to the years 1947 and 1948. The Minister's predecessor on several occasions received deputations, at one of which I was present, who pointed out that one of the grave dangers of the operation of excess corporation profits tax was that it made it impossible to provide adequate reserves to deal with the slump which most people believe will come and which everybody hopes will come at some particular point. It came three or four years after the last war. The provision in this section means that, where a slump happens to come in 1947 or 1948, anybody in business who has made excess profits will be entitled to a refund, assuming that he can somehow fit into this extraordinary section, but anyone in trade, and this applies to a very large number of trades, in which there is no probability whatever of any loss taking place until after 1948, will not get any benefit whatever, although he was just as much unable to prepare for a slump.

It seems to me absurd to take one given date. I think I am correct in stating that the Minister's predecessor, in general, stated that, after the war, a similar provision with regard to stocks would be made as was made by the British authorities after the 1914-18 war, but this section seems to me to have little or nothing in common with the provision made after that war. It is painfully like the provision made by the Labour Government in England after the last war, but it is a very different thing from the promise made by the Minister to traders and manufacturers. The public will probably say: "Traders have made profits. Why should they worry if they lose it all in a big slump?" That might not matter very much if it were only a matter of one or two firms, but those of us who were alive and in business after the 1914-18 war know that many traders ran extremely near bankruptcy as a result of the sudden slump which came three or four years after the war. I personally think that this section will achieve very little as it stands, and, unless it is amended, I do not, think it fulfils the promise made and certainly the indications given.

I particularly object, however, to what I regard as the absolutely unfair provision that stocktaking must have been carried out on 31st December, 1946. I cannot speak for all firms, but one or two companies with which I was connected received a circular—I think from the Revenue Commissioners or perhaps from the Minister, but it is immaterial—in the first week in December last, stating that some such provision as this was going to be made and that stocktaking would have to be carried out on 31st December. That may not have been a physical impossibility for all firms, but, in the case of any retail trader, he would have had to lose immediately in his Christmas trade far more than he could possibly have hoped to get back, and to give notice of that kind to traders, telling them that they must take stock on 31st December, knowing well that only a few wholesalers and a very limited number of traders could do so on short notice, was, I suggest, not fair dealing, and I do not think the Government should stick to that date. I know that after the last war those of us who had paid excess profits tax and were entitled to claim it back were able to operate on the normal date of stocktaking. I think there was a variation allowed of one month or so, but it was a very small variation. For a great many trades, December 31st is almost impossible for stocktaking, whereas January 31st is quite common in many of them. That figure ought not to be adhered to, if there is to be equity as between one section of traders and manufacturers and another.

I had rather hoped that the Minister in his Budget would have announced a change in the method of taxation on motor cars. I think it is overdue. The Government went to very great trouble to establish a motor assembly industry here. As I am not now connected with it in any way, nor am I speaking with any personal interest in it, that not only caused a great deal of trouble, but it meant that a great deal of capital was sunk in the industry. It also meant that the public had to pay a very high price for it. At the moment, quite a number of English cars, which are assembled here, cost the public more than they cost the public in England, even with the 33? purchase tax there. Now, that high price is being paid, on the one hand, by the public, and capital has been sunk in it so that it seems to me essential that the industry should be maintained as efficiently as possible, and that every effort should be made to keep the cost of assembly as low as possible.

We ought to be able to take whatever cars are available for export in a condition for assembly, whether they be from England, America or elsewhere. All indications point to the fact that steps will be taken by the British Government at some fairly early date to make it easier for manufacturers there to produce the kind of car which is suitable for export to countries which have not got what I regard as the ridiculous horse-power tax system that we carried over from Britain. I still think that, on the whole, the fairest method of tax is a tax on the petrol used by the car rather than the size of it. Whether that be so or not, we certainly ought to be very careful to see that this important industry is not going to be handicapped as a result of the public having to pay more for their cars because of the antiquated system that we have in operation here.

There were some other matters which I thought the Minister would deal with in his speech, and I regret that he did not do so. I want to make one more appeal to the Government. I want to ask them seriously to consider the setting-up of a commission to look into the whole question of the incidence of income-tax and of corporation profits tax to see whether it is not possible to devise some change which would make that tax more suitable to conditions in this country. The country is mainly agricultural on the one hand, but we must remember that, on the other hand, it is endeavouring to build up substantial new industries. We are working to-day on the British Finance Act of 1918. Certain minor changes have been made in that Act but they all refer back to it, and we must remember that it was passed 30 years ago. Even under normal conditions substantial anomalies would be bound to have arisen over that period of time, but here in our case we are dealing with another country altogether. No Minister, to my mind, in any Government faced with preparing his Budget will ever change that because he could not do it in a hurry. All figures on which to base possible reductions or increases or new taxes, or any change in the income-tax code, are based on that Act, and on our experience of it. The only way in which a change could be made would be by having a thorough examination of the whole question with a view to seeing what changes could be made at some future date.

I do not want to go into the question in any great detail now, but I do think it is highly desirable that we might make a serious effort to strike out a line of our own. If that could be done it would enable accountants, traders, business men and private individuals who have knowledge of the anomalies and of the inequities that have arisen to give evidence before the commission which I suggest. If that were done, it might be possible for a commission to recommend that a substantial number of changes should be made. I am not now advocating a lower rate of tax. It might very well be that, if a change were made, the rates might be higher but that the incidence of the tax would be fairer. In that connection, I advocated before, and I am still strongly of the opinion, that there should be a different tax on business profits from that on individual incomes. I think that a differentiation should be made between profits paid out whether to shareholders or in the way of salaries and profits which are retained in the business. At the moment, from the tax point of view, it is slightly to one's advantage to pay out money. I think that, from the point of view of industrial development, the State ought to step in, even though it increases the basic rate and make a clear differentiation, particularly in the case of money which is permanently retained in trade. I know that there would be difficulties in doing that as there are bound to be in the case of every proposal of this kind. It might be argued that the money would be paid out in bonus shares or in some other form. I do not think that presents an insurmountable difficulty. If it were paid out afterwards from reserves which were liable to the lower rate of charge, the company would immediately become liable for the higher rate.

The principle which I am advocating is, I submit, a sound one, and I think it ought to be carefully examined. I do not think that either the present Minister or any other Minister will make a substantial change of that kind when it comes to the preparation of his Budget. I think the only way to deal with it would be by setting up a commission to examine the question thoroughly. That would not commit the Government in any way. We are, as I have said, working under a British Act passed in 1918, except in so far as some minor changes have been made in it. I think this is a matter that ought to be looked into, so that all claims on the grounds of equity and fairness might be examined.

When the Central Fund Bill was under discussion my colleague, who has been recently elevated to the Bench — I applaud his promotion but deeply regret his absence from the House — made some acknowledgment of the action of the Government in recommending an Estimate of £35,000 for the requirements of Trinity College. I, unfortunately, was unable to be present on that occasion, and I should like to take this, the first opportunity, of saying on behalf of all for whom I may speak how much we appreciate the friendly action of the Government in acting as they did, and of the Dáil in passing that Estimate. We were faced with a serious financial position which threatened to reduce us to a condition of academic anaemia which would have greatly lessened our usefulness to the nation and to the world. What the Government have done has enabled us to look forward hopefully to expanding our various services to scholarship and learning, and to the practical application of scholarship, and of science in particular, to the problems of the community. Therefore, we face the future with a fairer hope and with more confidence. We feel that the confidence which we displayed—in the goodwill of our countrymen—in 1912 and again in 1922 when we scornfully refused to accept any safeguards for the constitutional position of Trinity College, has been more than justified. There is the happy event now that the head of the college is appointed by the head of the Irish State. We could have had a change, but we preferred to leave it as it is, and we are proud and happy that the head of the college should be appointed by the head of the State. I may say that very good appointments indeed have been made on the various occasions that have arisen since 1922. Comparisons, it is said, are odious, but I must say that the appointments made since that date were better than some of those that were made under the old régime. More important even than the financial and material aspect of this matter is the friendly impression that was made on all concerned, and particularly on those who negotiated on our behalf, especially by the frank and considerate manner in which they were met by the Minister, by the Taoiseach and the other persons acting on behalf of the State.

I think that the psychological repercussions of that friendly attitude have not been lost on any of the people who are concerned with our academic welfare both in the Twenty-Six Counties area and beyond it. I may say that our national outlook is by no means confined to the Twenty-Six Counties. Coming to the Finance Bill itself, there are many points of view from which one might approach it but, unlike the Senator who has just spoken, I do not intend to approach it with that obviously detailed knowledge he possesses of its various clauses and aspects. I think it is in order, in connection with a Bill of this kind, that one should consider financial policy as a whole, and not only financial policy as it is for the people of our own community and the development of our own policy but also the whole world framework within which such a policy must be pursued and given effect to.

I would like very briefly to remind the House of some of the outstanding economic facts which are now sticking out a mile, so to speak, in the whole world economic situation. The first of these is that as a result of the war and of the tremendous economic activity that was stimulated by the war in the United States of America, that country has reached an economic stature never before attained even in her history, but also, as a result of the war, every other country, and especially the European countries, have been impoverished, so that you have the contrast between the enormously increased productive and consuming capacity of the United States, and the economic anaemia that characterises the rest of the world, especially the various countries of continental Europe.

It is an amazing thing that it should take a war to enable the American economy to reach the degree of national income which all the constructive efforts of President Roosevelt during the 30's were unable to bring about. If I remember rightly the national income of the United States was as low as 40,000,000,000 dollars in the 30's, having fallen from about twice that figure in 1929. With the greatest of effort in the course of the 30's, that national income was raised to 89,000,000,000 dollars, but, thanks to the war and the development of the potential and gigantic strength of that enormous country, the national income of the United States is now 200,000,000,000 dollars, or if you like, £50,000,000,000 a year, a figure which almost defies the imagination, and is difficult to realise. The economic structure of the United States has been considerably developed in that period under the stress of war. Much of her present productive capacity is related, and essentially related, to the production of capital goods, durable goods of the kind which are doubtless needed in her own economy, but which are at present produced, and we hope will continue to be produced, in amounts which exceed even the absorptive capacity of her own economy, and which, if they are going to continue to be produced, must in some shape or form be exported.

According to reliable figures, it is calculated that if America is to maintain full employment and a 200,000,000,000 dollars rate of national income, she must produce 30 billion dollars worth of capital goods, and at a modest estimate, she must export five billion dollars' worth of such goods annually. Some people say she should aim to export 15 or 20 billion dollars' worth of capital goods in order to maintain that 200 billions national income. That is the economic position in which America finds herself, and the question is: where are all the dollars going to come from to buy these enormous quantities of capital goods, and of course of food and raw material exports too, which are also forms of capital goods especially needed to sustain those who are restoring the economic life of devastated countries?

Everyone knows the needs of Europe, including the needs of these islands, but one does not see clearly where the dollars will come from to buy the surplus capacity of the American economy during the next few years. Indeed, the contrast between America's position with her surplus wealth, and the rest of the world's terrific needs, is such that it seems just to say, that in one way or another America must find a way of exchanging her wealth with the rest of the world, or inevitably, the rest of the world will find a way of exchanging its poverty with the United States.

Unless markets can continue to be found for America's production, something in the nature of another 1929 seems to be staring the American people in the face, so that from their point of view they have every motive for desiring to maintain their production at full capacity, and they may be quite disposed to be both businesslike and generous to other peoples. It is up to the rest of the world to try to behave in such a way as to make it easy for the American people to be both businesslike and generous with their surplus productive capacity. What seems to be wanted is a kind of gigantic blood transfusion in the economic sphere from the full-blooded American economy to the anæmic economies of the rest of the world. As the Minister was rather expert in securing blood donors in another capacity at one time he might be able to make some progress towards success in this matter also.

The question, of course, is complicated by various ideological conflicts and ideas which make the relations between various European countries not at all easy to manage, and still more difficult to define, without entering the realms of controversy which I do not want to do, but I do suggest that the good Samaritan approach to the problems of a suffering Europe might in the long run provide the best antidote to the Communism which is threatening to spread over that Continent. After all, the man who fell among thieves was not asked whether he was a member of Fine Gael or Fianna Fáil, or a Communist or a Fascist. The only matter then that counted was human need and willingness to minister to it.

I think the American people are capable of gigantic acts of generosity as well as gigantic acts of human folly, and it is almost the turning of a hair whether their policy will be such as to lead the world forward to a new era of reconstruction and peace, or to set in motion the forces which will bring about a new world war and the end of world civilisation. The matter is so delicately poised that even the influence of a little country like ours might make that little difference which makes all the difference, and that must be my excuse for devoting time to discussing matters which might not appear to be immediately related to our own affairs. The question for Europe is, how can they make it easier for America to play the part of the Good Samaritan? The question for us is, is there anything at all that we can do to help?

Now, of course, our contacts with Europe are mostly indirect contacts which operate through Great Britain and, therefore, in this connection, we are interested, not only in the general situation of the various countries of continental Europe, but also in the immediate present economic situation and outlook of Great Britain. In that connection I would like to put on record a few facts which are doubtless well known to the Minister and his advisers but which, nevertheless, are not perhaps sufficiently appreciated by the general public. Britain has been making the most gigantic efforts since the war to try to recover her balance in her economic relations with the rest of the world and, by the end of 1946, had succeeded in increasing her volume of exports to 100 per cent. of their 1938 level. But, owing to the unfavourable position of the terms of trade, with that 100 per cent. volume compared with 1938 she was only able to acquire imports of the volume of 80 per cent. of the 1938 level. This was unlike the situation that happened after the first world war when with 80 per cent. of her former volume of exports she was able to acquire 100 per cent. of her pre-1914 volume of imports.

Her international financial position, as everybody knows, is worse by some £5,000,000,000 as compared with 1939, and in 1946 there was a gap of £400,000,000 in her balance of payment which had to be bridged by drafts of approximately that amount on the American and Canadian loans; further, as we know, sterling currently acquired is to become convertible into all currencies after the 15th July. As we also know, Britain is aiming at an export target in 1947 of 140 per cent. of the 1938 volume but, owing to the fuel crisis, it is now considered extremely difficult for her to attain that target, and quite likely that it will not be fully reached. Equally, it appears to be generally accepted that, from a long-term point of view, she would need to aim at an export target of 175 per cent. of the 1938 volume of exports in order to maintain international equilibrium with the rest of the world and gradually repay those gigantic sterling debts that she owes to various countries, including our own.

Part of Britain's difficulty is the fact that she buys 42 per cent. of her imports from what are called hard currency countries and sells only 14 per cent. of her exports in those same countries. Actually, the disparity between what Britain buys from a country like Canada and what she sells to Canada is enormous. I think her imports from Canada are of the order of about £200,000,000 in the year and her exports to Canada are something like £30,000,000 in the year, and a similar situation exists with regard to her trade with the United States of America. On the other hand, especially in recent years, there is a tendency for her exports to soft currency countries, especially European countries, to increase considerably and substantially to exceed her imports from those soft currency countries but, unfortunately for her, she cannot use the surplus soft currencies acquired in order to meet her hard currency liabilities because they are not transferable.

There is, of course, the Dollar Loan, which everybody hoped would last, at all events, to the end of 1948, but the general opinion now is that the Dollar Loan will be exhausted by Easter, 1948, and one just does not know what is going to happen after that loan is exhausted. Britain seems to be up against a blank wall and, from our point of view, in this matter we are in the same boat with Britain because we can only hope to get dollars in any large quantity in exchange for sterling balances, and if Britain cannot get dollars for herself it is quite likely that she will not be able to get them for us. We have an interest, then, in any policy which—most of all—would help to liberalise the supply of dollars, if that can be brought about by American generosity and, failing that, in any policy which would help to economise dollars from an Irish point of view or a British and European point of view. And, therefore, we have an interest in developing mutual trade as between European countries of such a character as would tend to lessen the need for goods from dollar countries in so far as such forms of trade with European countries can be developed.

In that connection I would like to draw the Minister's attention to an article in the Central European Observer of March 7th, 1947, on Britain's industrial crisis and foreign trade. This is a paper written in English and expressing a Czechoslovakian point of view. The author says in the course of the article:

"Considering the scarcity of ‘hard currencies' and the dwindling of the American loan, British production seems to be in acute danger, yet a solution could be easily found."

Then he gives some examples pointing out that it would be very desirable to encourage the export of British cod, herring and other fish to various European countries that could be doing with it. He goes on to say:

"Some of these (Central European) countries had an unequalled fruit crop last year. Many thousands of tons of apples, pears, plums, apricots and cucumbers were rotting in Czechoslovakia, Bulgaria and Hungary. Though they were available without any expenditure of sterling, Britain spent dollars on acquiring Californian fruit.

The Christmas turkey from Alabama could be easily replaced by the goose from Czechoslovakia and Hungary, and exports of some agricultural machinery to Eastern Europe would in two years' time repay a rich dividend in feeding stuffs, especially maize."

That may be of British interest but it is also of Anglo-Irish interest for an increase of imports from Éire of Christmas turkeys and other agricultural products would certainly lessen the need to buy similar things from the dollar area and equally, an increase in imports of maize from Yugo-Slavia and Rumania to Éire, if it could be brought about, would lessen the need for buying similar things from hard currency areas in the Western Hemisphere. In that connection, may I remind the Minister and the House that ten to 15 years ago it was quite usual for this country to import substantial quantities of maize, as much as 1,000,000 cwts. in the year, from countries like Yugo-Slavia and Rumania. I think we should explore the possibilities of renewing that desirable commercial contact with those European countries for every reason and get back to that kind of European trade as quickly as we can and in the greatest possible measure.

Then the author of the article continues to point out that a policy of expanding commercial relations between highly industrialised countries like Britain and mainly agricultural countries must be carried on with due regard to the natural desire of those agricultural countries to industrialise themselves as opportunity offers, and he says:—

"The time is past when a few industrialised countries could impose their commodities on wholly agricultural countries and lower their living standard by extorting payments of raw materials from them while barring the import of their main products. There are practically no wholly agricultural countries left and no country is without alternative as to its sources of imports. Thus, if Socialist Britain wants to weather the present economic crisis she must apply socialism, not only to basic industries at home, but also to foreign trade. Trade relations with Central and Eastern Europe could be the first step on this path."

I suggest that we have every interest not only in closer economic relations with Britain, but also in an Anglo-Irish policy, aiming at closer relations with the various countries of continental Europe. In fact, to bring about such a closer integration of the various European economies would seem to be very much in harmony with the most recent edition of American policy where it seems to be a condition of this large-scale lend-lease to European countries that they should get together and arrange closer integration of their various national economies. What that may mean in practice I do not know, but it might be worth while looking into it, in a process of exploration.

According to the papers, there have recently been taking place various conversations between various official and semi-official persons as to the possibilities of more intimate economic and commercial operations between Great Britain and Éire. We do not know yet what is happening or what will come of it eventually, but I would like those conversations to be carried on with a full knowledge and realisation of the general world situation, as it reacts not only on Britain but on ourselves. If the Minister has any statement, hopeful or otherwise, to make on the course of those negotiations, I would be very much interested to hear it.

On the 18th June, 1946, on the Second Stage of the Finance Bill, 1946, I spoke here on the question of relief from double taxation in respect of persons domiciled in the United States or in this country as the case may be and leaving property in both countries. What I said is reported in the proceedings of Seanad Eireann, Volume 21, No. 25, columns 2255 to 2258, inclusive. Last year I called attention to the fact that a convention had been reached between the United States and Great Britain on the 16th April, 1945, at Washington on behalf of the two Governments. The particulars of the convention, which is entitled: "Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on the Estates of Deceased Persons," have been published as a White Paper by the British Stationery Office, Command No. 6625, 1945. That convention provided that it should come into operation on the exchange of ratifications between the two countries. Those ratifications were exchanged on the 25th July, 1946. It has been implemented by legislation of the British Parliament, contained in Section 54 of the Finance (No. 2) Act, 1945, which was passed on the 20th December, 1945, and by the Finance Act of Northern Ireland, 1946, which was passed on the 19th February, 1946.

I pointed out that, under this convention, relief from double taxation in respect of estate duties would be available to Irish people who are living or domiciled in the North of Ireland, our own fellow-countrymen; and that it was opportune that our own Government should take steps to explore the possibilities of a similar convention with the United States of America. On the Second Stage of the Finance Bill, 1946, I said, as reported in column 2258:—

"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 right for investigation and solution.”

However, the Minister, in his closing speech then, did not refer to the matter. Now that 12 months have elapsed and that this convention has been implemented by Great Britain and Northern Ireland, I am sure the Minister is in a better position to deal with the matter.

It is not often appreciated what a hardship it is for people in this country to be subject to double taxation in the case of death duties. Over 100 years and more, there has been intercourse between the United States and this country. Our kith and kin have gone there, worked and slaved there, and in great measure prospered; and we here have been dependent not only on their remittances during their lifetime but upon the money which they left at their death. In the year 1923, a report was submitted to the Financial Committee of the League of Nations by three professors: Professor Bruins, Professor Einaudi and Professor Seligmann and also by Sir Josiah Stamp, afterwards known as Lord Stamp. That report is published as a League of Nations document E.F.S. 73, F. 19 and ought to be available.

This report propounded four general principles in accordance with which States are accustomed to impose taxes, and those principles are (1) political allegiance or nationality, (2) temporary residence, (3) domicile or permanent residence, and (4) location of wealth or situs. However, different countries have different ideas as to the principle upon which their taxation should be imposed, with the result that in the case of death duties there is a clash. One country imposes death duties on the principle of domicile, that is to say, in the case of personal property a country will impose a death duty on that property if the person who owns the property dies domiciled within the territory of that Government or State. Another country will impose death duties having regard to the situs or location of the property, that is, if the property is located within its territory. That is a competition between what I may call rival principles.

The theory of taxation is based upon the ability to pay, and therefore each person who is able to pay must pay according to his economic interest under each authority; that is to say, the authority of the country in which he is domiciled claims that it must get all that person's wealth which he pays in taxes, whereas another authority will say: "His property is here and we are entitled to whatever taxation is going." But while a man may be domiciled in one State and have his property in another State, he spends where he is domiciled what he gets from the country in which his property is, so that, in order to evolve order out of chaos, this report of the League of Nations recommended that a certain class of property should be taxed in respect of death duties on the basis of domicile and other property on the basis of location. Generally speaking, the report recommended that immovable property—land and property associated therewith, such as agricultural implements, flocks, herds and all property, even though movable, connected with land, including mortgages —should be taxed in the country in which the land is situated and all other classes of personal property taxed in the country of domicile. In the case of death duties, the United States of America imposes a federal estate tax on all the personal property, no matter where situate, on the person domiciled there and this country does the same, with the result that the unfortunate relative who receives something on the death of that person has to pay both countries.

There is a very slight form of relief given by Section 7 of the Finance Act, 1894, which merely gives the Revenue Commissioners power to allow whatever is the amount of the death duties paid in the United States as a deduction, but the total amount is not allowed as in the case of income-tax, so that, therefore, unless there is a convention between the two countries with regard to double taxation, there will be injustice. I am not prepared to say at the moment how we would fare under such an arrangement. That is a matter for investigation and that is why I should like to have the matter investigated, because, in the case of federal estate tax in the United States, there are exemptions and our estates here may not be large enough to enable us to gain an advantage from it. All I ask is that the matter should be considered.

There is another aspect of double taxation which is more modern because it is a reality. Under our agreements with Great Britain—one dated 11th April, 1926, and the other 25th April, 1928—it is provided in Clause 1 of the 1926 agreement that any person who proves to the satisfaction of the Commissioners of Inland Revenue that, for any year, he is resident in the Irish Free State and is not resident in Great Britain or Northern Ireland shall be entitled to exemption from British income-tax for that year in respect of property situate and all profits or gains arising in Great Britain or Northern Ireland. By the agreement of April, 1928, British income-tax is defined as meaning British income-tax charged or chargeable at the standard rate. Up to 1946, no difficulty arose in connection with these agreements. In the case of a person resident in this State and having shares in an English company, British income-tax is deducted at the source at the standard rate and when the person entitled to the dividend applies on what is known as the K. 1 form, he is refunded by the British the full standard rate deducted. In other words, he is only liable to taxation in this country on the amount of his dividend. An Act was passed by the British Parliament in 1945, the Finance (No. 2) Act, 1945, which contained a section, Section 52, which, in effect, has resulted—I will not say in injustice—unfairly to residents of this country. Sub-section 2 (a) of that section enacts, inter alia:

"Notwithstanding anything in the income-tax Acts no relief or repayment in respect of the tax deducted or authorised to be deducted from any such dividend shall be allowed at a rate exceeding the rate hereinafter referred to as the net United Kingdom rate of the United Kingdom income-tax payable directly or by deduction by the company after taking double taxation relief into account."

That may appear somewhat involved, but I have here an example of a concrete case. It is a case of a shareholder who had shares in the Chartered Bank of India, Australia and China, which has its head office in London. His gross dividend was £32 10s. Tax at the standard rate of 9/- was deducted from that to the amount of £14 12s. 6d., leaving him a net cheque of £17 17s. 6d. Under our agreements of 1926 and 1928 with Great Britain, he would be entitled to be refunded £14 12s. 6d., but, on his K. 1 form, he has been refunded, in fact, only £10 11s. 3d., leaving a net loss to him of £4 1s. 3d. I understand that when a resident here forwards his K. 1 form to the Inspector of Taxes for certification that he has been assessed in respect of taxation, the amount which he claims by way of payment is altered by the Inspector of Taxes from the standard rate to what is called in Section 52 (1) the net United Kingdom rate. That must be by arrangement with the British Government. The persons who have suffered this deduction have written to the people in Great Britain because, I take it, it is the duty of our own Government to safeguard its own citizens.

In this case the taxpayer suffered a loss of £4 1s. 3d. For some reason or other—probably it might be called a rule of thumb arrangement—he was not assessed on the full sum of £32 10s. here. He was assessed only on £32 10s., less £4 1s. 3d. That is his net loss. By reason of this arrangement, our own Government loses tax at the standard rate of 6/6 on £4 1s. 3d.—that is, loses tax amounting to 26/-. That is only one dividend. If we take all those dividends, we must then be losing a considerable amount of tax. I should point out that under the agreement of 1926 a person resident in this country, and who is not resident in Great Britain, is entitled to exemption from British income-tax. By the agreement of 1928, he is entitled to exemption from British income-tax at the standard rate. What is being done is that the Revenue authorities are treating exemption as repayment. In other words, under Section 52 (2) (a) of the Finance (No. 2) Act, 1945, it is provided:—

"That notwithstanding anything in the Income Tax Acts no relief or repayment in respect of the tax deducted or authorised to be deducted from any such dividend shall be allowed at a rate exceeding the net United Kingdom rate."

That Act does not bind the citizens of this country, but it has been operated to the detriment of citizens of this country. Therefore, I suggest that the matter should be taken up with the British Government because, in my opinion, it is a breach of the agreements of 1926 and 1928. That section of the 1945 Act was intended to affect only citizens of the United Kingdom. It was never intended that it should operate against the citizens of this country. It is being operated against them. Therefore, I suggest that the Minister, who I am sure, is fully aware of the position, having regard, of course, to the method of taxation which is in force here on this particular type of dividend, should do something to relieve the position of investors in this country.

This Section 52 of the 1945 Act, which I have already referred to, applies to all dividends paid after the 20th February, 1946. Its repercussions were not, of course, felt last year when the Finance Bill was before the Oireachtas, but they are being felt now. This provision, while it might not do a very great injustice, does affect a certain number of people, especially residents of this country who depend upon their dividends, people who have been in the East, who worked all their lives and who on retirement have come here to end their days. I agree that this only applies in the case of certain Dominion companies, companies who trade in India and Australia. It does not apply in the case of ordinary British companies. At all events, the principle is the same. Under our agreements we are entitled to exemption at the standard rate. We are not bound to be satisfied with repayments of net United Kingdom tax. For these reasons, I suggest to the Minister that he should consider the two questions which I have raised, namely, double taxation in the case of death duties, and what I call a breach of the agreement for the exemption of income-tax on residents in this country.

May I say that, in my view, this Bill offers an opportunity to Senators to discuss a somewhat wider subject than that just now discussed by Senator Ryan. I should like, first of all, to ask Senators whether they feel the proposition that is behind this Bill—that is the proposition contained in the Budget—can be defended indefinitely: the proposition that this country, in its present circumstances, can provide for public expenditure an annual sum of approximately £70,000,000. That is really what we are discussing. We are concerned here with the raising by way of taxation and rates not merely the amount provided for supply services, nor even for supply services as set out in the Book of Estimates, plus the Central Fund services, but rather for the supply services plus Central Fund services, plus the Supplementary Estimates which are coming every other day before the Dáil, plus local rates. All these sums amounting in the aggregate to £70,000,000 must come out of the current production of the country. If the several items are totted up, it will be found, I think, that what we are required to do in the current financial year is to provide for the spending, by public authorities, of £70,000,000. That is approximately one-quarter of the total national income. It may be argued that the State and the local authorities can, in fact, spend the moneys derived from taxation to greater advantage than the individual themselves can do it. I do not want to go into that.

I can see a case being made that money collected by the Government or by the local authority from certain citizens will be spent to better advantage by these authorities than by those citizens themselves, but that is hardly admissible in relation to the whole run of taxation—taxation by which we lift money in the form of duties on tea, tobacco, cigarettes and spirits from the ordinary citizen as well as the money collected from those who pay income-tax and supertax.

There is also this other aspect to be considered: If we are to continue collecting from the community one-quarter of the total national income of the State it seems to me that there is not going to be much left for capital expenditure—let us say on agricultural development, on housing, on the replacement of the damage wrought during the past six or seven years of neglect of machinery and equipment.

Some time ago, in an article, I think, in Studies by Dr. George O'Brien, he calculated that it would cost £100,000,000 to overtake the arrears in capital expenditure due to the neglect of the war period, or “the emergency” period. It has been calculated in other quarters that £150,000,000 will be needed now to put agriculture on an economic basis. In a White Paper published by the Government last year, there was an estimate of £100,000,000 for building and constructional work. These three items together suggest that we must find, in the near future, a capital sum of £350,000,000 for the re-equipment of our economy and I am drawing attention to the fact which must be present in the minds of members of this House that it is not easy to see where it is going to come from unless we pare down taxation.

Of course, it will be argued, and I think, probably with justice, that there is a very substantial nest-egg lying to our credit, in foreign exchange for instance. I would be very glad if the Minister would devote some time in the course of his reply to discussing that question because it is one of tremendous importance. We are at the moment—it seems to me at any rate— living very substantially on our external balances, even at a time when we are not able to get more than 50 or 60 per cent. of the commodities we require. Last year, for instance, we expended £12,000,000 in dollar currency countries. We supplied to these countries £600,000 worth, so that our expenditure in 1946, in the dollar currency countries, exceeded our income from these countries by £11,500,000, roughly speaking.

I do not know where we stand in relation to foreign purchases in the future, and I am sure it would be of considerable importance and considerable interest to the members of this House, and to the community—the farming community, as well as the business community—if the Minister would tell us exactly how we stand in relation to the purchase of goods for capital development, and for current consumption outside the sterling area. We cannot continue to buy outside the sterling area at last year's rate unless by an arrangement with the British authorities.

As it is, it seems to me that we are buying from Britain, and from the sterling area, 100 per cent. of our current exports to that area. If that is so, it would appear there is nothing left over for buying essential commodities outside the sterling area, unless we are permitted to use up existing sterling balances, the balances built up during the war period, during the period between the two wars, and between 1914 and 1918.

It was calculated some years ago that the sterling balances to the credit abroad of this country in 1938 amounted to about £350,000,000. Can we utilise these balances? Can we avail of them now to buy tobacco and films in America, and will we be permitted to do that freely at a time when Britain refuses permission to her own people to utilise sterling—the American loan—for the purpose of buying tobacco and films in America? These are questions of considerable interest, because if there is to be a crisis, if there is to come a time when we are going to be short of these things which we are accustomed to buy abroad, it is better that we should be told of it in advance, better that the Minister would tell us that there is not going to be smooth sailing, that there will be a tightening of our relations in foreign markets and that we will not be free to spend as we like outside the sterling area. It is better that we should be told now that there are difficult times ahead, so that we would not be taken by surprise eventually. I think it is obvious that the difficulties are likely to arise.

That brings me to another point which seems to be of considerable interest. When these sterling balances of ours were being created, money had certain purchasing power. In other words, in 1937-38, if we exported 10,000 cattle we could have got 250,000 tons of coal in exchange. If, in any particular period, we did not desire immediately to import the coal, steel or cotton, or whatever else it might be, and so allowed the currency which was realised for these 10,000 cattle to lie to our credit in Britain, that added so much to our sterling balances, and normally, the average citizen would feel sure that come what might we could get the 250,000 tons of coal later on as it was required. That, however, is not the position now. You will require now to surrender for 250,000 tons of coal not the sum realised in 1938 by the sale of 10,000 cattle but the sum realised for 85,000 cattle. Therefore, from the point of view of immediate purchasing power, the sterling balances have depreciated enormously. They are not going to get for us now the volume of goods they could have got in 1937 or 1938. They are going to get a very much less volume of goods, even in the sterling area, and much less still outside the sterling area in view of the considerable increase in prices on the American export market.

I would like also to refer to one other point which seems to be overlooked. A very large proportion of this £70,000,000 which will become payable in the current financial year in respect of taxation, direct and indirect, and rates, will come from a section of the community who have suffered greatly during the last seven or eight years by reason of the fact that their incomes have not kept pace with the increase in the cost of living. It is notorious, of course, that in this country a very substantial proportion of the nation's revenue is derived from indirect taxation, say taxes on tobacco, spirits, food, clothing, cinema seats and various other things in general use. A very much larger proportion of our national revenue is derived from indirect taxation than, let us say, is the case in Great Britain, Australia, New Zealand or Canada. The people affected very largely by that fact are wage-earners and others with small incomes including the recipients of home assistance and public assistance.

The Minister, like his predecessors, for some reason is very sensitive when it comes to the demands for tax relief of the wealthier elements in the community. He is, like his predecessors, less sensitive when he is dealing with the protestations of those with slender incomes. For instance, take the case of the recent increase in the tax on cigarettes. A man who smokes a packet of twenty cigarettes a day—and I am told that that is not heavy smoking— will have to pay an extra 1/9 a week over and above what he was paying before. I calculate that the average cigarette smoker's contribution to the nation's revenue to-day is in the neighbourhood of 10/- a week and the average pipe-tobacco smoker is contributing 6/- or 7/- a week to the nation's revenue. In the case of the wage-earner this is a substantial contribution. It may be argued, of course, that tobacco is not one of our essentials, that you can do without it. That is probably true. We probably could do with two meals a day. People have existed for long periods without taking any food. But it has become part of our social life that men, and even women, smoke, and a very substantial contribution is demanded from them in taxation.

Then see the other side of the picture. Take, for instance, the practice which obtained up to very recently that only a prescribed number of people were allowed to travel in a bus. There was supposed to be a seat for each person travelling and tax was paid on the seating capacity of the bus. Since the creation of our transport monopoly in the custody of Córas Iompair Éireann, that practice seems to have disappeared. There is now almost no limit to the number of persons who may be carried on a bus and I understand that the police have instructions not to interfere with Córas Iompair Éireann, no matter how many passengers are standing in one of their buses. Do not forget that Córas Iompair Éireann does not pay extra tax in respect of the extra passengers carried. The regulation is made permitting the company to carry six or seven standing passengers and there has been no adjustment in the taxation. The £6 15s. 0d.—or whatever the company is supposed to pay per seat—is saved in that case and there is no attempt made to require the company to pay additional taxation by virtue of the privilege granted to it to carry a number of passengers for whom there are no seats.

Another aspect. The Minister made a statement in his Budget speech in respect of the rebate that has been given in respect of hard-pressed tobacco. As far as I have been able to calculate, the additional duty imposed on hard-pressed pipe tobacco was about 2¼d. per ounce. The Minister for Industry and Commerce made an Order permitting the manufacturers to charge in some cases, I am told, an extra 4d. per ounce. Who gets the balance? The Revenue gets 2¼d. The consumer has to pay 3½d. or 4d. an ounce. The retail tobacconist tells me that he gets none of the added price, that it is a frame-up between the Government and the manufacturers in order to make the manufacturers happy about the increased taxes on tobacco. The retailer assures me that he does not get a brass farthing out of the increase in the selling price of tobacco permitted by the Minister for Industry and Commerce.

It seems to me that, discreetly and well-concealed, there is an attitude in Government Departments to make things easy for those who are well-circumstanced and to make things hard for the poor and those who are seriously affected by every change in the volume of taxation. It has been the practice of Ministers to suggest that those of us who are associated with the Labour Party should never complain about income-tax. Personally, I think income-tax is a very fair form of taxation. I am strongly in favour of the direct method as against the indirect method of levying taxation because I think it is proper that every citizen should know the total sum he is paying in taxes or rates. But I want to draw attention to the fact that, because of changes which have taken place in the last couple of years, particularly in the last 18 months, very large sections of people are being brought into the arena in which they are required to pay income-tax who were not formerly liable to income-tax and I think its assessment is unduly harsh in their case.

I have in my mind one individual whose circumstances if understood by the House will probably illustrate what I have in my mind The person is a carpenter living in Dun Laoghaire, seven or eight miles outside the city. His present wage is £7 per week. He is unmarried, living with his mother, who is an old woman, and two sisters one of whom is an invalid. The other sister acts as housekeeper for the household. I have been trying to find out what his assessment will be under the present Finance Act. His total earnings will be roughly £365 for the current year, assuming that he works a full year without broken time or illness. On this there is an earned allowance of £73 and a personal allowance of £140, and an allowance of £25 in respect of the mother, leaving £127 or £128 as taxable income. Portion of this will be taxed at 6/6 in the £ and the remainder at 3/3. The total tax being £16 5s. 0d.

But a couple of years ago this man was compelled to leave his house and early this year he bought the house in which he is now living. In 1937 or 1938 it was sold actually for £900 but because of the happy times in which we are living it was sold this year to the present occupier, the person with whom I am concerned, for £2,500. Its poor law valuation is £24 and to that is added one quarter for the purpose of income-tax assessment, so that really the taxable valuation is £30, and the total sum this man will be required to pay in taxation is £34 12s. 0d.—13/6 per week in taxation out of a wage of £7 per week.

The balance is left to him for the maintenance of himself, his mother and two sisters. In the meantime Córas Iompair Éireann have increased his transport charges by 25 per cent. in the course of the last six weeks and the Minister has increased the cost of his tobacco and his beer. There is not much point, perhaps, in referring to this case unless we make a comparison with this man's position before the war. At that time he was earning £245 a year; he had 2/- per hour. Earned income allowance then was £49, and the personal allowance £120; there was an allowance for his mother of £25, making the total taxable income £51 which at the rate of 2/9 in the £, meant he paid £7 per year in taxation before the war. He did not own his house at that time but if he had owned it, the taxation on it would have been £3 6s. 0d., making a total of £10 6s. 0d. as against £34 12s. 0d. this year. But in the meantime this man has in fact lost in income the equivalent of £50 per year because if his wages had increased to the extent that the cost of living increased they would not be £365 but £416, so that he is £50 per year worse off in terms of purchasing power than before the war and on top of this his income-tax has increased from £10 6s. 0d. to £34 12s. 0d.

The net effect of the whole policy underlying the Finance Bill and the Budget statement is that we have a declining population, which is kept at its present low level very largely by artificial methods adopted by the Government to prevent emigration. One may say that the conditions in Britain are not better than they are at home. I do not know. I do not desire to express any view on this point, but I want to draw attention to the fact that the people are prevented from emigrating only by artificial methods adopted by the Government. And there is no place where we can see the effect of this emigration more clearly than in agriculture. Now, it is generally conceded that agriculture is the main industry of the country; the country's mainstay. It is the source from which the greatest portion, in fact, practically all our wealth, is derived, and the position is that during the last ten years the number of male persons employed in agriculture has decreased by 41,000. The number of male persons engaged in agriculture in 1936 was 560,000; in 1946 the number was 519,000, a decrease of 41,000 in our main industry, notwithstanding compulsory tillage and everything that has been done during those ten years to boost agriculture. And bear in mind that this exodus from the land of 41,000 persons is not entirely or even mainly an exodus of wage earners; of this 41,000, no less than 25,000 represented occupiers and their relatives, the small farmers' sons leaving the land. It may be that they are not leaving Ireland, but if they are not, they are ceasing to be independent proprietors and are being transferred into proletarian wage earners.

Sixteen thousand men, wage earners, have left the land, but this is less serious than the loss of the other 25,000. What I think is the greatest condemnation of the economic policy pursued in this country during the past ten years and, of course, during the previous 20 years is the fact that our main industry is deteriorating in volume of production. There is no doubt it is deteriorating in relation to its power to absorb the young men and women of the country and that seems to me to portend something for which we are not ready.

Looking at the agricultural scene as a whole, it is a most depressing picture. Our output per 100 acres is £365. In Denmark it is £1,260 and in Switzerland £1,560. To put it another way, while the average output per man engaged in agricultural production in these Twenty-Six Counties is £70, the corresponding figure for Switzerland is £120, for Denmark £140. What is the cause of this disparity? Why should our production in terms of man-yield or per-acre output be less than in Denmark or Switzerland? It seems to me that the disparity is due very largely to the fact that, in most other countries in which agriculture is a predominant economic factor, scientific attention is bestowed on the agricultural economy. Money is expended on implements, drainage, afforestation, reclamation, the building of houses, co-operative marketing—none of which is being done here.

We have been told: "Well, what can one do—there are no fertilisers?" That is probably true. I am not denying that there is a scarcity of fertilisers, but I want to point out that thousands of tons of organic manure are being wasted for the want of tanks and receptacles connected with the byre or farmyard; there is no proper method of collecting organic manure, it is allowed to go to waste instead of being used for restoring the fertility taken away from the soil by intensive tillage. Had this been attended to the absence of artificial manure would not have been felt so much.

We are told frequently that we have 12,000,000 acres of land. Yet we are not able to provide for 3,000,000 people enough butter, eggs, bacon, milk or fruit. In European countries there is an argument proceeding as to whether it requires to maintain an individual an acre, a half acre or three-quarters of an acre. Goldsmith in his time believed that "every rood maintained its man". If every rood were to maintain its man now, the Twenty-Six Counties of Ireland would be capable of feeding 40,000,000 people. As it is, with the present system of organisation, we are unable to feed 3,000,000. There are shortages of many dairying and agricultural products notwithstanding that exports of dairy produce ceased years ago.

I came across recently some newspaper cuttings and found this report issued six or seven years ago to the Dungannon Board of Guardians by their clerk. It had relation mainly to the workhouse farm maintained by the Dungannon Board of Guardians. The clerk said in his report that "the workhouse farm of six acres showed a profit of £170 for the year". That is a farm of six acres run in connection with an institution. Many people are inclined to say that institutions of that kind are not the best for running a farm; yet they are making a profit of £30 per acre per annum. On that basis and assuming those figures can be repeated throughout the country, a 25-acre farm in Meath should have no difficulty in showing a profit of £750. If that is so, some more careful attention must be given to the form of our agricultural economy. I do not wish to devote more time to it, as there are others more competent to speak on the subject of agricultural reorganisation. I merely pose the question, as it is one that seems to me to be of vital importance, lying at the root of our national economy—how are we to operate our agriculture so as to make a profit adequate to maintain the people on the land? This is not being done at present.

I want to refer to something else which is closely linked with the monetary policy outlined by the Minister in his Budget speech and crystallised in the Finance Bill. I want to draw attention to what seems to be the mistaken policy of the Government in relation to wage levels. If we are to have a profitable home market for our industries and agriculture, that can only be achieved by a high wages policy and not by a low wages policy. If low wages would ever have made a country prosperous, Ireland under the British régime should have been flowing with milk and honey. Back in 1910, a farm labourer was paid 6/- a week and given his food; a man on the old Midland Great Western Railway, to my knowledge, was being paid 13/ a week; agricultural workers maintaining themselves in their own homes and working on large farms and estates were getting 9/- a week. If low wages could bring prosperity to any country, Ireland should have been the richest on this earth, but it has been proven that the contrary is the case, that the countries which provide high incomes for wage earners become prosperous, as they provide a substantial home market for themselves.

Whatever other people may do with their income, the wage earner spends his promptly, usually in buying food, which in our case is produced in the country; or in buying clothing, a large portion of which also is produced here; or in providing himself with a house, in educating his children, in doing the things which we all would like our people to do and which they cannot do unless they have an income sufficient for that purpose.

What has been the history of wage rates in Ireland during the last seven or eight years? A return which became available to me yesterday was made recently by the International Labour Organisation at Geneva, on the Index of the General Level of Real Wages, and is published in the International Labour Review for May, 1947. That return shows that, taking the year 1937 as the base and valuing 1937 wages at 100, the last figure for Éire is 86, that is, the wage level has dropped from 100 in 1937 to 86 in 1945 and the beginning of 1946. On the other hand, the figure for Sweden increased to 104; for Switzerland, to 105; for Canada, to 109; for New Zealand, to 119; for the United States, to 130; and for Great Britain, to 146. There are a number of other countries in which conditions are probably less favourable, but the countries I have mentioned are those of which we hear a great deal and some of which correspond to our set-up in many ways, particularly Sweden, Switzerland and, to some extent, New Zealand. They are countries which have very much the same kind of living conditions as we have. It seems to me extraordinary that, in every one of these countries, there is a shortage of labour—in other words, full employment, not enough people to do the work which needs to be done—and that in every one of them the level of real wages—I speak of real wages and not money wages—is higher to-day than it was in 1937. With us, the level of real wages is substantially lower—14 per cent. lower—than before the war and we are not able to provide employment for the 2,970,000 people left in Ireland after all these years.

Worse than that, there is a very unsatisfactory feature about the way in which the net value of the product of industry is divided. I examined the clothing and textile trade recently to find that, in 1938, the wages paid to workers in that industry absorbed 52 per cent. of the gross profit, but that, in 1945, they absorbed only 42 per cent. of the gross profit, so that the balance has notably shifted. In 1938, 52 per cent. of the gross profit of this industry was distributed in wages, while 48 per cent. went to rent, interest and profit, but that has now been changed and 58 per cent. goes to rent, interest and profit, only 42 per cent. going to wages, that is, to the people who will spend the money immediately on consumer goods.

What has happened with regard to prices and what has been the policy of the Minister and the Government with regard to prices? I think the Minister's policy has been to allow prices to soar, so that he will get a greater cut in income-tax and surtax. I do not think he minds very much how prices go, but that is a short view, and, in my opinion, a disastrous view in the long run, because it is going to affect the whole economy and to mean that the people who want to spend money on consumer goods will have less, while those who want money to invest or to spend on luxuries will have more.

Again, I examined the manner in which food prices have moved in a number of countries. I have already referred to six or seven countries and have shown the relationship between their pre-war and post-war wages, and I want to look for a moment at the manner in which food prices have moved in this group of countries. The easiest way to examine it is to take a £5 note and see how it is being spent, or, at least, see what it can buy in a number of countries with which we are more or less familiar. I am taking the figures compiled by the International Labour Office, and I take them from their most recent publication, the May issue of the International Labour Review circulated in Ireland yesterday. I find that in the United States it is costing £5 7s. to buy the basket of food which can be bought here in Ireland for £5. In Norway, it takes £5 4s. to buy the same basket of food, but, in Sweden, our £5 basket of food can be bought for £4 12s.; in Belgium, for £4 3s.; in Canada, for £4 2s.; in Denmark, for £4 1s.; in Holland, for £3 19s.; in Great Britain, for £3 10s.; in Australia, for £2 16s.; and, in New Zealand, for £2 10s. So that notwithstanding their higher wages in Britain and in Australia, New Zealand and Canada, the cost of their basket of food is less than it is here.

I have heard and read some of the retorts of the Minister to statements with regard to the attractions of other countries. I do not want to paint other countries in vivid colours or to make them appear attractive. I want us to make our own country attractive. I want us to provide a standard of living here which will induce Irish men and women to remain at home and induce them to work here for the benefit of our community rather than fly away to seek jobs elsewhere. There is no use in telling me that distant fields are green. The fact that our people are going away, that they are going into the Six Counties in order to get away to Britain without permits, is a clear indication that, whatever we may say to the contrary, the people both in the towns and the country here are convinced that they can do better by going away. I want to change that. I want them not merely to remain at home but to feel quite confident that they can do better by staying at home, and I urge that that is the direction in which the State should proceed through its budgetary and other financial operations.

While our prices are high and while wages are low, what was the experience during the war of companies engaged in manufacture? I took three cases at random, three well-known firms—I do not intend to list them here, but one is a wholesale firm in Cork and the other two wholesale firms in Dublin—all three in the drapery trade. Their total profits, the profits available for distribution in 1938, were £22,920. In 1946 the corresponding figure was £44,450, that is to say, the profits of these three firms alone increased by 94 per cent. between 1938 and 1946. One well-known firm in Dublin which was in a rather low state some years ago has been doing so well that almost every year there has been a uniform 15 or 16 per cent. increase over the year immediately preceding. In 1946 its net profits were 17 per cent. more than in the previous year. In another case the increased profits were 10 per cent. These are drapery firms.

Now, take food. I had before me last night the balance sheet of a well-known bakery firm in Dublin. We know the restrictions, controls and other devices availed of by the Government to restrict profits, but this firm, notwithstanding a very successful year in 1945, showed an improvement of 14 per cent. in 1946 over the previous year's figure. Let us take, say, the case of Mooney's. Its profits in 1946 were 33 per cent. above the 1945 figure. In the case of one textile manufacturing firm, its profits for 1946 were 42 per cent. greater than in 1945. These are all net profits. The profits of the whole of the textile manufacturing group were 120 per cent. higher in 1946 than in 1945. The Minister talks about excess profits, surtax and income-tax, and he is satisfied. These figures, I submit, are an indication that the investing public are getting a growingly greater proportion of the net profits of industry than the average wage-earner is getting. The people who are going to spend money on luxuries or probably invest it in India or in Japan—the people about whom Senator Ryan was speaking—are getting more than the people who would spend money on consumer goods at home. The latter are getting less and the others are getting more. In one case there was a drop of from 52 per cent. in 1938 to 42 per cent. in 1946. We hear all this talk about emigration, poverty, destitution. The Government talks about providing money for the relief of poverty. There would be no need for us to spend £12,000,000 or £13,000,000 on social services if we had full employment for our people, and if the workers were being paid a proper wage, if the people had a proper income and were properly fed, housed and clothed. The truth of the matter is that we have the most inadequate social services, and are spending rather fantastic sums on them because we refuse to adopt proper remedies to get rid of poverty.

I remember reading many years ago what I thought was one of the most hopeful statements that I had heard expressed in public life in Ireland for a very long time. It was hopeful because it was not a speech made at the chapel gate or at the cross-roads on a Sunday morning. It was a speech made by the head of the Government in Dáil Éireann; that was what gave it value. I want to give a quotation from it. The speech was delivered by the then President de Valera in Dáil Éireann on the 29th April, 1932, and will be found at columns 917-18 of the Official Debates. Mr. de Valera said:—

"I say we are a solvent community. We have potential capacity to produce wealth. We have the capacity to meet all our needs. All we want is to begin properly. We do not want to go off without a general idea of the direction in which we are going. We want to examine the situation, and I promise, just as I am firm when I think we are right, in dealing with England or anyone else, I am going, as long as I occupy the position, to be firm that the people who are entitled to get a living in this country will get it."

Later, he used the following words which seem to me to be very significant:—

"It may be that under the present system we cannot do the full work we should like to do, but we are going to try. I am going to say this, that if I try within the system as it stands and fail, then I will try to go outside the system, and I will go to the country and ask them to support me to go outside the system."

There have been several general elections held since that speech was made, but I cannot remember that any member of the Government has asked for a mandate from the people to get rid of the system which is causing poverty, destitution, emigration, low output in agriculture and high profits in industry and to substitute for that system one of full employment which would inspire our people and induce them to remain at home to produce wealth in Ireland and increase our national income. I do not think that any member of the Government has asked the country for that mandate. What I would urge on the Minister is that he might persuade his friends to harp back to what was outlined in that speech 15 years ago, and urge that it might be implemented now, because I have no doubt whatever that if the country was asked for that mandate it would give it. I think that if the country is not asked for that mandate that, in five or ten years' time, it may be too late to make a permanent improvement in the conditions of life in this country. These are the observations that I have to offer to the Minister on the Finance Bill.

If I could associate the huge sum which it is proposed to take from the people under this Finance Bill with the prospect of an improvement in their conditions, I might feel more complacent about it than I do. In view, however, of the fact that over a very considerable period increased taxation has not meant an increase in prosperity for a number of people, I do not feel too easy about this huge sum which the Bill proposes to take from the people as a whole. During the war years an abnormal sum of money was taken from the people by way of taxation. They looked forward to a reduction in taxation when the war would be over.

Yet here we are in 1947, two years after the cessation of hostilities, and we find that the Bill presented to us for payment exceeds that for last year by £5,000,000 and even that will not be sufficient to meet the cost of running the country for the year, because a further sum of £8,000,000 must be gathered by means of borrowing. In so far as borrowing is concerned, the national debt of this country is considerably over £100,000,000, and so far as local bodies are concerned, their indebtedness in loans totals over £35,000,000. Putting these sums together, we find the taxpayers and the ratepayers are responsible for a debt which is the equivalent of over £135,000,000.

Very often we hear the suggestion that that debt may be met by increasing agricultural production. We know that the debt must be paid sometime, but as the committee set up to investigate post-war conditions in agriculture very specifically pointed out, it is no more possible to increase production in agriculture without essential capital than in any other industry, and looking through the Estimates for this year one finds no substantial contribution for the capitalisation of essential agricultural production on which so much depends.

Two years ago this House passed an Arterial Drainage Bill. The estimated cost of carrying out that Bill was put down at £7,000,000, but there is no reference to that in the services that are going to cost such a huge sum this year. The report I referred to went into the question of what was necessary to secure the expansion of agricultural production. It pointed out very definitely that very large tracts of land would have to be ploughed, reseeded, limed and drained.

It also pointed out that housing accommodation, both for man and beast, would have to be improved if the production visualised was to be achieved under hygienic conditions, and it further referred to the necessity for replenishing the depleted stocks and herds throughout the country. But I do not find in the Finance Bill or in the Estimates for it, any reference to these all-important questions, and it often occurs to me, that even if we had the money available now to bring about the necessary changes, the country would find it difficult to get the necessary labour to do so, because of the large numbers of boys and girls, the men and women of this country, going to England to get employment there, I do not see where we will be able to find the labour. It is no use in trying to attribute the departure of these people to England to a desire to get out of this country. I am quite satisfied that if these young people could get remunerative employment at home which will bring them in wages as good as they could get in England, there would be no difficulty in getting them to stay.

I know for a fact that the argument which carried most weight in 1932, at the change of Government, with the people who migrate to England from these areas, was that they would get employment at home under a Fianna Fáil Government. That is why they voted for a change of Government. I meet several of these boys and girls when they come home for a holiday. They are well clad and they have plenty of money to spend, even after contributing regularly and liberally to the maintenance of those they left at home. The conditions under which they come home on holidays is enough to excite the envy of those who cannot get away like them and should be enough to induce them to try every means to secure employment at home that would place them in the same condition as their more fortunate brothers and sisters who happen to get employment in England.

If this huge bill that has to be collected from our people this year made any provision to reduce or to curb the menace to production that the exodus of young men and young women from this country is, I would not be so perturbed about it, but no reference is made to such a provision. May I say that I never did subscribe to the theory that it is a Government's business to provide employment for all its people, but I hold that it is a Government's business to so manage its affairs as to encourage the investment of private capital in a manner calculated to create employment.

Industrialists in their annual reports from time to time complain of the discouragement to expansion which heavy taxation puts in their way. So far as this Finance Bill is concerned, they will have to remain discouraged. Because of that, I feel, something should be done—something must be done—in the near future, to bring about conditions that certainly do not obtain in the country at the present time.

Certain reliefs or concessions have been given to that very deserving class of the community, the old age pensioners, in this year's Budget. They will get an increase of 2/6 weekly, but for those of them, and it is a big number, who smoke tobacco, they will contribute a large share of that increase back again to the State revenue. I have no suggestion to make as to how the situation may be improved. So long as conditions in this country are such as to cause over 120,000 of our best men and women to leave the country as they have left since 1938, anyone interested in our national development cannot feel satisfied that the country is making progress. If, as I said, increased taxation meant increased prosperity for the people, we would not have to worry so much about it, but we know that that is not the case.

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

With regard to the Budget proper as a purely financial statement, I have not got very much to say. In fact, I should wish to congratulate the Minister on his general adherence to sound budgetary principle. To all intents and purposes, he balanced his Budget and I think it is quite a considerable achievement to have borrowed little or nothing during the last six or seven years. Of course, funds have come into the Exchequer through increased savings and the Government has had the use of them, out, by and large, any tendency to inflation cannot be attributed to the usual reason, that is Government borrowing on unbalanced Budgets.

I was a little bit concerned that the Minister referred, in his stride, to an increase of, I think it was, £160,000 in the yield from the betting tax, because I consider that the Government stands in a very wrong position with regard to betting. There is very great demoralisation in the betting shops throughout the country as we know them, where people who can ill-afford it are tempted to seek for easy money with earnings that should go to support their families, and where can be seen, during employer's time, crowds of employees who wish to lay on odds. Maybe it is not for me to criticise the policy of the Churches, but I am surprised that the Churches have acquiesced in this practice whereas they have condemned other practices, which, at least, appear to me far less harmful than betting. While we may say, "you cannot stop betting," I do feel that the Government should not derive a revenue from it. I draw a distinction between what I call open-air betting, betting that takes people away to the courses, where they can see the horses, and betting which is done secretly, in premises with back entrances, in our cities. I am not at all convinced by the argument the Minister's predecessor used. He said you cannot have one law for the rich and another law for the poor; you cannot allow a rich man to bet and prohibit a poor man. I think there is a distinct difference between the man who can afford to bet and the man who cannot. There should be no encouragement given to any form of betting, least of all to betting by those who can ill-afford it.

Perhaps the Government will, sometime, consider its own attitude towards this very reprehensible practice. There are one or two matters closely associated with the Budget to which I should refer in passing. I understand that Senator Ryan has already referred to one of these matters, namely, in connection with British income-tax repayment. I need not do more than outline it at this stage because we may be able to get to more close quarters with it on the Committee Stage. The position at present is that in some cases, in fact in all cases, British tax is deducted at the standard of 9/- and in quite a number of cases relief is only given at a lower figure, in some cases at a substantially lower figure. I know of one case where the standard is deducted at 9/- and repayment is made somewhere about the rate of 4/6 so that the Irish resident shareholder is paying a contribution of 4/6 in British taxation. That appears to be a direct violation of the double taxation agreement and I would like to ask the Minister whether this matter has been taken up with the British authorities and if so what has been the response. It looks on the face of it as if the British authorities have acted in a unilateral manner with regard to this agreement. In the case of one Irish resident whom I know, he tells me that over the whole range of his investments he is paying 1/- in the £ to British taxation.

There is another matter and I think it was referred to by one Senator when I was not present, that is, whether the Minister will reconsider the position of income-tax on annuities. If I choose, in my declining years, to live on my capital I only pay income-tax on such portion as represents income, whereas if I buy an annuity I have to pay tax on the whole of my annuity although some 80 per cent. of it represents capital. Many of the annuitants are struggling people with small incomes and if there is going to be justice in the question of income-tax here is a case where justice might well be done. On the general question it has always been the practice, and I am glad it has been allowed in this case, to give considerable latitude in debate on the Finance Bill. It is really the only opportunity this House has of having a general discussion on economic policy and I propose to make, to-day, some remarks of a general character. Several speakers have called attention to the high and mounting price level. I prefer to interpret this in the form of the sagging standard of living and while to the visitor and to the casual observer this country may look very prosperous—in fact many visitors comment on how prosperous we are—those who are near to the lives of the people see a very different story. It is no exaggeration to say that anybody with under £800 a year or even, I may say, £1,000 per year who has to support a wife and family at the present high level of prices is very badly off and very hard put to it. I know some of them have cars: how they do it I do not know. I would like to give a few comparative prices as between this country and Great Britain at the present time. The price of beef in Britain is 1/3¾d. per lb.: the Irish price is 2/2 per lb. Bacon is 1/10½d. per lb. in Great Britain; here the price varies between 1/4 and 3/2 per lb. The English price for butter is 1/4: the Irish price 2/8 per lb. I will not read the whole list because it is a long list. Cheese is 10d. a lb. in Britain and 1/9 a lb. here. Eggs are on this list and you may say where do they get them from in Britain. At all events the price there is 2/- while here it is between 3/- and 3/2. Bread is 10½d. for 4 lbs. while the price here is 1/0½d. Of course I know that in many cases there are subsidies but, after all, subsidies are paid by the general taxpayer and the amount paid by the lower income levels towards subsidies is comparatively small.

Personally, I think that in times of scarcity subsidies are the right way to get down the cost of living, and I would have no objection whatever to a larger element of subsidy to the high prices hoping that they are not going to be permanent. I think we are justified in hoping that there will be a readjustment of world food prices before long. The general comment would seem to be that not only are most of the essential foods dearer here than in Great Britain, but that four of them, beef, butter, margarine and cheese are dearer than they would be in England even without the subsidies and this in an agricultural country. I do not think I need dwell any further on this because the present high prices are well known to us all. There are, of course, many causes for these high prices, the war, world shortages, and the pressure of money on too few goods. But there is one case where remedy, I feel, is within our power and it will be my object in the course of the remarks I have to make to suggest where some relief of the present high level of prices, not only food prices, because other prices are higher still, may be found. We have a very useful pointer to economic trends in our war experience. We have had, of course, like every other country, shortages in most goods during the war, and we tried to restrain these shortages by means of price control. At the same time, it was taken as a principle that it was wrong that those fortunate people who had goods should be allowed to make profits out of goods in scarce supply during the period of the war. We also hoped that, to a certain extent, what you might call a consumer conscience would influence those who were in a position to make excessive profits. What was the result? It is not always easy to find out what goes wrong in matters of this kind. First of all, nobody who has a guilty conscience is going to tell you exactly what goes on. There may be two together in the swim, and they may tell one another, but I find it extremely difficult to find out. I feel like the gentleman called James Forsyte in the Forsyte Saga where his refrain was: “Nobody tells me anything.” When it comes to asking where these profits are made, I find I can get very little information. It is one of the extraordinary miracles of the time that I have never met anybody who says the excess profits have come his way. I have met many who say: “No, no, my conscience is perfectly clear.” Yet the arithmetic is unanswerable— at a conservative figure, it would appear from the returns that £40,000,000 was taken from the public in increased prices on commodity goods. You get that from the figures shown as return from excess corporation profits tax. That is only corporations profits tax—we do not know how much is paid in excess surtax or excess tax on individual transactions. We know that none of these excess profits were made by farmers. They have all been made where one can only guess, but I have yet to meet anybody who will admit that he ever made anything.

Have we not a right to be told more about what is going on? I asked the Minister last year whether, in the interests of economic research, he would help us to know, even if it is in the nature of a post-mortem, who made these excess profits. I do not mean that he should tell us the individuals, naturally, but he should say in what groups they were made. It can be done perfectly well. Of course, if the Minister does not want to do it, he can say it is a very difficult thing to do, that some businesses were both manufacturers and wholesalers, that some were both wholesalers and retailers. From our own knowledge, we know that the degree of duplication would be comparatively small. If the Government wanted to tell us, they could do so, even if they had to group certain categories together. If they went so far as to say even this—though it would not be as much as we would like—that so much was made by manufacturers and so much by distributors, that would be something. They could say so much was made in the textiles, so much in the catering trades, and so on. I think very little was made in the motor trade.

I press on the Minister to instruct the Revenue Commissioners in preparing their report to give the public information on these lines. It is called for in the name of economic research, if for no other reason. We do not want to cast reproach at those who have done it. In some cases, their own conscience must be quite sufficient reproach. In a democratic country, we have a right to know this and I hope the Minister will agree. Will he comment on the figure I have given, as he has access to information which I have not got? All I take is the excess profits taxes, which are only half what is made; I double them; I deduct the prewar corporation profits tax; and I take it that that is the amount the public have had to pay. Mark you the difference between here and Great Britain—here they have had to pay it on consumer goods, while a large portion of the excess profits made in Great Britain was made on munitions of war. Very little, if any, was made on that in this neutral country.

When we see that large amount of excess profits made during the war, we have every reason to doubt the efficacy of price control. During all this period, price control, for what it is worth, was in operation, but it appears by the results to have been very ineffective. Do not take me as suggesting that the whole of that £40,000,000, or whatever the figure was, went in profits to suppliers, manufacturers or distributors, since what was left, the 50 per cent. that was left after the deduction of excess profits tax, still had to pay income-tax. As a rough figure, 25 per cent. was left with the profit takers, which I think was quite a substantial sum to make out of the scarcities and sufferings of war.

I feel that, by the method of assessing that tax, the Government probably encouraged excessive profit taking. If I were in business, I should say to myself: "I am allowed to keep only 25 per cent. of what I make, but I have practically no limit to what I can make on account of the scarcity, so I will see that my 25 per cent. is as big as possible." That had a certain effect in making the excess profits higher than they would have been if all the excess profits had been taken.

At this stage, I would like to repeat what I have already said in public correspondence—that I think the Government did wrongly in taking off the excess corporation profits tax when they did so. I dislike the tax as much as anybody, but it is based on a perfectly sound principle, that people are not to be allowed to make profits out of the community in times of scarcity. It was not merely a profit which stopped the moment peace was declared. It was a tax which should have stopped when goods came in fairly plentiful supply, and, up to quite lately, goods were, and, I think, still are, in as scarce supply as ever, and if an excess profits tax was justified during the war, it is justified for at least one year after and it should not have been taken off when it was. It would have been very nice for the Minister to have had some £4,000,000 coming into the revenue during 1948-49. He will get some £4,000,000 this year, but it would be very welcome and very proper that he should have had that sum next year. I see no signs—I may be wrong—that the remission of this tax has in any way stimulated production. If I could be shown that, as a result of this tax having been extinguished, there was either a fall in prices or increased production, there would be some justification for what the Minister has done but I see no such indications. With the best will in the world, increased production is difficult, owing to the shortage of raw material, and nothing in the price level that one can see shows that any portion of these excess profits, now retained by manufacturers, is finding its way, in a lowering of prices, to the consumer.

Turning to the future, it is extraordinarily difficult, in the present state of the world, clearly to see trends, but from the war and its scarcities we learned certain lessons which appear to have a bearing on our accepted economic policy—I refer to the policy of protecting and encouraging local industries. I know that some will say that all my public life I have been steadily and resolutely opposed to any form of local industrial development. That is not so, but I have always viewed with considerable suspicion and disquietude any haste or too precipitate action in this matter of promoting home manufactures. The time has come when our whole attitude towards this tariff policy should be reconsidered. I do not ask, and I do not expect, the Government to put back the clock, even if they were politically able to do so, or to take any backward steps in their present policy. What I ask is that they should take a forward step and should be alive to the dangers contained in their present policy.

What are the two main protections which the public get under any system of free enterprise, and for the moment, although Senator Duffy might say, not for long, we are committed to a policy of free enterprise? The two main safeguards the public get are production and competition. If you can get ample production, a plentiful supply of goods, experience has shown that competition will come along to protect the public by people who have goods being satisfied with the minimum profits necessary to carry on their business. These conditions do not seem ever to be capable of application in the case of protected industries, as we know them, in the narrow market we now have.

I should like to give the House an actual instance of what happened only recently. It may be remembered that, in a recent debate on wireless duties, I pointed out the dangers of giving a virtual monopoly to certain home manufactures merely on the assurance which some manufacturers gave that, if they had a monopoly, they would be in a position to produce radio receivers at as good a price as that at which they were made in Great Britain. What do we see only recently? We see a firm —it is not necessary for me to mention the name, but there are so few that Senators will almost guess its name— showing in its balance sheet for the period ending, I think, last December, issued recently, more than double the profits of the preceding accounting period. It increased its dividend from 7½ per cent. to 12½ per cent., and, I suppose, in order to be symmetrical in the matter of increases, it raises the price of its product, and we now reach a position in which the cheapest home-manufactured wireless one can buy costs over £17, whereas, not the same set produced in England but a set which I am informed is every bit as good for the ordinary poor man listener, to whom a wireless should be almost a necessity, is £5 cheaper.

That is an example of the working of our tariff policy. Is it right that that sort of thing should be allowed to go on? I take it there is a whole mass of price controls working, and I have no doubt that a very good reason is put up as to why the price of that product should have gone up, in spite of increased profits and increased dividends, but I say that it is wrong and any policy which allows that sort of thing to go on stands condemned. We know that that is not the only instance, that it is not one isolated instance. We know that that sort of thing, hard to find out, is going on in many directions, as shown by the high-sustained price level of commodities.

It is difficult to say, in any one case, what is the reason for the high prices. There may be perfectly good reasons in many cases. It may be that you cannot get imports from some countries and you may have to get them from others rather than not have them at all. We have to pay whatever price they can be got at. I am not blaming the manufacturer for making all he can. I think that if I were in business I would make all I could, especially with the uncertain future there is, but it is the business of our rulers to stay such greed and to adopt such a policy as will curb the natural human appetite to make money wherever it can be made. In the old days it was made by increased production and through competition, but these hardly exist at all to-day. They are unlikely to exist in the future to anything like the extent that is necessary to protect the public so long as this tariff policy, as we see it to-day, is continued.

Price control has been ineffective. It stands condemned as a result of the war. We are told now that there is what is called a marking up: that such and such a profit is marked up or allowed to the manufacturer, the wholesaler and retailer. That may be so, but that sort of control is never in the long run effective. As long as we have the system of private enterprise the aim should be more production and more goods in plenty, and when you have that then let competition be the safeguard for the public. How are you going to get goods in plenty at as low a price as possible? I do not see how we can ever get them, by and large, under the conditions that prevail in such a small market as ours. In order to get goods in plenty at the lowest possible price, you must get expensive capital equipment and mass production. That, of course, does not apply to everything. I would not say that it would apply to wireless. You could get maximum production in the case of wireless with a comparatively small amount of capital equipment. But it would apply to agricultural machinery which is being protected here. I venture to say that, in the case of agricultural machinery, you will never get the lowest price for the reason that the market for it here is so small. It would never pay a manufacturer to install the plant necessary for the cheapest production unless he had a much wider market than he can get in this country. It is because of the need for maximum production, and of being able to obtain goods at the lowest price, that we should review our economic policy and take stock of how we stand on the threshold of the new world.

It may be asked, what suggestions have I to make. The first is that the tariff commission should be revived, and that we should not have these duties put on without any inquiry but simply by executive action. The temptations there are too great. I should hate to be in the position of the Minister. I should hate if I were aproached by powerful political interests to put on new duties. I would feel torn on the horns of a difficult dilemma. There would be my duty to the community on the one hand and my duty to the Party on the other. I would have to consider my Party and that any benefits I gave in the form of protection might be very advantageous to my Party. On the other hand, I would have to consider my duty to the public which was to give them goods at the cheapest price, allowing, of course, for proper conditions of labour, and for the production of these goods under decent conditions.

That is the dilemma the Government are in. I would hate to be in that position because it would embarrass me politically. The support of the people who wanted to get the duties might be very valuable to me. I am afraid that owing to reasons which I need not develop, but which all members of the House know, certain people have got political power that is out of all proportion to the contribution which they make to the welfare of the community. Surely, it would be an escape for the Government to be able to say: "We are not going to be put into this embarrassing position any longer; we are going to have an open inquiry into all these new duties and as a result of that inquiry we are going to impose duties." That would be one step which the Government could take. It is one that would be reassuring to the public.

The next point to consider would be this: "How can we bring about conditions which, while stimulating and encouraging manufacture, will get us the advantage of maximum production?" It could be done in this way, not, of course, in the case of all commodities, but in the case of a number of commodities. Let us suppose that a group comes along and asks for protection. The Government might ask: "Can you give the best service on your article in the restricted market that we have got; if you had a wider market would it not pay you to put in more expensive capital equipment and adopt methods amounting to mass production?" Suppose the reply was: "We cannot in our restricted market." The Government might then ask: "What about an export market?" The key to this whole problem could be set if the Government would deliberately place on those who are seeking protection at home the duty of producing for export as well as for home consumption.

I imagine that better brains than mine could use the taxation lever to bring about that end. It would appear to me to be possible, but it would have to be worked out on some system which would give tax remission in relation to the volume of goods exported and, of course, on the understanding that the home price was no higher than the export price. If that happy state of affairs came about, you would have big production, more employment, better conditions and a lower price. That, to my mind, would apply to a certain range of commodities. Agricultural machinery would be a case in point. In that case, if the Government set their mind to get an export trade it would mean a larger volume of production and a cheaper price at home.

A stocktaking of our whole economic policy is overdue because we are drifting dangerously into more sheltered markets, where inefficiency is a real danger, and where the incentive is not to hard work, not increased production, but an easy life with good profits under sheltered conditions and with a heavy burden on the community.

I am here against my doctor's orders, but whether I like it or not, I cannot help saying quite frankly that I am amazed at the statements we have just listened to from Senator Sir John Keane. When he rose to speak, he admitted his innocence on many things and in his closing remarks he pleaded again his innocence of the world, despite his life and experience. He has suggested a complete reformation of our protectionist policy in the course of a discussion on the Finance Bill. What in the name of God has it got to do with the Finance Bill, and even if it had where is the responsibility in the suggestion that we should develop a world export trade in the manufacture of agricultural machinery? Surely the Senator knows that the iron ore and the coke necessary for such an export industry have to be imported? But the Senator goes on to betray a lamentable ignorance of industrial matters, and he has so exposed himself to the House.

I wish I could make the speech I would like to make in reply to Senator Sir John Keane, if my throat permitted me, but in the minute or two I have left, I would like to say that I do sympathise with the Minister in coming before us with this Finance Bill, faced, as he has been for the past 12 months, and in the years before, with an ever-increasing demand for this, that or the other social services. Should we not hear to-day, instead of speeches such as that to which we have just listened, something which would give the Minister some indication that the total of the Bill he has presented to the country has now reached its limit and must stop. That is something on which all members of the House might come to agreement. Surely, if you go in to buy a suit of clothes, you will not ask what is the cost of the pants or the waistcoat? You will ask what is the price of the whole suit, and here we are to-day discussing the price of buttons. We have not worried about the size of this entire Bill.

Can we afford to face a Budget and a Finance Bill of such staggering proportions as this one? We can, as long as we have this abnormal circulation of money coming in from all directions. We do not know its real worth. We have heard speeches to-day about sterling balances and we have had lectures on American economics, all very interesting, but what is the real value of the paper money coming here against the good food and other things we are giving in exchange? It is because we have this abnormal circulation of money that we can face a Bill of the size the Minister has presented to us, and face the proposals which are embodied in this measure.

I will admit, quite cheerfully, that I am one of those bad, bold businessmen so harshly criticised by Senator Sir John Keane, but whether he likes it or not, the country was very glad of these, bad, bold industrialists in recent years, because it was not a question of Yokohama or Bristol or anywhere else —it was because, thank God, this country had here goods made in Irish factories which were giving wages to Irish workers. Really, it is not fair that we should have this continued propaganda against the Irish manufacturer and industrialist. It should not go on. Of course, there are black sheep. We know it. How many are there in Britain? How many are there in the United States? Go to the Continent of Europe, which has been ravaged by the war. The percentage there is so great that it would stagger you.

We are no better and no worse than other people—we are human beings, suffering the reactions of world conditions and I hold that it is long time that we stopped fouling our own nests. We have our virtues as well as our vices. What depresses me most about Senator Sir John Keane's speech is that he does not know as much about the Minister for Industry and Commerce as I do. If he did, he would know how difficult it is to put anything across on that innocent gentleman about industrial undertakings that are not sound from the ground up. If the Senator knows anyone who is shrewder in that regard than the Minister, I would like to ask him who it is. What I would like to know in this debate, and what I would like to hear stressed is what is going to happen when the present heavy circulation of money diminishes. What will happen when it begins to go down? We have attuned ourselves to the growth of social services and other commitments with a kind of airy acceptance that this staggering expenditure can go on indefinitely. Those commitments will not go down until we indicate firmly to the Minister that it is the wish of the elected representatives of the people that so far and no further shall it go until our national economy is on a healthier foundation than it is to-day. We might devote our time to thinking on those lines.

No one has mentioned the total of the bill at all—no one has mentioned its huge proportions or called attention to the fact that it is out of proportion to the size of the community and out of proportion to what we will pay when we get back to more normal working conditions when this influx of money from outside dwindles; and these are the things this House should pay attention to. Before my voice goes finally, I want to refute so far as I am able what I would describe as some of the more reckless statements we have heard from Senator Sir John Keane. It is not the first time he has made them and it would be too much to hope that it will be the last time, but so long as he makes them and so long as I am in his presence, I will do my best to refute these calumnious charges against Irish industry, in view of the part that our industries play in the life of the nation.

I want to ask the Minister whether he is making any arrangement in the present Bill for some relief to persons who have purchased annuities. The position as I understand it at the moment is that income-tax is charged on both parts of the annuity—the part which represents the return of capital to the purchaser and the part which corresponds to the interest of the insurance company on the capital and which enables them to pay something additional to the annuity. I was unfortunately obliged to leave the House during the debate and I do not know whether the matter has been raised by any other Senator.

I would like the Minister to deal with this particular problem. I know it is rather a difficult one. An article in the Economist some months ago referred to it and indicated that a similar move is being made in England. I understand that a move has already been made in Canada in the direction I suggest. The second point I would like to mention is this: I was approached recently by a person who has held the position of District Court clerk since 1922 and I understand that clerks appointed at that particular time were not put on what was called an established basis and, as a result of that, after long and very satisfactory service, officials of that kind find themselves now being obliged to go out without any pension whatever.

I would ask the Minister to consider this matter also, and since there is a Superannuation Bill at present before the Oireachtas which provides in a comprehensive way for a very large body of officials, this is a type of official which should get some consideration. The people appointed at that time who were able to retain their posts were people who had proved themselves qualified to carry out the duties of the office. Those who were appointed simply from patriotic motives, if you like, who were not able to discharge the duties satisfactorily were released from office. Therefore those who held the post right through in that way proved that they were competent.

In the local government service there was a regulation that if a person were reappointed annually for ten years he would become entitled automatically to a pension. There is some doubt at the moment as to whether that principle still holds but it seems a very reasonable provision in connection with the type of office I have mentioned.

I would ask the Minister to deal with these two points when he is replying to the debate.

The Finance Bill is the occasion for this House to allow its imagination to range over many fields and to examine every aspect of Government policy. It is the rare occasion when the House has a chance of examining Government policy as a whole. To attempt any realistic analysis of State expenditure as presented to us in this Bill would occupy many hours. I am one of those who are interested in certain aspects of Government policy. They are rather far apart and it is difficult to coalesce them. Therefore, I hope the House and the Minister will appreciate the difficulty one is in in these circumstances. This is the only occasion, unless one puts down a motion on certain aspects of Government policy, that one can raise these matters.

In an examination of the Minister's Budget speech we are concerned, generally, about the amount of money the Minister is seeking, the manner in which it is to be spent and especially the manner in which it is to be raised. The figure in the present Bill is staggering and the Minister is very courageous when he can be as cool as he is in putting it before the Oireachtas. I know, of course, he can tell us, as some of the Opposition tell him, of the degree to which money has depreciated. That may appear to him a justification for the size of his bill, but we all recognise the fact that we have reached the stage when the demands that are being made upon the taxpayers and ratepayers are more than they can bear.

I do not know how the Minister and his colleagues feel about it but there must be a considerable sense of disquiet generally at the drift of events. Time and again here, almost as far back as I can remember, I have addressed myself to that aspect of Government and national policy which should concern all of us, that is, that despite increased and mounting expenditure year after year, there is no evidence whatever of increased production. Nobody should be as much concerned about that as the Minister for Finance ought to be. I am sure he is concerned. When I review Government policy I see no evidence of a realisation of the true position and I cannot say that I am satisfied, in the way this money is being allocated, that there is a real facing up to that major problem on the part of the Government. Naturally, I am, in the main, concerned about the conditions in agriculture and the future prospects of agriculture. I see no advance in the 12 months that have passed since I last spoke on this subject.

We had a Ministerial statement the other day. I have not yet been able to study the Official Report but, judging by the Press report, there is no evidence yet of anything new being done for agriculture. I know the Minister can tell me that we are spending a great deal of money and I would like to ask the Minister, does he think we are getting value for it? In my opinion, we are not. In my opinion, we are not attempting to do the things we ought to do and we are not attempting to spend money on agriculture in a way that would bring us returns.

I shall not go into a lengthy discussion here on what we ought to do or into lengthy criticisms, because there is a new Minister in charge of the Department and he should be given at least a reasonable time to prepare a policy other than the one he has been pursuing. I do not know—nobody knows—what our plans for agriculture are to be in the future. I do not know in what branch of agriculture to-day one could claim that we have a fixed policy, where we could expect stability and progress in the years ahead. That is the situation with regard to agriculture. Despite all the money which is being collected in taxation, and all the money which is being spent, there is no evidence of increased production. On the contrary, there is a fall. I cannot measure the fall in production last year, but it must have been very, very considerable. It was in certain respects due to causes over which we had no control. There will probably be an even greater fall this year in every branch of agriculture. How can there be anything but a feeling of disquiet when we see the mounting bill for taxation and a fall in production of the goods which, in the first and last analysis, have to bear all the burden of taxation, local and national?

I do not know whether or not the Minister will address himself to certain aspects of Government policy in regard to agriculture that, apparently, have created a certain amount of perturbation, but I am satisfied that the Minister is not without interest in the matter. I want to refer especially to the new line of departure of the Minister in regard to cattle-breeding policy. He has expressed himself in a very definite and positive way in this House. He has taken a line which is new in the Ministry of Agriculture. I wonder what is the view of the Minister for Finance on this matter, because I am satisfied that he is not without a view and he has the experience. The expression of opinion given here on the matter of dairy stock is something, I think, that could be backed up by knowledge and research carried out in this country a good many years ago. I would like if the Minister would tell us, if not now at least at some later date, whether there has ever been brought to his notice or to the notice of his colleagues in the Cabinet any report of work that was carried out in Ballyhaise at least 20 years ago in connection with this problem of the science of breeding and in determining the output as against feeding. I know myself that a very competent member of the staff of that institution did a considerable amount of research work on this subject about 20 years ago. I have never seen the result of his work published and I do not know whether it has ever seen the light of day. I, at least, have not been able to get any information about it. It is the sort of thing that should be available and would be very valuable to many people to-day who are perturbed and perhaps confused to a certain extent by the recent statement of the Minister for Agriculture.

Looking at things as they are, I suppose we have to admit that there are difficulties for any Government. There have been shortages that have influenced production, but in my view, as far as agriculture is concerned, the greatest shortage for a number of years past is imagination and courage in realising the particular kind of asset the greater part of the land of this country is and in applying that knowledge. I think we should have a Government statement on the extent to which we are going to pursue a policy of compulsory tillage in the future. Notwithstanding the views expressed by a number of people living in different areas in this country, it is my opinion that the solution of the economic problem on the land is going to be determined by the manner in which we can lay down our tillage field in grass and the manner in which we can utilise this grass and the manner and technique we can develop in saving it as winter fodder. But I see very little evidence in any of our counties of money being spent in trying to spread this knowledge. It is not being done in my own county and I do not know of anything being done by any of our county committees of agriculture to-day that was not being done 20 years ago. If anyone has any knowledge of anything new being done let him get up here and tell us about it. Is the position due to lack of leadership at the top? That is not the position in other countries. I do not want to expand on it further, but I must say that until there is a better appreciation Departmentally and Ministerially of the way the land of this country should be used in view of the type of soil and the climate and so on we cannot increase our production to the extent that it is possible to increase it to and we cannot possibly get the income for our farmers that they should have. Consequently, their spending power and taxable capacity is going to remain low.

When you look out upon the possessions we have, our greatest asset is the people of the country. I may have said something like this before. A good deal has been said in the other House about it, but when we come up against the question "How stands the Irish race" is it not deplorable that the Minister for Finance should tell us that 120,000 people left the country within the last seven years. That is the net figure of the comings and goings. We lost that amount and they were all young and virile people, most essential to our national life not only now but in the future. Trying to follow this up to find out what is the method by which we can attempt a solution one is driven almost to despair when the Minister tells us that those people went because there was no work for them to do. I wonder is the Minister convinced of that. I am not accepting it and it would be a tragedy if the nation was prepared to accept it. I do not believe it. There is more work in the country, if the country is worked as it should be worked, than three times our present population could do if we had them harnessed to the job. I know that the Minister may go on to say that we could not afford to pay them the wages. That again I reject. There has been this continuous flow of emigration to Britain and on looking on the other side of the account, I cannot find it in the Minister's Budget statement, the remittances received annually from across channel were about £13,000,000. The Minister can correct me if I am wrong, but I think the figure was £13.5 million in 1944. Look at the position we are presented with: 120,000 young men and women left the country either because we have no work for them or have not the money to pay them. Their labour in Britain entitled them to make claims against goods produced in Britain and surplus to their needs they are able to send back £13,000,000 annually. That is sent over here. Goods are not sent. As far as one can judge a letter is sent to an Irish bank to meet these commitments and it is honoured. I want to ask the Minister for Finance where does this £13,000,000 come from. Senator Hearne is amused. Perhaps he will answer for the Minister. I do not mind who answers, but I want the true facts. I am told on the one hand that men and women must leave because either we have not enough work or we have not enough wages for them and, on the other hand, the net result of their leaving is that they can send back to us claims on the labour of those who have stayed at home and we can produce somewhere out of the hat this £13,000,000 earned in England. Where is that money found? If it is found when they go over there and work to make this order on us, why should we not find it before they go at all and spend it on them in keeping them at home?

What would you do with a carpenter if you had no timber, or with plumbers and plasterers?

I do not know how many carpenters went out. If we had the statistics analysed properly, we would know the type of people who went and how much they were being paid. The Minister and some of his colleagues have said these men would do much better at home. If some of the things written in some of our papers are true about the conditions in England, I cannot imagine anyone staying there if they could get as much money at home. Our figures of national income do not reveal that situation at all. They reveal that we have nothing like the equivalent income per week that these people on the whole are sending back to us, after paying their expenses in England.

Senator Hearne asks what we would do with the plasterer or carpenter if we had not work. Up and down the country to-day there is hardly anything you can put upon a fire. I do not know what the conditions are like in other parts, but if God is not much better to us than He has been in the last few weeks in the matter of weather, there is not going to be much fuel in my part of the country. I remember when the late Mr. Hugo Flinn was in the Office of Public Works he came in here on one occasion with an order having to do with the production of turf. Amongst the queries which I put to him, I put one as to whether any survey of our bogs had been made in an effort to discover where the good and bad bogs were, to see if it would be possible to order that only the fuel from good bogs would come into urban and city centres, and in addition whether there was any realisation of the importance of building up at least a year's supply of turf in advance. At that time, there was no evidence of knowledge on the part of the people handling it that that ought to be done. Deputy Fred Hawkins knows something about bogs, just as I do, and he knows that the provident farmer does not burn the turf in 1947-48 that he made in 1947 but tries to use the turf he made in 1946-47 for 1947-48.

We hear talk of people leaving the country because there is nothing for them to do. It would definitely have paid this country to have given those people £5 a week to build up one year's extra stock of turf in our bogs and keep them at home to do it. If we had found the money in the magician's way we have been finding it when they sent it across the water—because that is how we have been manipulating things—prices would not have been any higher than they are to-day and at least we would have turf against it.

Senator Sir John Keane has been discussing rising prices and I am sure other Senators have been discussing the whole problem of inflation. How can there be anything else, when we have no real control over the amount of currency in circulation here? The Minister or Senator Hearne may tell me what they like, but as long as you have people living in England who can send £13,000,000 in emigrants' remittances and other people who can bring in £10,000,000 to spend on houses or land or anything else, and as long as that is coming into a small narrow pool here, where there is only a limited amount of things available, there is no use in telling us we have control over the inflationary situation. These are very serious problems for us and I think we are not facing up to them at all.

We had here some time ago the Minister's Parliamentary Secretary dealing with a Bill on agricultural credit. I do not know why the Minister himself did not come then, but he is here now. I ask him how he hopes to reconstruct agriculture on the basis of money at 4½ per cent., which is the rate of interest at which money is to be borrowed from the Agricultural Credit Corporation. Will he further explain why there is discrimination? If I want to borrow from the corporation to build a house, I pay 4½ per cent., but if a local authority wants to borrow to build a house for my labourer, they can get it at 2½ per cent. What is the reason? If it is possible to provide it at 2½ per cent.—and it is dear money at that—in one instance, why is it not done in the other instance, if we have a planned reconstruction policy? I appreciate what the Minister has done in lowering interest rates. I congratulate him on it. It was practically the first evidence of enlightenment that ever came from the Department of Finance. But why has not the Minister a wider vision and carried his activities into every field?

There is no place where cheap money is as necessary to-day as in agriculture. I as well as other people have given figures as to what is essential for the reconstruction of agriculture. I have given it in hundreds of millions; Senator Johnston has done the same thing, and he has taken the number of acres and multiplied it by £20 per acre, which is about the amount of capital invested in farms all over the Continent, certainly in the smaller countries, many of them producing twice as much per acre as we are. I suggest that this whole scheme of financing of agriculture has to be faced anew. Let there be a real attempt to measure all the things that are requisite to build up a healthy, progressive industry and let it be faced up to with courage and it will bear fruit.

There is one further point which is remote from this. A matter has been brought to my notice which comes somehow or other under the Minister's Department. It is the manner in which people travelling by plane and arriving at Rineanna are treated by the customs authorities.

The Appropriation Bill would be the proper place to deal with that.

Then I will have another opportunity. Perhaps the Minister will keep it in mind and know what is in front of him.

It is very difficult to know where to begin or where to end in a debate of this nature. We have travelled all over the country and have dealt with everything, including industry and lands, which could possibly be dealt with. Senator Baxter says that nothing has been done for agriculture, but only last year we passed a Bill to enable the whole country to be drained and to provide a great deal of additional land for the nation. The doing of that work had to wait until machinery was available. Senator Duffy says that we spent £12,000,000 on importing machinery. I wish we had spent a lot more. That machinery was long overdue and the getting in of machinery and implements for the starting of manufactures in a new country is a very healthy sign of the times and I should like to see more of it.

We are told that 120,000 people have gone to England but Senator Baxter must know that, for very many years, at least 40,000 people went to a country farther away than England every year —to America, when they very seldom returned. We know that because the doors were closed against them there, a great number of young people accumulated in this country. They had to go somewhere and they went to a country where they could get a wage which was never dreamt of in this or any other country. Whoever dreamt that wages such as those paid in England in the last year or two would ever have been paid? Senator Baxter made one suggestion with regard to keeping them at home. He said we could employ them in the cutting of turf, but he knows very well that there are only certain seasons of the year when turf can be cut. I do not know whether the suggestion was that we should keep them sitting idle during the winter months, waiting for the few bright days in the summer when they could go out and cut turf. What are we to do with them in the meantime?

Drain bogs, make roads into them and so on.

In the winter? The Senator is not speaking of the kind of bogs I know because you could not go into them to drain them in the winter or get near them at all when they are flooded. The idea is not at all commendable. Senator Sir John Keane suggests that we should not have any industries.

The Senator more or less put that forward and said that no advantages should be given to people who start new industries. On the other hand, he admitted that, because of the smallness of this country, it was impossible for anybody to start an industry and compete with the big manufacturers, unless he got certain advantages. He said that the best means of controlling prices were production and competition. There are numerous types of competition. Take the banking industry. We have numerous banks, with different directors and different capital, but what do we find? We find that we pay 5 per cent. on our overdrafts, and, if anybody is lucky enough to have money on deposit, he gets 1 per cent. That is competition.

There is nothing to prevent the Senator starting a bank and lending money at 2 per cent.

Senator Sir John Keane said something against it in this House when he objected to the Government setting up an institution which would lend money at 2½ per cent. He considered it unfair competition against the banks. The Senator wants competition for different things, but, where it affects his own interests, he wants no competition at all. Is that the idea?

Somebody said that this world is a world of contradictions, but it appears to me that we can be very much influenced by our own interests, although it may be unconscious on our part. Senator Sir John Keane also said that, in relation to the new factories now being started, nothing is done to control the prices. He evidently does not know what is being done. The Minister for Industry and Commerce could tell us about them, if he were here, and I presume the Minister for Finance also knows what is being done in that respect.

On a point of explanation, may I say that I never said anything of the kind? I said that I knew there were price controls—the marking up of manufacturers' prices, of wholesalers' prices and of retailers' prices.

But that they were not effective. There is a great deal to be said for that. It is very difficult to fix a price which will be effective. One industry will turn over £100,000 per year while another may turn over £10,000 per year and the same rate of profit will give the one man an enormous sum of money, while it may enable the other man merely to pay his overhead expenses and secure a small percentage. It is not possible to control prices, although it is sought to control them.

What is the cause of the high prices in this country? Let us face the facts. The cause is that there is too much money in the country and people will buy only the very expensive article. Offer them an article at a reasonable price and they will not take it. If you offer them an article of about the same value at three times the price, they will jump at it and then go home and boast of the price they paid for the article. That is one of the great causes of it— too much money, too much prosperity. It is very hard to control people of that kind, and their actions affect the poorer members of the community who cannot afford to pay big prices. It is very hard for any Government to exercise control in that respect, and I do not know how it can ever be done. Until people acquire a certain amount of sense, that kind of thing will go on and enormous prices will be paid and charged. That is one of the difficulties I see in it.

Senator Duffy also complained about the people who have gone abroad and said that higher wages should be paid. Senator Baxter suggested that higher prices could be given, but when a wage is fixed for a farm labourer in this country the farmer says that he cannot afford to pay it. The same thing applies in other walks of life. People say they cannot afford to pay. Is it to be suggested that people should not be allowed to go to England? If that policy were adopted it might be a good thing. I do not know, but we should face the facts. Let us definitely say that we will not allow them to go or that we will not allow foreigners come in here and buy land. If that were done farmers might make an outcry and say that we were reducing the value of their property. At any rate, nobody has suggested that it should be done. If it were I might have a certain amount of sympathy with it, but until we make up our minds to do certain things we surely must face the position as we find it at the moment.

Mr. Hawkins

Senator Baxter, in his opening remarks, started off by congratulating the Minister on the great courage he had shown by coming to present such a huge Bill to the House. It is not the Minister who presents this Bill to the House. This Bill represents the demands made by every section of the community and by every Party in this and in the other House for additional expenditure on social services in particular. We have to remember that £12,000,000 of this £52,000,000 is to be spent either on additional social services or by way of an increase on the existing ones. When legislation was brought before this House to increase the old age pensions, widows' pensions, national health insurance benefits and so on, every member of the House got up and said that the increases proposed were not sufficient, and that they should be doubled if not trebled. Senator Baxter on every occasion that presents itself makes a demand here for greater expenditure to help agriculture. Other members, representing different interests, put forward similar demands.

Therefore, it is not the Minister for Agriculture, the Minister for Industry and Commerce, the Minister for Finance or the Government or the Fianna Fáil Party that is responsible for the introduction of this huge Bill but the people themselves, or their representatives, because they have given way, and I believe will continue to give way, to the demands made for increased social services. Senators cannot have it both ways. They cannot do the popular thing on one occasion by demanding increases of various kinds, and then when it comes to providing the money for the services in which they are interested dissociate themselves from the means proposed to raise the money required to finance them. I think it is most unfair of any person to do that. What I say refers to every member of this House and of the other.

Senator Baxter, when dealing with the question of unemployment, linked it up with emigration and made reference to turf production. I think he went so far as to suggest that the carpenters, plasterers and painters who were forced to emigrate, through the lack of materials, should have, and could have, been put into turf production. I remember that on a former occasion he was one of those who was very emphatic in saying that townspeople should not be let within a certain radius of a bog because, he said, they knew nothing about it. He was also very emphatic in protesting against the action of the Government in taking over bogs for turf production, pointing out that if that system was going to continue, and if the great turf drive were to be undertaken, the time would soon come when the farmers of the country would not have sufficient turf banks from which to secure their own turf supplies.

Provision has been made by the Government to try to keep in the country sufficient workers to cut the quantity of turf that is essential to meet the needs of the community. A special register was compiled for that purpose, and assistance given to those people during the winter months in order that they would be available for work on the bogs when the turf-cutting was to be undertaken. I agree with the Senator in what he said that, in the olden days, the good farmer did not rely for his winter requirements of turf on the turf that he produced in the spring because, as a rule, he had on hands a supply to last him over a year or nine months. The Senator went on to suggest that what was the custom with the good farmer in the old days should be the aim of the Department that is now in charge of turf production. We would all agree with him on that if it were possible, but we must cast our minds back to the spring of 1946. The suggestions that were made here and elsewhere at that time were that immediate steps should be taken to get rid of the turf dumps that we had in the park and in such places as the Square in Galway. It was said that these supplies should be got rid of immediately because it was urged that what was going to happen was this: that in three or four months' time sufficient coal would be available and it would be a great loss to the nation if all that turf was not burned up immediately. It was that type of speech on this question of turf production that contributed its share to a lack of interest in the people in the turf areas in cutting sufficient turf.

I regret that I was not here for the whole of Senator Duffy's usual lecture. I just arrived when he was telling the House about the amount of food that could be purchased for a certain sum. As well as I remember, he said that a basket of food that could be purchased here for £5 1s. 0d. could be purchased in England for £3 15s. 0d. or £3 10s. 0d. He did not tell the House, however, that the Government in England are subsidising food to the tune of £400,000,000, and that this subsidy, as Senator Sir John Keane pointed out, is got from the consumers—that is the people who are getting this cheap food, as Senator Duffy says. The same people are also paying 3/4 for their packet of cigarettes, while they have to pay double the price for a bottle of stout or a bottle of beer that the worker here has to pay. He told us that there is a cure for all that, but that while we remain inside the present system the problems of unemployment and emigration cannot be cured. He suggested that in order to get the cure we should go outside the present system. I had the idea that the Labour Party had abandoned that theory since the last election. I remember one of their prominent speakers at the time advocating such a policy as that money could be printed here for this purpose, and that if that was done, all our ills would be cured and we would have no unemployment. We would have full employment for everybody at a proper wage, instead. Of course, he related for us the great profits made in the textile industries, and he quoted the profits made by some of our drapery establishments here in the city and elsewhere, but if we throw our minds back to the first years of the war, when an attempt was made to control these textiles, there was a great march through the city of Dublin and a great protest aroused against the suggestion of controlling prices. We were told that if there was no control everyone would have their share of whatever drapery goods were in the country, and that if the proposal were proceeded with, the drapery business would be ruined, and that the people in it would be thrown out of employment, because the employers could not afford to keep them on.

There was an appeal issued at the time to all employers throughout the country as far as possible to avoid the great unemployment that would arise from the war, to keep as many in employment as they could, and it must be said, in justice to many employers, that they answered the appeal. I have known employers throughout the country who even sent their men to cut turf, and to cut it for themselves, while they were paid full wages by the firm, and it is not fair that these employers should be called parasites now, or that it should be alleged that they sucked the life blood out of the people.

The great majority of our people who went into industry were prepared to risk their money in giving employment to the sons and daughters of Irish people. If they invested their money abroad there would of course be no protest from Senator Duffy or any other Senator at that action. Senator Ruane raised the cry of emigration and told us that 120,000 people have left this country during the last eight years. These are the figures, I think, given by the Minister in the Dáil, but the Senator forgot to tell us in the period from 1923 to 1930 that 222,250 persons left this country——

Would you not add 1931 as well?

Mr. Hawkins

You can have it if you wish.

It is a minus.

Mr. Hawkins

The difference is that emigration in that period was forced emigration, when supplies of raw materials were freely available, when our industries could have been built up, when those people could have found employment if the policy advocated at the time was adopted, but I must give this credit to Senator Ruane. When he wound up his speech he said: "I have no suggestion to offer. I have no policy" and I just said to myself: "Typical of the Fine Gael Party". He knows, and the country knows, that those people who are trying to make political capital out of emigration and the difficulties of the present time do not know the Irish people when they try to cash in on these difficulties because the people realise that 75 per cent—I would safely say that—of those people who emigrated during these eight years went because of lack of supplies and materials. In the building industry, one of our greatest industries, there was a hold up because of a lack of materials and production in almost every one of our other industries was stopped for the same reason. If we examine the situation, we find that as a result of the policy pursued prior to the war from 1932 to 1939, 80 per cent. of our people found employment in our new industries and were it not for the Opposition, both inside and outside at the time, greater progress could have been achieved.

The oil refinery at the North Wall, for instance.

Mr. Hawkins

How? If the country was spared the difficulties brought about by the economic war which was forced to a great extent on this country by the Opposition Party. I think it is no harm to say here that it is one of the greatest regrets that men who claim to be Irish were found standing in opposition to the will of the people at the time. If the Opposition Leaders had accepted the verdict of the people in 1932 and had they been wise enough to support the Government, the economic war would never have been started, and even if undertaken, it would not have been pursued as long as it was. It was pursued because it was felt by them that by their opposition to the Government at the time, the Irish farmer would give way to intimidation and that a change of Government which would bring about the achievement of the aims they had in view would be achieved.

Senator Sir John Keane went on to refer at length to the tariff policy and he instanced for us a case of the manufacturing of wireless sets. He told us of one particular firm manufacturing a set at £17 while a set could be got for £5 less in England. He said that of course it was not the same set, but that after all, it was good enough for a working man. That was the description, I think, that Senator Sir John Keane used, and I think he has, on more than one occasion, expressed a view in this House with which I agree, that our aim in the production of any article should be to produce it as good and as cheaply as possible as that which can be imported, but when we talk about cheapness, we must bear in mind the conditions under which the article was produced. We cannot expect our manufacturers to go into competition with those in Japan or other slave countries, and if we are going to end our unemployment problem by the creation of industries, those industries must be in a position to give good wages to our workers.

Senator Sir John Keane also said that he, of course, had great sympathy for the Minister when his powerful political supporters approached him with a view to having a tariff put on in order that they might reap the profits and fleece the public. I think this accusation of political preference and political corruption and jobbery, while it is wrong and will not do one bit of harm to this Government, it may have the effect, in the end, of dragging down our whole Governmental institutions, and this is one of the things we should be very careful of.

If he examines the number of people engaged in a big way in industries in this country and find their political association, we will see that instead of being powerful supporters of the Minister whose requests the Minister may find it difficult to accede to, the reverse is the truth. Surely Sir John Keane must know something of one large industry with which he is associated. This particular industry has a monopoly and surely he would not suggest that this is because of the influences or opportunities given to certain people. Mind you, this industry is very important to the people of this country. It is one which can influence the solving of the slum problem. Surely he does not suggest that it was set up by the Government here for the purpose of giving opportunities to his supporters? I think the Senator knows the directors of that particulaur industry and the side they are on, and I hope we will not have very much more of these accusations either here or in public in future.

Senator Douglas was the first speaker and I would associate myself with him in his request for consideration for a lowering of the income limit in connection with unearned incomes. I think it is only natural justice that where people are deriving small unearned incomes from house property or shares left to them by their friends— probably a widow or an old lady in poor circumstances—they should get more consideration. I would also agree with him that in the case of the birth of a child the concession should be made in the year in which the child is born rather than in the following year.

I would also like to recommend to the Minister to give some consideration to the question of granting increases to pensioners, such as pensioned teachers. They are a very deserving section of the community. Their incomes now are very much reduced. The cost of living has gone up for them just as much as it has for everybody else. I would recommend to the Minister that he should give them sympathetic consideration and, if possible, have their little pensions increased.

I must confess that I was completely and absolutely swept away by the fire of Senator Hawkins and, far more, by his audacity. That any Senator from the front bench of Fianna Fáil should get up and, without a tremor, without a smile, without a twinkle in his eye, suggest that it was desirable that there should not be attacks on Ministers struck me, to say the least, as somewhat peculiar. I was able to throw my mind back 20 years——

Mr. Hawkins

I did not hear you that time.

I will repeat it for the Senator's benefit. Some 20 years ago I was just about starting to take an interest in reading the newspapers. I can remember the fire with which the present Ministers set out, from 1927 to 1932 and thereafter, to blackguard their particular opponents of that day and there was not a murmur then from Senator Hawkins or from people who suggested like him, now, that it was undesirable to attack or to criticise Government policies or Government individuals. I can remember also the continued repeating of the too often quoted statement of the members of Fianna Fáil about emigration, that they were going to bring all the exiles back. I can remember also the statement of the Minister whom we have here to-day that it would be better if our ships were at the bottom of the sea. Remembering these things as I do, I must confess that I was quite amazed at the audacity with which Senator Hawkins was able to deliver his extremely able oration without the flicker of a smile or the twinkle of an eye.

The one thing that does amaze all of us here this evening is the enormity of the bill that has to be faced and the manner in which it has to be faced by the very small production. There comes a time when we must consider how we will be able to pay the bill we are asked to foot. There comes a time when we must analyse the method in which the funds that are to be raised are to be utilised and whether they are to be utilised along the lines of productive capacity or along the lines that they will be a heavier dragnet on the people as a whole.

Senator Hawkins very carefully skipped over a large part of the £60,000,000 odd that we are asked to bear in this Finance Bill. He was careful to pick out certain items and I suppose he will not object if I take the same line and pick out certain other items. The real trouble about this Bill is not so much the size of it as the fact that such an enormous proportion of it and such an enormous part of it is being turned to unproductive work. We have arrived at a situation at present in which we are getting entirely cluttered up by the Government machine. The Government machine, as a result of controls, and the system of controls that the Government wish to operate, as apart from an emergency, in a general situation, has got to the point at which there are far too many civil servants per head of our population; far too much cost of government for our population; far too much being spent on one of the Minister's own particular Departments, the Revenue Commissioners.

The cost of the Revenue Commissioners in 1930 was somewhere about £850,000; it is now somewhere about £1,500,000. I wonder are we getting any better value from the Revenue Commissioners than we were getting then. Personally, I think it is just typical of the whole general outlook and the whole general trend of administration in the past 15 or 16 years, a general trend towards Dublin, away from the country, accentuated all the time by the growth of Government Departments and the growth of central bureaucratic administration.

The Minister's own Department, 16 years ago, cost about £73,000. I now find in the Estimates for the current year that it is to cost about £152,000. The Department of Defence then cost £1,750,000; it is now costing some £4,800,000. The Department of Justice then cost about £48,000; it is now costing about £82,000. I am sorry that Senator Foran is not in the House because he makes great play often on the amount that is spent on law. The amount incorporated for law charges in 1930 was £62,000; to-day it is £108,000. These are the segregated totals at the beginning of each Estimate in the Book of Estimates for the year 1930-31 as compared with the present year. They are all items of completely unproductive expenditure that have in the ultimate resort to be borne by the main prop of our national economy, agriculture.

Until the time comes that we make up our mind that we are going to cut loose from the enormous buildup that has gone on in these years and get back to a system in which there are less people engaged in the production of files and more people engaged in the production of goods, we will not have a healthy atmosphere. That is the real trouble we are in at present. There are too many people engaged in seeing that somebody else does the job of work and there are too many people drawing out of the national pool of production without putting anything into it.

By and large, we may take it that the bill we are being asked to bear this year will work out somewhere about £100 for each of the 800,000 people there are here engaged in real production. We have £60,000,000 here. We have the local services. We will have, as we always have, Supplementary Estimates and, on a rough estimate, it may be taken that each of the 800,000 who are really engaged in productive work, as apart from distributive work, is being asked to bear £100 towards the cost of government, and I would suggest to the House and to the Minister that this is a proportion that we cannot stand over and that it is a proportion that we have got to cut down. I have great sympathy with any Minister who has the problem of cutting down, because invariably it is very much easier to dole out money, especially if it is somebody else's, rather than to suggest that this cause or that cause is not going to get so much. One real way of cutting down is to abandon the system that has deliberately grown up of ensuring that the Government will have a finger in every individual pie. That is the root cause of the whole increase in the cost of Government administration and until this knot is cut there will not be very much real difference in the cost of administration that will be presented to us year after year. I do not think that any change from one tax to another in the meanwhile is going to be anything more than a palliative but there are certain things which, in a small way, should be dealt with, and although I propose to come back again to them on the Committee Stage, it may be more convenient for the Minister if I give him warning of the line I am going to take. The first part of the Bill deals with income-tax and surtax. I think, myself, that there would be a case for dealing in a different way with the higher levels of surtax. I think it is a case that has not been sufficiently examined.

There is too great a discrepancy in the very high levels of surtax between this country and England, and I think that if there is this big discrepancy and if it is going to be allowed to continue it will lead to an unhealthy situation just as it has led to what we have seen transpiring during the past 12 months. At the other end of the scale there is, I think, an unanswerable case for an increase in the personal allowance of widows. In 99 cases out of every 100 when a man dies and leaves a widow she has to lower her standard of living. I appreciate, of course, that during the first year there is some relief because the basis of assessment is changed during this first year, but thereafter there is a very difficult situation for the widow, and I think there is an unanswerable case for making the personal allowance greater for a widow than for a young bachelor. It is a great pity that the Minister did not take the advice offered by Senator Douglas some time ago and introduce a new system of income-tax. The present system is unsuited and highly involved, and as long as it remains it is certain that any person with anything more than the most simple type of income must employ a professional person to deal with his affairs. Income-tax has become so involved that it is essential and a necessity for such professional assistance and that is a great mistake. I think also that there is a case, since this necessity arises through the fault of the code, for the fees paid to such an accountant being allowed as a proper charge on the income of the person concerned before the tax is assessed. The situation at present is that the fees payable to an accountant for computing the profits of a company or the earnings of a man are allowed, but it seems to me that it is the fault of the law and that being so, it should be taken into account and the fees of the income-tax expert or accountant should be properly chargeable before the income is taxed in the ordinary way.

Finally, in respect of Part I, I want to deal with another small point. There is provision under a recent Act, I cannot remember the exact year the Act was passed but I have no doubt the Minister is aware of it, empowering the Revenue Commissioners to go back 20 years for the purpose of raking in old assessments. That was put in to enable the Revenue Commissioners to catch up on income that had not been properly returned. I am not going to comment on the impropriety of this because I think it is an established fact that if everybody paid the tax which they are entitled to pay those who pay their full liability would have far less to pay. They would get off with about 2/6 less and provide the same amount of money. While the commissioners have that power to go back for 20 years the taxpayer has no power to claim, as a right, the allowance to which he would have been entitled during those particular years. What, in fact, happens, is that the Revenue Commissioners make a proposal to grant equivalent relief by way of voluntary concession, but it is unfortunately a fact that because it is only a voluntary concession it is used as a stick to ensure that certain figures will be accepted by the taxpayer although, in fact, they are not, in his view, a completely accurate picture of the situation. In fact what happens is that the Revenue Commissioners take the line: "If you will not accept our view of these figures we are not going to give you the concession of the allowance." I agree that the Revenue Commissioners should be entitled to go back for more than six years on anyone who has not properly returned his income but equally the person whose income is being dealt with should have the right to claim the allowances to which he would have been entitled when the matter was first being dealt with.

The whole question of income-tax and corporation profits tax is a question of drawing an assessment for tax in such a way that there is left the greatest possible incentive to get on with productive work. I am not satisfied that the present method is conducive to this end. I think that there is not sufficient incentive to save for capital development. I do not think there is sufficient incentive for people to branch out in new businesses that might be analogous to their existing businesses and bring further production. I think that the whole problem can only be met by following the suggestion of Senator Douglas and trying to strike out for ourselves here our own line of taxation to meet our own circumstances. The sooner some Minister sets up some body to examine the position, the sooner there will be a fair tax on the money a man may have and there will be the greatest possible incentive a man can have to ensure that what will be done will make for greater productivity.

An Leas-Chathaoirleach

We have received a request that owing to the strain imposed on the reporting staff by the circumstances that the two Houses are sitting and as some of the staff are absent on sick leave, that the House should not sit late to-night. I presume it is the intention to conclude the Second Stage of this Bill by 10 o'clock to-night, and if that be so I suggest that the Minister be allowed half an hour to conclude.

Will the Minister be engaged elsewhere to-morrow?

An Leas-Chathaoirleach


Being associated with the farming community, I know that one of the greatest things with which we are concerned in the West of Ireland is the drainage question. Everybody evidently realises that it is very important, but there is nothing in this huge bill set out for it this year. The only information we got about it was from Senator O'Dea, who says the material and machinery are not available to proceed with drainage. I would ask the Minister to be kind enough in his reply to say when the Government expects to be in a position to start, or when it is hoped the necessary materials will be available. I could stress the great advantages and the great necessity for drainage a good deal more, but I do not wish to delay the House now.

I have spoken on other occasions about the Land Commission dividing bogs and leaving them in a waterlogged condition. People signed up and thought roads would be made in and that bogs would be drained, but after some years they find that that has not been done. In my district there are bogs within a mile of the railway station which could have been of great advantage for the last couple of years, if roads had been made into them. One particular bog I know of would have been available to the local people to cut turf privately. The Land Commission allottees are paying rent for their bogs and not cutting turf on them, but are renting bogs from private individuals. Senator O'Dea says employment cannot be given in the winter time, as the bogs are waterlogged, but I know that useful work could be done regarding roads and drainage, at least in Roscommon and Mayo. I am not making these remarks by way of derogatory criticism, but am stating the facts, and if these things can be remedied they should be.

Regarding transport, people coming from the West of Ireland to emigrate to England are left behind. I know five people who were left in Charlestown. They had to take a private motor car and pay £1 5s. apiece to catch a bus at Longford, in order to get the evening boat for England. I wonder if it would be possible to send some extra buses in the mornings.

I definitely support Senator Hawkins in regard to the pensions for old retired teachers, who are out on very small pensions, and especially junior assistant mistresses. I understand their allowances are very small and it is hard for them to live. I strongly support Senator Hawkins in his remarks, and I would ask the Minister to give this point his sympathetic consideration.

This debate has taken a very wide circuit, but no one said what should have been said, about the remarkable achievement of the Minister and his advisers. With all the demands for increases for teachers, for universities, for old age pensioners and so on, that have been made, the increases have been made without adding any extra taxation, except in two minor details. That is a remarkable achievement and shows how the country is able to support this tremendous rate of taxation without being put out of gear. That ought to have been said and was not said.

I thank Senator Mrs. Concannon for the kind word. In the short time I have here, I want to say that Senator Douglas was wrong when he said I gave only a week's notice that stocktaking for the purpose of a claim for the recovery of excess corporation profits tax was to take place on 31st December, 1946. In the Budget speech in May, 1946, almost eight months before the end of December, I gave this notice to those who wanted to make a claim for the recovery of excess corporation profits tax in respect of stock held by them which did not realise the value placed upon it. I said:

"I wish to make it clear now, however, that it is proposed that any relief given in this connection should be by way of repayment. Companies who desire to claim relief will be required to show, among other things, to the satisfaction of the Revenue Commissioners, the amount of stock on hands at the 31st day of December, 1946."

"Companies who desire to claim relief will be required to show, among other things, to the satisfaction of the Revenue Commissioners, the amount of stock held on the 31st day of December, 1946", so that it is untrue to say that they got only a week's notice. They got almost eight months' notice and they got, on my instructions, from the Revenue Commissioners some time before, a repeat of that warning that they were to look out and that, if they wanted to make a claim for repayment, they would have to take the stock.

We had to bring all this to an end sometime. Whether we were right or wrong to have promised in the 1946 Budget that we proposed to abolish excess corporation profits tax, when that promise was given, it had to be carried out, and there had to be some date set by which the shopkeepers and manufacturers concerned should make up their books, take their stock and show thereafter, if they wanted to make a claim, that the stock had fallen in value. Senator Sir John Keane thinks we were wrong to abolish excess corporation profits tax. I think that if the Senator examines the matter he will see that it was unfair to keep that particular tax in being beyond the emergency. It is true that he did not exaggerate when he said that there were profits to the extent of £40,000,000 but, in all cases, these profits were not excessive profits, because, on the basis of the standard fixed, if a person made losses instead of profits before the war, he only got a reasonable standard, after which he had to start paying excess corporation profits tax.

If we propose to retain a tax on profits, the ordinary straightforward corporation profits tax is much better than the excess corporation profits tax. The British Chancellor of the Exchequer for a number of years was thinking over the problem of what they were going to substitute for the excess corporation profits tax, when it was abolished, and he came to the decision to adopt the system in operation here for a number of years, that is, a straight tax on the profits of corporations. The British tax is called the profits tax.

Senator Sir John Keane and Senator Ryan raised the question of double income-tax relief. It is true that, since the British made a series of new conventions with the Government of the United States and the Governments of other countries, some of our taxpayers have been experiencing trouble in the case of investments in British companies which do business in America, Canada, Australia or some of these other countries, and all I can say at the moment is that, for some time, that problem which has been called to my attention has been receiving very careful consideration from my advisers. I have to leave the matter at that at the moment.

Another question raised by Senator Sir John Keane was the question of income-tax on annuities, a matter which was also touched on by other Senators. It was claimed by Senator Sir John Keane that if a person purchases an annuity from an insurance company, portion of the annuity was a repayment of capital and should not be treated as ordinary income. If we take that line, the difficulty is to say how much is capital and how much income. If the Revenue Commissioners were prophets and could see that the annuitant would live only for two years, if they could tell the exact date of his death, they could apply the slide-rule and say: "Thirty-five per cent. of your annuity is capital, my dear fellow, because you will be in the grave two years hence."

Very cold comfort.

It would be better not to go near them.

They could forgive him that amount of capital repayment, if that was the desire of the Oireachtas, but the Revenue Commissioners are not prophets and they have to take a man's income as an annual income. All this matter of what is interest, what is capital and what is income is a matter not so much for the Revenue Commissioners as for the courts and the question was put before the British courts and fought out. It was decided there that the annuitant could not claim, if his annuity was for an undetermined number of years, that any portion of the annuity was a repayment of capital. If, however, a man gives a sum of money to an insurance company and says: "Pay me this sum in 20 years," then the calculation can be made as to what is capital and what is interest, and in that event the repayment of capital is given as a deduction; but when it is an annuity for an unknown number of years, for life, as the Revenue Commissioners cannot say and have no means of calculating when the claimant is going to pass on, they simply cannot give any relief. There are a number of other arguments against that proposition, but the one critical argument is the impossibility of carrying it out. Any Senator can see that, if that system were to grow, we would get very little by way of death duties, which would be a secondary consideration in determining that it should not be adopted.

Senator Johnston spoke at some length on the question of international trade and what is going to happen in the future. All I can say is that, whatever happens in the future in the sphere of international trade, we will be better off if we can take reasonable care of ourselves. To the extent that we are producing the essentials of life, we can have independence in the approach to all the problems and to all the solutions that are put forward to us on the international plane. It is undoubtedly a fact that if European economy is to recover rapidly it should get the assistance of countries whose productive machinery is in full working order. It is also true to say that, in the future, if the exporting countries do not import to the extent that they export they will have to give—if they want to continue exporting—to the foreign countries the means with which to buy exports in their own currency. There is no way out of that problem.

Our own immediate and most pressing problem has been touched upon by a number of Senators: that is, how we are to induce our people to remain at home and produce the goods that are necessary for their own welfare and for the welfare and comfort of the nation. The number one solution of that problem is for our people to realise how well-off they are from many points of view. I would not attempt to prove that we are as well-off as we should be, or that we are as well-off as our resources would enable us to be, but in relation to most countries in the world we are better off than they are.

Senator Duffy's little yellow basket told a wrong story here to-night. That £5 note would only fill a small corner of the little yellow basket in England. I think it was Senator Sir John Keane who spoke about meat in England costing 1/2½ as against a couple of shillings here. The fact is that in England they can only buy 1 lb. of meat in the week —1/2½ worth of meat—and that will fill only a small corner of the basket. To get as full a basket as the ordinary workingman wants for his own comfort so as to maintain a fair standard of health and enable him to give a big output, would cost very much more in England than it would here. That is true.

The difficulty about Senator Duffy is that he gets hold of some kind of statistics which relate to three or four years ago and uses them as if they were up to date. He goes not to the ordinary statistics that are available to everybody, to the weekly and daily prices quoted in the United States or here or in England, but to some report of the International Labour Bureau of the League of Nations, although these might be three or four years old.

I mentioned, of course, the latest report.

The latest report might be a year old and that might refer to a period two years earlier. We know how difficult it is here to get out long comprehensive reports, and we know the difficulties in which these international organisations, such as the Labour Bureau of the League of Nations, have been in for a number of years.

We know that the prices of food are fairly high here. Why? Because our farmers are getting more money, even than the American farmers in most cases, for growing food. We could reduce the cost of food if we could reduce the prices that we are giving to our farmers and if we had some means, other than price inducement, to induce or to force them to produce the food that we require.

Would the Minister not agree that a very large proportion of the cost is due to distribution charges?

That is so, unfortunately. I think that the most effective price control that has ever been invented is competition, but when you have shortages—of essential commodities, particularly—you will not get competition because it is only human nature for people to charge as much as the market will bear. The Minister for Industry and Commerce is doing his best to stop that, and to a certain extent he has been successful, but no Minister and no Government institution and no number of inspectors are a proper substitute for competition, and the only way to have competition is to produce more goods. One of the ways in which we could produce more goods is this—if Senator Duffy and his friends would stop doing the emigration agents or the emigration advertising agents.

There is no need of that. The people know the facts for themselves. I have said that is the reason why they are going.

A number of them have come back as well.

The net figure is 120,000.

The net figure for the eight years ending 31st December, 1946, was 120,000. The net figure for the eight years ending the 31st December, 1931, was 220,000. I am not mentioning the figure of 220,000 for the eight years ending on the 31st December, 1931, as an excuse for the 120,000 in the eight years ending on the 31st December, 1946. I wish we could have kept them all at home, but as every Senator knows, there were a number of skilled trades here which had to shut down during the war. Everybody knows of the ghosts of garages that there were all around the place. It was a common sight to see a few motor cars covered up with sheets and no one around the place. A great number of other industries had almost to close down because of the lack of essential materials.

Surely the Minister is not suggesting that all the people we lost were skilled men and women?

No, but I say that one element of the problem is that there was no work for these skilled people to do. The question was whether we should attempt to keep them within the country with bayonets, and try to get them to do the work that was available in the production of turf or on the land or on the roads. There is something other than a Government's desire involved in this, and if we had kept them at home Senator Baxter and Senator Duffy would be telling us that we were causing a grave injustice. If we kept engineers, fitters and electricians and people of that kind at home, and put them on the bogs, these two Senators would say we were slave drivers. One of our big difficulties is that although there is a great scarcity of workers on the bogs to produce all the turf we require and although a man can earn more on the bogs than he can get in a mine in England, you have big numbers of unemployed in big cities like Dublin, Cork and Limerick——

How many of them are physically fit?

About half and half.

Very good; that is what you are up against.

Take those who are physically fit—are we to drive them out of the city and say that because there is work available in Galway, Clare or Kerry, they will not get unemployment assistance here? Some people will say we should, and others would say that it would be too great a hardship, and that we should not overnight ask persons reared in the city and accustomed to city occupations to carry out agricultural labourers' work. But we could, as I said, increase production in that way. I do not think there is anybody who would advocate they should be driven out of the city at the point of the bayonet. If we did that they would not be much use to us.

On the question of wage levels, as far as the ordinary city worker is concerned, wage levels here at the present time are higher than they are in London, not to speak of the other large cities in England. The bricklayers and masons get 2/11½ an hour here, as against 2/7½ in London and 2/6 in large towns in England. Carpenters and joiners get the same rate and so do painters and plumbers. Electricians get 3/- an hour here as against 2/9 in London and 2/7 in the large towns. Unskilled labourers get 2/3 an hour here; 2/1¼ in London, and 2/- in the rest of England.

Apart from the actual cash per week, there is the fact of the difference in taxation. A single person with £200 a year in England pays nearly three times what a single person will pay here in this year. A married person with no children on £350 a year pays eight times as much in England as a similar person pays here, and when it comes up to £600 a year for a married man with three children, the married person with three children in England pays four times as much in income-tax as the married man with three children here. All those matters have to be taken into account as well as the taxation on things like beer and whiskey, which is much less here than it is in England. We have all heard of the English tobacco and cigarette prices—much too often recently—not to realise that the man who gets a few pounds in England and who wants to enjoy himself or live on any reasonable standard has to pay a lot more money for certain articles in England than he has to pay here, and if he wants to get more than what will fill the miserable corner of the little yellow basket, he will have to pay far more for the things than he would have to pay here.

Why do so many go? What is the Minister's answer to that?

A lot of people went. They are not going at the same rate now as they went before, and I hope less and less will go. I agree with Senators who say that if we are to support a bill of the magnitude of the Budget bill this year we will have to increase our production. Since this time last year, there were certain increases in wages and salaries granted, not all of which were quite justified by present levels of production, and the advances that have been given are counted, to a certain extent, as advances against future increases in production. If that increase does not come off, then the whole level would have to be reexamined again and I hope that everybody—farmers, industrialists, and the trade unions, all of whom are in a position to help, will do all they can to encourage a bigger output during the coming year. At present, there is an unlimited market for all classes of goods that can be made here, and there is utter scarcity in some essential articles of life that are needed here. Anybody who does anything to encourage persons who can help in production here to leave the country is doing a great disservice to the community, and everyone who can put a man to work to add anything at all to the national wealth is fulfilling a patriotic duty.

Question put and agreed to.

An Leas-Chathaoirleach

Next stage?

Next sitting day.

An Leas-Chathaoirleach

Tuesday, 1st July?

Why Tuesday? Is that decided? Have we not trains every day?

An Leas-Chathaoirleach

I am told there is an understanding as regards Tuesday as next sitting day.

Committee Stage fixed for Tuesday, 1st July.