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Seanad Éireann debate -
Tuesday, 1 Jul 1947

Vol. 34 No. 1

Finance Bill, 1947 (Certified Money Bill)—Committee and Final Stages.

Question proposed: "That Section 1 stand part of the Bill."

There is a general point with regard to income-tax which I wish to make. I have not got any specific recommendation down, but I would like the Minister during the year, while the next Finance Bill is incubating, to consider again this question of income-tax on life annuities. I feel that the Minister's reason for not doing so could be easily overcome if he really wanted to admit the equity of the principle. If he wanted to confine the taxation to income and to exempt capital, it would be possible to work on actuarial tables of life.

If a person takes out an annuity at a certain age, in the insurance company's calculations, there is so much capital and so much income involved in that annuity, and it would be easy to work out an average of that kind and to say that, in the particular case, 80 per cent. is capital and 20 per cent. income—if it was an older life, more would be capital and less income—but if there was a desire to put the taxation on a par with a case of a person who spends his own capital, it could be done. It is done in some countries and I should like the Minister during the year to consider the point with a view to giving relief to a very necessitous class and in a very deserving case.

Apart altogether from giving relief, it seems to me that there is need to overhaul the entire code. For instance, the returns made in respect of income-tax and surtax cover quite different periods. The income-tax year ends on 5th April and the person who makes a return in respect of the income-tax year ending 5th April is required to make a totally different return in respect of surtax, because in that case the year ends, I think, on 31st December. The whole idea of this separate assessment for income-tax and surtax has been taken from the old British administration and there seems to be no justification whatever for it. Is it not a simple proposition to levy income-tax on a progressive scale? In New Zealand, and perhaps in other countries, the taxation starts quite low, but it is at the rate only of 3d. in the £ and it continues to build up until it reaches something like 19/- in the £. Is there any reason why the same kind of regulation should not apply here; in other words, start at whatever point may be agreed upon at a low figure—3d., 4d. or 6d.—and build up until the maximum is reached. I am not suggesting that this device should be availed of to reduce the income of the Exchequer. I merely make the suggestion that there should be a new approach to the method of levying direct taxes on the community and I urge strongly that the Minister, when considering the proposition put forward by Senator Sir John Keane, might consider this proposition also.

I want to raise a point with which I am not very familiar but to which I think I can address myself under the section with regard to the position of our nationals who have investments in British companies. The position is that the national here used to get the full refund of the deduction made in Britain. I should like to know if the Minister has any information to give the House as to any alteration in the position as it formerly existed, because my information is that the position has been altered by the British Finance Act of 1945, which apparently limits the amount allowable to the United Kingdom rate of tax on the dividends specified. That is some information which is only disclosed to people when they receive their dividends and it is not a situation which can be regarded as satisfactory. It is a position of which our nationals have no information and something on which we should have a statement from the Minister. The position ought to be clarified as to whether it is in fact a going back on something which has been the accepted position for a number of years, and embodied in an agreement between the two countries. I should like the Minister to say if there was any discussion on this point before the position was altered by the British Government in the 1945 Finance Act and, if so, did we agree to the altered basis on which these payments are now being made.

Tá pointe amháin ann gur mhaith liom go ndéanfadh an tAire machnamh air i gcóir na bliana atá le teacht—pointe isea é go mbíonn a lán staidéir dhá dhéanamh uaireanta air. Má leagtar £50 cánach ar dhuine—agus tá daoine ann a íocann £200 nó £500—tá laistigh den airgead sin cáin ar an airgead sin féin. Tógaimis cás Seirbhísigh Stáit go mbaintear cáin ioncaim dá thuarastal. Ní bhfaigheann sé an t-airgead san, nó úsáid an airgid sin, beag ná mór. An áirítear cáin ioncaim ar an tsuim sin féin a bhíonn laistigh den cháin, bíodh nach bhfaigheann an duine sin í?

Do réir mar thuigim, bhí sé mar nós in Ameirice—b'fhéidir go bhfuil sé fós ann—nuair d'íocadh duine suim airgid i bhfuirm cánach, go bhfaigheadh sé thar n-ais an méid cánach a bheadh ar an tsuim sin féin. Gheibheadh sé freisin an méid arbh fhéidir leis a chruthú gur cháin é, gur íoc sé é ar thicéidí amharclainne nó ticéidí pictiúrlainnc, nó in aon tslí eile, ar ghluaisteán nó rud mar sin. Gheobhadh sé thar n-ais suim na cánach ar an méid sin airgid.

Dá mbeadh £50 dá íoc ag duine mar cháin ioncaim, ba cheart go bhfaigheadh sé thar n-ais 6/6 sa phunt ar an £50 sin. Ba mhaith liom go ndéanfadh an tAire machnamh ar an bpointe sin, agus ná beadh cáin dúbalta le n-íoc. Tá suim chinnte ann, agus ni suim bheag í, go bhfuil cáin dá híoc uirthi, agus is cáin an tsuim sin í féin.

Senator Keane is back to this point to give relief for what he describes as the income portion of the annuities, that a person might purchase. It is all right for insurance companies to take up such a policy. They make their own assessment or they get their doctors to assess the value of the man's life and if he does not agree with it he can go to some other insurance campany and try to strike a better bargain. I do not think we could ask the Revenue Commissioners, even if they had a medical staff, to assess the probability of the person living five years or 10 years. I do not think it is possible to work it. The only thing you could do would be to have it a rule that you would take an insurance company's assessment of the length of time the person was likely to live. I do not know whether they would tell you that or not and it would be a dangerous type of business if the sums involved were very large. On the whole, I am thoroughly convinced that this should not be done.

If a person buys an annuity for a stated number of years, the Revenue Commissioners know then the number of years in which the income will accrue to the individual involved and they can make an appropriate allowance. On the other type of annuity, for an indefinite number of years, the Revenue Commissioners could not, by any process that has been suggested to me to date, make an assessment that would be satisfactory both to the State and to the individual involved. There would be all sorts of trouble about it. However, if Senator Keane wants to put down an amendment to the Finance Bill next year and puts down something concrete, we can argue it out on the basis of his suggestion rather than in a general sort of way.

I do not know what Senator Duffy knows about New Zealand, but he always brings it in here, as if something was happening there that we should follow pronto. He talks about income-tax there starting at 3d. in the £. It starts lower here. If the Senator looks up the Annual Report of the Revenue Commissioners, he will see that a man on the 7/6 rate at £300 a year would start paying at 3d. If he had £350 a year, it would be 7½d. in the £—that is, for a married couple without children. The effect of having a certain number of pounds income free before the half rate of 3/3 comes into operation, is to reduce the average on the total. Taking an earned income of £175, if a man has £180 he pays only five times 3/3, so one can see that the average rate over the whole amount of his income is very low indeed for a beginning.

Senator Baxter spoke about the effect of Section 52 of the British Finance Act. The British adjusted their income-tax law in view of the fact that recently they have made double income-tax agreements with a lot of other countries, whereby they are allowing tax that is paid in the other countries to be deducted from the tax paid by the resident in their own country. The new type of arrangement that they have made has affected some of our taxpayers here and we have heard from some of them recently. All I can say at this stage, as I said in reply to Senator Sir John Keane on the Second Stage of this Bill, is that the whole matter is being thoroughly examined by my advisers and myself.

An Seabhac made a suggestion which I do not think it is possible to follow, that we should allow a man to deduct from his income-tax what he pays in other taxes. He also spoke of the civil servant who has to pay income-tax and suggested that, if he is overcharged, he should be allowed not only the money back but an allowance of the income-tax. Assessments are made in respect of the year that is past and gone. On the whole, the income-tax code is complicated enough without entering into other complications by having drawbacks of that kind. Senator Duffy spoke about the surtax year and the income-tax year not corresponding. That is not so; it is the same year.

The surtax year is a year earlier.

He spoke about different dates and that sort of thing.

In the latter part of his statement, the Minister seems to recognise that the taxation code is complicated. I started by complaining that it is complicated and said there is no reason why it should continue to be so. It would simplify the returns by a taxpayer if we had one code for income-tax and surtax, to replace the two existing codes. The Minister was under a misapprehension in regard to what I meant by starting low. He mentioned that on a certain income level a rate of 7/6 involves the payment of an average of 3d. in the £ over the whole income. That is not my point. What I tried to suggest was that we should agree on a figure at which taxation would commence, after having made due allowances. I mentioned 3d. as an indication of what I meant by starting low and then building up. If we started at £150 as the level at which one would commence to levy taxation, one could charge 3d. in the £ on the first £10 or £20 and 6d. on the next range of figures and build up from that to 10/-, 15/- or even 19/- in the £.

That is an alternative method to the present one in which there are two different types of assessment, one for income tax and one for surtax. I am in the fortunate position of having to make no returns for surtax, so I do not know what is involved, but people say there is a tremendous amount of worry and confusion and it would save a good deal of anxiety if they could make one return on a graduated scale. The Minister should not find the suggestion too difficult and there is much to commend it.

I must confess that I was glad to hear Senator Duffy supporting a point of view put forward by Senator Douglas in a specific motion a considerable time ago and adverted to on several occasions since. However, in dealing with Senator Sir John Keane's point about annuities, the Minister seemed to visualise that the insurance companies fix an annuity payable in each individual instance according to the expectation of life of the proposed annuitant. That is not the case. The fact is that all the insurance companies concerned have specific tables by virtue of which they grant their annuities to all comers of the particular age involved and that it is a specific amount which, if one is 30, 40 or 45, one will get. Any two people who are 30 will get the same annuity from the same insurance company. The rates, undoubtedly, differ between one insurance company and another, but the rates are fixed in any insurance company for two people of the same age.

The Minister also, I think, omitted to take cognisance of the fact that he himself goes in for an assessment of expectation of life in the assessment of death duties, for example. The Minister assesses the expectation of life of people in certain circumstances and assesses them by certain specific tables which, I think—I would not like to be dogmatic—are included in the Act of 1853. Senator O'Dea will be able to be more accurate than I am. But, the tables are in an Act in which the expectation of life of a person who is entitled to an annual sum is set out, and it does appear to me that it could be dealt with on the same basis. I agree absolutely that you could not deal with a case if an insurance company was making a differentiation between A and B, both of whom were aged 60 but the number of cases in which such differentiations are made is very trifling indeed compared with the number of annuities granted. Where it is fixed, therefore, there would not be the objection the Minister made out. I think expectation of life could quite easily, for the purpose of income-tax, be assessed in exactly the same manner as the Minister assesses it for the purpose of making a person pay death duties.

Is trua liom ná fuilim ar aon aigne leis an Aire i dtaobh an leathscéal a luaigh sé fá nár cheart géilleadh don mholadh a thugas dó i dtaobh na bliana seo chugainn. Ní dóigh liom gur leor mar leathscéal go mbeadh sé níos trioblóidí. Ní réitím féin leis go mbeadh se níos trioblóidí. Ní bheadh le déanamh ach suim an méid d'íoc sé sa mbliain roimhe sin a ligint saor ó cháin san athbhliain.

Má d'íoc duine £50 anuiridh ina cháin ioncaim, ba cheart go mbeadh saordhul ó cháin ar an méid sin aige. Ba mhaith liom a thathant ar an Aire nach éileamh cóir ar dhuine go gcaithfidh sé bheith ag díol cánach fé dhó. Cuir i gcás, má chaitheann sé airgead ar thobac nó ar chaitheamh aimsire nó ar thicéad amharlainne, nó má dhíolann sé cáin ar ghluaisteán nó, fiú, rátaí a dhíol, agus gan tairbhe ann dó féin go pearsanta ná úsáid an méid sin airgid aige, ní dóigh liom gur ceart ann féin go gcaithfeadh sé cáin a íoc ar an tsuim sin, sé sin, cáin a íoc ar airgead cánach. Níl ann agam ach moladh don Aire i gcóir bliana éigin le teacht. Is eol dom nach féidir an t-athrú sin a dhéanamh anois ach ba mhaith liom go gcuirfinn síol an smaoinimh ina cheann.

Do chuir an Seabhac i gcuimhe dhom an liosta fada a bhíonn sna Scéala Fiannaíachta des na nithe nach féidir a dhéanamh. Ní féidir snámh in aghaidh easa. Ní féidir gad do chur um ghainimh. Ní féidir tíos a dhéanamh gan mhnaoi. Agus ní féidir aon ní d'aiteamh ar aon Aire Airgid i dtaobh simpliú na rialacha nó i dtaobh nithe a chaillfeadh airgead dó.

When I heard the Seabhac talking to the Minister for Finance I was reminded of a list of things that very often occur in Irish stories of what you cannot do—you cannot swim against a cataract, put a withe on sand, house-keep without a woman—and you cannot persuade a Minister for Finance to simplify anything. The Seabhac when he has heard seven, eight or ten Ministers for Finance, will understand that the Minister for Finance has a point of view of his own, which is not a Party point of view, which is a finance point of view and which can be expressed either roughly or smoothly, politely or impolitely, but which never varies. For example, the Minister for Finance to-day explained very blandly —has Senator Sweetman dealt with the point—that, of course, you could not deal with annuities, you do not know how long persons are going to live, but he is dealing with all kinds of things every day that are just as uncertain as our own lives are uncertain. He deals with these things most effectively and he charges you most effectively even though he does not know how long you are going to live and when you die he is going to charge you, too, although he does not know how much you have.

The point made frequently by Senator Douglas, made from these benches and made to-day by Senator Duffy, that the whole code ought to be simplified came up very clearly for me within the last few weeks. I met a widow who complained to me that she had not received her refund of British income-tax, a matter about which, of course, I could do nothing. She assured me the claim form had gone out because she had instructed her solicitor. The unfortunate woman, with a comparatively small income, had to engage a solicitor—I think even Senator O'Dea would be reluctant to see that done—because she cannot make it out herself.

Recommendation No. 10.

The Senator is going to try to amend that point to-day. We had here a Finance Bill in 1944. Some Senators will remember it. The most elaborate provisions about subsidiary companies were contained in an enormous section. Not because I am a subsidiary company or because I pay surtax, but because as a legislator I like to understand what I am doing, I asked the Minister for Finance to explain it and the truth is that he could not, which means that the Revenue Commissioners could not either. Nobody could and, in the end, he said in the bland way that at times that particular Minister assumed: "This is important to us because certain people are evading tax. This elaborate provision is intended to keep them from evading tax and, to tell nothing but the truth, we do not know how it will work out. Give it to us for this year." We did and, of course, we never heard a word about it since. I do not know whether the Revenue Commissioners understand it now or not, but they understand that if you owe them something they will get it from you.

The Minister was most naïve in the conclusion of his speech because he would not make the income-tax system more complicated by agreeing with the Seabhac to give certain remissions that would make it more complicated, but if anybody in this House puts up to the Minister for Finance a scheme for getting more money out of the citizen, he will consider it no matter how complicated it is and he will make the code, already complicated, twice as complicated if it gets him more money or any more money. Really, the Minister for Finance constantly deals with the citizen on the basis of "heads I win, harps you lose". He cannot complicate it to give you a concession but he can complicate it and indeed he is constantly complicating it—in every single Finance Act, the whole code is being more and more complicated—to get more and more money out of the citizen and to keep him from escaping. Indeed, so far as the Minister's provisions to keep him from escaping are concerned, I am entirely in sympathy with him.

Remember also about this question of simplification, the Revenue Commissioners have immense and extraordinary powers. They have powers undreamt of by the despots of old. They have fantastic powers. You are met with the statement that the Revenue Commissioners are reasonable. Of course they are reasonable. They get their pound of flesh. Shylock, according to himself, was completely reasonable.

The Revenue Commissioners are reasonable and so is the tax inspector, but remember it is his job to be there, it is his job to understand all this and he has unlimited time to understand it and unlimited time to work it out. He has unlimited time to keep you waiting about it. They make you pay on the one hand but when they have to give you something back it is astonishing how sticky the Minister for Finance and the Revenue Commissioners are. So that, really and truly, there is a case. It is just one of those cherished ideas we had long ago that, I suppose, we have abandoned by now that we could simplify certain things. There is a case for simplifying the income-tax code. In fact, I am nearly certain I could trace back Deputy Frank Aiken on that in discussions between 1927 and 1932. I say that casually. I may be wrong. But I am nearly sure I could do it if I tried. I have not the time. I have to make out examination papers and an income-tax return before the 1st August.

I think there is a case for simplification and there is a case for considering this matter of annuities because, quite clearly, whatever the administrative difficulties are, there is an injustice in charging a man income-tax on his capital without a capital levy. If your code purports to be an income-tax code, when you tax a man on the total amount of his annuities, you are doing something that is not in the principles on which your code is based. Is that not correct? The Minister admits that. If the commissioners devoted their minds to it, they could find a scheme which would enable them to make it more equitable, even though it might not give the most complete justice.

I agree with the Minister that perhaps it is not possible to establish what you would call mathematical justice but, as Senator Sweetman has explained, the insurance companies which give the annuities do a certain amount of gambling on it. They benefit on one, they lose on another. It should be possible for the Revenue Commissioners to do the same thing. The argument that something is administratively difficult is the argument that is blandly put up about reform. It is fundamentally unsound because no administrative difficulty ever prevents the Minister for Finance or the Revenue Commissioners from getting what they want to get and I think that, if the matter is going to be dealt with, it should be dealt with on the basis that we are all grown up and all understand something about this business.

I would like to say a word about the examination of the income-tax code. If the Minister were to tell us the whole story he would probably tell us that the income-tax code has been built up out of long experience, that it has been the outcome of a battle between the taxpayer and the Revenue authorities, or between the lawyers and the Revenue authorities, that they arrived at a code which may be complicated but which is very effective in protecting the revenue, that if you examine the whole thing with a view to simplification, you never know what openings or what opportunities in a new code lawyers might find in the matter of legitimate tax evasion. For that reason, the Minister says: "No. We know what we are dealing with now. We do not know what we would be dealing with if we started a new code." That is not a fair argument to justify the terrible elaboration and complication from the point of view of the ordinary taxpayer in trying to get his assessment and his rights. In the interests of the community, which should be paramount, we should aim at a simple code and the Revenue authorities should run the risk of possible new approaches and fresh ingenuity the lawyers may develop when they are faced with a new code. A simpler code is essential in the interests of the ordinary income-taxpayer.

I feel strongly that you can always defend any request for concessions from the Revenue on the grounds of administrative difficulty and complication. You have an outstanding example of it in the Minister's objection to this proposal to relieve from income-tax the income portions of annuities. I am afraid the Minister has got a little bit confused in regard to the insurance aspect of the problem. He talks about the necessity of assessing lives. Of course, it is quite obvious that there is no reason to assess life in the case of annuities. There is a table and that table is framed on the safe side.

If the annuitant dies any sooner, that is all the better, but it is quite different in the case of life insurance. If a person is insured to-day and dies to-morrow, that will mean a heavy loss to the company. these are two entirely different matters. The Minister could take an annuity table as the basis for the equitable apportionment of the capital on income. There will be no difficulty whatever about that. I say, even though the Minister speaks on the authority of all his officials, that there is no difficulty whatever about it. You have only got to take the age, make a table for age, with income content so much, and when you look at that table the matter is plain sailing. In the average case it is a straightforward matter. I hope that the Minister will not close the door to a reexamination of this problem. He suggested that I should come along with a recommendation next year. We all know how hard it is to get a recommendation through. In the case of the Budget, if a thing is to be effective, it must come from the Minister himself. I am hoping that before early next year it may be possible for a few of us to go on a deputation to the Minister or to the Revenue Commissioners to lay our case before them. This is a matter of meeting a case of straightforward justice, and Departmental difficulties or objections of that sort have no validity and should not be allowed to frustrate the rights of the individual.

I should like now to say a word on the question that has been raised about the British Finance Act of 1945, and of its effect on Irish taxpayers in the matter of the recovery of their British tax. I shall read the relevant section from the double taxation agreement. I am quoting from Section 1 (a) of Part I of the Double Income-Tax Agreement of the 14th April, 1926, which runs as follows:

"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 all property situate and all profits or gains arising in Great Britain or Northern Ireland and to exemption from British supertax for that year."

Then it goes on to deal with another matter, and it says:

"In Article 1 (a)—that is the article I have just read—of the said agreement the words ‘British income-tax' construed as meaning British income-tax charged or chargeable at the standard rate."

If there were a court of appeal—there is no court of appeal—between two sovereign bodies, I have no hesitation in saying that on the law the British by their present practice would be held to have violated that agreement.

There are two things that I want to say on this part of the Bill. The first is that some of the speeches which have been made may have given the impression that the inspectors of taxes are not prepared to give every assistance possible so that taxpayers will get all the exemptions that they are entitled to. My experience is that they are prepared to give every possible assistance on the facts as given to them. In order that they may get the facts, it is necessary that someone with legal knowlodge, or with experience as an accountant, should marshal the facts, and so that full benefit may be given. If that is not done it is not the fault of the inspectors. Relatives and friends come to me on this matter of seeking to get the full exemptions they are entitled to. I have written on their behalf and of others, to the inspector, and I must say that whenever I did so he was always very ready to give assistance. Therefore, I should not like an impression to the contrary to go abroad.

My second point is that this debate illustrates what I endeavoured to set before the House one and a half years ago, namely, that it is completely futile to endeavour to get any substantial or reasonable changes made during the progress of a Finance Bill. The Finance Bill carries out the plan of the Budget for that year as it has been made by the Executive. Even if the Minister were convinced of the justice of a case made, he cannot do very much except perhaps knock off 6d. or 1/- here and there. He dare not interfere with the sum total that he is asking for that year, and nothing that Senators may say will persuade him to make a change. For that reason I want again to advocate the setting up of a commission or of some other body which would consist not only of revenue experts but also of other competent people of experience representing different classes in the community. That commission might sit for one or two years, and hear evidence not on the question of simplification which I regard as almost hopeless, but on the question as to whether the present method of taxation as between one person and another is equitable or not.

I think anyone of experience knows that, rightly or wrongly, people do not believe that our present income-tax code, as it has developed over the years, is fully equitable. That may be a wrong impression. I am convinced, however, that under the present code there are many inequities which could be brought up in evidence before a body such as I suggest, inequities which are not appreciated and cannot be fully appreciated by the Revenue Commissioners, because I imagine that some of them probably never reach them. These inequities will never be dealt with in a Finance Bill except as the result of a comprehensive survey such as I suggest.

It must be remembered that, after 25 years of native government, we are still working under a British code. During those 25 years changes in rates have been made. changes in the standard of living—changes of all kinds. In that situation it should be possible to get together a number of persons who would sit down quietly to see whether a different method of taxation should not be evolved, or whether there should be substantial changes in the present code. You can never get that done by means of amendments to a Finance Bill. I would urge the present Government, or their successors, to face up to the fact that there is dissatisfaction at the moment, the feeling that the present method is not altogether equitable, that in its effect on business it needs careful investigation from the point of view of the productiveness and the development of business, that, after all, this is a British code, and that we have made many changes from the British practice during the last 25 years. In view of all that, I suggest that the time has now arrived for a full investigation. I believe that such an investigation is demanded. I know from my experience and from letters that I have received that the accountancy profession would be almost 100 per cent. in favour of it. It would also be welcomed by business people, and particularly I would say by country solicitors who would be able to give a great deal of information which does not come in a collective form before the Revenue Commissioners or the Minister.

I support the plea which has been made on this point by Senator Douglas. I believe there is great wisdom in the suggestion which he has made. It is impossible for the ordinary taxpayer to-day to know where he stands in relation to our income-tax code. You have on the one hand the technicians in the Department of Finance which is the bogey-man of the State. The decent, respectable and competent officials in that Department are by their attitude looked upon by a great many taxpayers as being almost a Ku Klux Klan. That is because quite a number of taxpayers do not understand the code. They do not know what they are paying tax on, or for what. The net result is that outside you have another group of technicians and between the two you have what may be described as a battle of wits. The code is so intricate that very few outside the technicians understand it. The result is that there may be, in fact, considerable evasion in the payment of income-tax. One may say that those outside are just as clever as those inside. They spend their days and their nights seeing how they can do battle for their clients. Probably, money that is due is withheld. It would be far better for all concerned if the approach suggested by Senator Douglas were made. I think the Minister should agree to try it. We all recognise that he has to get money. I think, however, there is no justification for keeping in operation a code which is so obscure.

With regard to the position of those who have holdings in British securities, Senator Sir John Keane suggested that, so far as the Irish taxpayer is concerned, there has been some breach of the agreement between the two countries. It has been pointed out that, because of agreements with some other countries, the British have amended their income-tax law. I should like to know from the Minister if they have actually amended the law and altered the position of our citizens with regard to refunds of income-tax without consulting us? We were a party to the original agreement which benefited the taxpayers of both countries. The position would be an extraordinary one if they amended their law without consultation with us, especially in regard to an agreement which affected our citizens. I should like to know if there has been any such breach, one that entitles them to withhold the full benefit of a refund from our people. Will the Minister tell us whether this matter has been brought to our notice and, if not, whether any protests have been lodged by us in connection with this action on the part of the British in relation to a matter which affects our taxpayers detrimentally?

Will the Minister say whether if he cannot get agreement with the British revenue authorities he will consider taking the matter to the United Nations?

With regard to this question of Section 52 of the British Finance Act, I have said all that I am going to say on it. I dealt with it the last day and I dealt with it shortly to-day. Senators will have to leave the matter at that for the time being. Senator Sir John Keane said that there was a battle going on between the taxpayers and the Revenue Commissioners. The income-tax code contains pretty well a thumb-nail sketch of the result of those battles. Every clause in the income-tax code is a record of a revenue defeat because it departs from the simplicity that Senator Duffy wants. In his idea of simplicity he wants every clause to contain some sort of exemption that will give the citizen a right to claim an abatement in income-tax. For this and all the other reasons given we could have a very beautiful simple income-tax code, but in that situation we would not want any Revenue Commissioners and we would not want to give them any discretion. We could say that everybody who makes £1 would have to pay so much on it. We could do that whether he made £1 or £1,000. We could grade the taxes and it would be very simple. Senator Douglas and others would complain then about its simplicity and its harshness, and would start off again to build up another complicated code of income-tax which it would be hard for the ordinary citizens to understand. So far as the ordinary citizen is concerned—the person with the modest income, the person who draws a wage or has a farm—there is very little complication in it. The complication comes in where exceptions of various kinds are made. I do not think we need go any further into this question of income-tax. It has been agreed for a long number of years and all this debate has arisen out of a single clause in the Bill to continue the system in operation—charging income-tax.

Question put and agreed to.

I move recommendation No. 1:—

That in page 3, lines 30 and 31, the words "two hundred and sixty" be deleted and the words "three hundred" be substituted.

This amendment is concerned with the defeat of the taxpayer and not the defeat of the Revenue Commissioners. It is probably one of the few cases in which the taxpayer comes off second best. In 1939, a married man without a family had an allowance of £220 free of tax. That figure was in fact a reduction from the figure of £225 which obtained from 1930 to 1939, and it is proposed now to increase the exemption figure from £220 to £260. The purpose of my amendment is to make the figure £300. Might I explain that the principle upon which this amendment is based is simply this, that the ordinary tradesman who is paid 52 weeks' wages would be exempt from income-tax if he is married and if his income does not exceed £7 5s. per week? Many members will be familiar with the awards of the Labour Court and the agreements made between building trade organisations and the employers' organisations in the building trade. These agreements provide for the payment of wages to craftsmen on or about the £7 or £7 1s. per week mark. In the past, the craftsman, the married craftsman, at all events, was exempt from tax. Under the present code, he is brought in, although his earnings in terms of purchasing power are lower now than they were in 1939. The cost of commodities which the craftsman has to buy has increased by 70, and perhaps 75 per cent., and in fact it might not be unjust to say that it costs him double now to buy the commodities needed in his house what it cost him in 1939. To meet that increase in prices, he has got an increase in wages of roughly 50 per cent., so that he has substantially less purchasing power now than he had in 1939 when his income, up to a figure of £225, was free of tax. I submit to the House that it is not reasonable to bring into the income-tax code a group of people who have already suffered a very substantial diminution in their income, and I plead very fervently with the Minister to examine the code from that standpoint and to exempt from tax the married man with a wage not exceeding £7 5s. per week as proposed in this amendment.

I support the amendment. I intended to put down an amendment with a somewhat higher figure, but I think there is a good case for this amendment—not only the case which Senator Duffy has made but another and different case. I presume that the income-tax code is intended to be a tax on incomes which are above the minimum subsistence or living wage. You exempted the single man up to £120 and the married man up to £220, if his wife was alive and living with him, the idea presumably being that he required, at the very minimum, £220 to sustain himself and his wife and that he should not be taxed until after that exemption, plus a certain earned income allowance, had been deducted. That principle applies to both married and single people, but this amendment deals with married people. You do not start the income-tax levy until certain minimum expenses have been met and the tax therefore is really a tax on surplus income, although that is perhaps not mathematically correct.

The exemption limit of £220, which the Minister now proposes to make £260, represents the low-water mark of a living wage or income. There can be no doubt whatever that, if it was £220 in 1939, it should certainly be increased in 1947. I know the Minister will say— and I think he is right—that people cannot expect to be put in as good a position now as that in which they were in 1939. Nobody, with comparatively few exceptions—certainly no ordinary person—is in that position and cannot be put in that position until we have greater production, but this increase is an increase of less than 20 per cent. and it certainly does not go any appreciable distance towards meeting the immense increase in the cost of keeping a man and his wife, and, on that basis, Senator Duffy's request that the exemption should be made £300 is very modest indeed.

My own first reaction, if I were putting down an amendment, would have been to put down an amendment setting as the limit the figure which is now the limit for insurable persons under the National Health Insurance code. Senators will remember that, when the Minister for Health or perhaps the Minister for Local Government was amending that code, his first thought, when the Bill was being introduced, was to raise the limit from £250 to £400 so that people with incomes of £400 per annum would have to be insured for national health purposes. Subsequently, following certain pressure by the Dáil, he increased the figure to £500. That amount of £500 is altogether out of proportion to this £260, and if it is thought that people who have an income of £500 are persons who ought to be insured under the national health insurance code, surely the exemption of £260 for a man and his wife for income-tax purposes is entirely too small and surely to ask that it should be increased to £300 is to ask something very modest indeed. For that reason, I support the amendment.

The other point which Senator Duffy has made is also sound, that is, that, whether rightly or wrongly, it was thought that certain people on certain wage levels should be entirely exempt from direct taxation. Theoretically, at any rate, that is rather a mistake, because these people pay considerable indirect taxation and it might be useful politically—it might even be useful to a Labour Party—if everybody had to pay some direct taxation and be quite conscious of it. That used to be the argument of Labour speakers in England, but the Labour Government, I understand, have taken quite a different line. However, it is true to say that a man who had a certain wage, say, £5 per week, had not to pay any income-tax in the past. He is now in the region of £7 per week and has to pay income-tax, so that something given to him by way of increasing his wages is taken away from him in income-tax. From every angle I can see, it seems to me that the figure of £220 exemption for married people under the income-tax code should at the very least be increased to £300. I think an excellent argument could be made, by analogies and in various other ways, for increasing it beyond £300, but certainly the modest demand that it should be increased to £300 is very sound.

I wonder if the Minister has been studying the British Chancellor's approach to Budget debates. He apparently adopted the technique of coming in with a certain number of concessions up his sleeve and giving these concessions as if they were the outcome of debate and appearing to yield to reason, but he always has information beforehand as to what these concessions will cost. It makes the whole Finance Bill debate very interesting, if we can feel that something is to be given to us at the last minute. Perhaps the Minister might in future consider that approach, because I take it his reply now will be that this proposal would cost so much and that we cannot afford it. If that is so, although the demand seems to be just, there might be a reason for not granting the concession on account of the cost. Would the Minister tell us how much it would cost, and, if the cost is comparatively small, whether he will consider making a last-moment concession because it is certainly an equitable demand?

Senator Sir John Keane wants the debate to be made exciting by reason of concessions granted by the Minister for Finance. So far as I am concerned, if I can help it, it will be a very dull debate, because all the concessions being asked for in the sheet of amendments before us would cost a very large sum of money indeed. If we take Senator Duffy's two amendments—this one designed to raise the married allowance from the £260 which I propose to £300, and the single allowance from the £140 I propose to £170—their combined cost would be about £1,000,000 this year and £1,800,000 in subsequent years.

What would this particular amendment cost?

In the current year, about £500,000, and about £1,000,000 in succeeding years. I think we have done very well indeed in proposing that the personal allowance will be increased for a single person by £20 and for a married person by £40 this year. Last year we took 1/- off the general rate of income-tax and this year we propose to increase the personal allowances. When you consider that, no matter how much we leave with the people or how much we give them, they cannot live at any higher standard. That standard depends on the level of production and imports, and I think we have gone not only as far as is reasonable but as far as is wise in this regard.

To look just at the personal income allowance of a married person leaves out of the picture that the artisan Senator Duffy speaks about will not pay on anything unless he earns over £325 a year. Indeed, if he is a married man with one child, he will start to pay only when he has £400 a year and if he has three children, which is the average family, only when he has £529 a year. I think that is fairly reasonable. It has been argued over the years that income-tax is one way, and a reasonable way, to collect the moneys the State needs in order to spend them when the Senators are in a more generous mood than they are in to-day. If we have income-tax graded according to income, I think we should start on a married man who has three children and has an earned income this year of £529 and say: "If you get another £1 above that, you will have to pay 3/3 on it."

Senator Douglas said that it is difficult for a Minister for Finance to change his step after the Budget. All the considerations put forward here to-day were fully in my mind when making proposals to the Government. We decided to give some increase in the personal allowance and to make the tax slightly easier for the people in the lower income groups, but we would not go to such an extent as would force us to cut down the general services the State is rendering to the community or put a very big impost on the people in some other way. When you have regard to the ordinary artisan in the country nearest to us, you find they have to pay very much more in income-tax, so I think these proposals are reasonable.

I have expressed no disagreement with the Minister's point of view that it is desirable to bring as many people as possible into the direct taxation arena so that we may know exactly what type of people are paying. It is really a question of making an adjustment between the different classes of people with different incomes. In 1939 a craftsman or artisan, married, with £3 10s. 0d. a week was not within the income-tax group, but is now brought in, although he has a smaller effective income. People within that group are paying a tremendously large part of their income in indirect taxation. The average tradesman in Dublin will smoke 20 cigarettes a day and on that he is paying the State 9/- a week in indirect taxation. If his wife does likewise, she is paying another 9/- to the State. This is very amusing to people who do not value 9/-, but to the craftsman with £7 5s. 0d. a week, which has a purchasing power now of, roughly, £3 10s. 0d., it is a very substantial contribution to State funds.

Is he entitled to a drink? If so, he is paying a very large tribute to the State every time he lifts a pint. He pays increased taxation on cinema seats and on dog racing. Recently, there was 1/2 a lb. added to the cost of his tea and if he is living in Dun Laoghaire he finds the tram fares have been increased by 25 per cent. That man is faced with paying out for rent, fuel, light, amusements and some luxuries, such as tobacco and drink, and is finding it very hard to live. If he has a bout of illness for three or four weeks in the year and is in hospital, he will be very much in debt at the end of the year. It is a question as to whether we agree that, in framing his Budget the Minister did the wisest thing in reducing the rate of tax before he made greater exemptions. I would prefer the rate to be 7/6 and give greater exemptions than have it reduced to 6/6 without exemptions.

Recommendation put and declared negatived.

I move recommendation No. 2:—

That in page 3, line 33, the word "forty" be deleted and the word "seventy" be substituted.

This relates to the single man and its purpose is to exclude him from taxation if earning not more than four guineas a week. That is how the figure of £170 came to be chosen. Senator Hayes, on the previous recommendation, expressed the view that the claim for exemption might have been stepped up. I thought so, too, and when framing this amendment originally I was proposing to exempt the single man with an income of not more than £200 and a married man with not more than £350. I came to the conclusion that the figure should be related to some weekly income, to make it easier to understand and easier to defend, so the sum of four guineas a week free of tax, and £7 5s. in the case of a married man, were chosen.

From the Minister's figures, it seems that the cost of this recommendation would be about £500,000. I do not know if the Minister has considered the likely increase in revenue. For a number of years, the estimates of revenue have been exceeded, that is to say, the income from taxes has been greater than the figure estimated in the Budget. If we assume there is an increase in revenue of £500,000 in the present year, over and above the estimate, the gap would be closed; but I submit that, whether it is closed or not, there is an obligation on us to act in an equitable manner and consider what is a reasonable sum for a man to live on, before we commence deducting taxation from him.

For a period of years, there was a substantially greater margin left free of tax than there is now. In 1920, for a single person, the exemption figure was £135; that continued until 1932, when it was reduced to £125; then it continued until the second, the Supplementary, Budget was introduced in 1939, after the outbreak of the European war, when it was reduced to £120; and it continued during the war at that figure until it is increased now, in the present Budget, to £140. The £140 now, however, is something like the equivalent of £70 in 1939, when there was an exemption figure of £125. Undeniably, certain elements in the community are infinitely better off than ever before and have increased their incomes five or ten times. The wage-earning section has suffered a considerable diminution in their actual income as measured in terms of purchasing power. It is indefensible that, in framing his Budget, the Minister should require from the wage-earning community a tax contribution which is far greater in terms of real money than it was before the war. The section that has suffered most from the economic set-up of the last five or six years is called upon to make the largest contribution to the Exchequer.

Every member of this House knows that there are substantial sections of the community who have made more money than they can spend or dispose of in any other way. I know of one case of a small family who have at the moment three motor cars. They have not garages for them. They are lying on the roadside. Senator Summerfield will be delighted, because they will not last very long if they are left on the roadside in winter. The fact is that there are sections of the community who have increased their income from industry and they are getting away with it now. The Minister reduced income-tax from 7/6 to 6/6. I ask him seriously to review the situation, and if he says he cannot grant this exemption out of present revenue, I suggest he should alter the rate of taxation and restore the 7/6 rather than refuse a claim of this kind.

I would like to say a word or two in support of Senator Duffy's amendment. All these amendments are based on the same principle. I agree with Senator Duffy. I do not know how you could classify them, but I am satisfied that there are people in this city whose incomes have increased enormously in the last few years. I do not know what class they belong to, but one is only to go around the city or visit the larger hotels to realise the considerable extravagance that occurs. I do not know whether one should classify it as extravagance or not, but there is evidence of so much money surplus to the needs of certain of our citizens as to warrant the belief that they are not able to spend that surplus. Money is being thrown around in a variety of ways and in some ways not the most profitable to the health of the person concerned.

On the other hand, there is a very considerable section of our people in the lower income groups who are being crushed in a way they never experienced before. There is a minimum required for even frugal existence, but the cost of providing these things has risen so enormously that a great many of our people are being pressed very hard. They are doing their utmost to keep up an air of respectability on means that have so diminished in purchasing power as to make life a weary struggle for them. The Minister could, I am sure, quote the figures of the number of people within the income groups who would be covered by the amendments, but, from the point of view of equity—and equity should be the foundation of the whole taxation policy—there is everything to be said for the principle enunciated by Senator Duffy and I do not know that there is so much to be said in defence of the Minister's claim that these people ought to be taxed as they are being taxed to-day. I know that Ministers for Finance must get revenue and that if they do not get it they will not have it to spend. I wonder if there is not a greater injustice in levying taxation for the purpose of this expenditure than in leaving the money with the people concerned and not indulging in the expenditure. Whatever the effect the amendments would have on revenue, the position is that the State is doing these people such an injustice as to make life very difficult for them. While one does not want to prolong the discussion, I feel that Senator Duffy is on very strong ground and that from the point of view of equity there is no answer to the case he makes.

I gave in reply to speeches on the first recommendation the considerations that moved me to reject the second recommendation. All this matter was considered at the time of the framing of the Budget and we have gone as far as we could in this financial year.

I think we are entitled to submit to the House that the Minister has two alternatives. He has taken what appears to be the wrong alternative, that is to say, the Minister decided to give certain relief and reduced income-tax from 7/6 to 6/6 and because he has taken that step, he is precluded from taking the step that is suggested here which, as Senator Baxter has properly remarked, is based on strict justice. I want to put it to the Minister, that a young man, a clerk, shop assistant, or civil servant, in Dublin, will be lucky if he gets decent lodgings at 50/- a week. One case came to my notice last week.

There are scores of them.

The case I have in mind is of a man who met with an accident in his business. He was an insurance official. He had to retire on a small pension of £4 a week. He searched Dublin for lodgings. The cheapest quotation he got was 50/- a week. That is for lodging alone. Consider the price of clothes—£12, £15 or £20 for a suit of clothes, 25/- for a shirt, 35/- to 50/- for shoes or boots. How is the man with £4 a week to meet all these charges and to have something left to pay income-tax? It is true that the wage-earners on small incomes in Great Britain are also liable for income-tax. I want to make this point, that it is much easier for a person with a small income to pay a 1/-, 1/6 or 2/6 a week than to find a sum of £5 or £10 at the end of the year. Take, for instance, a single man earning £6 a week. That is probably the highest salary a young man will earn in a shop in Dublin. Taxation in his case is 8/- a week, that is, more than £20 a year. He has to find the sum of £10 twice a year for income-tax. I put it to the Minister that that is not easy for this young man in these circumstances unless he saves it. The Minister says he ought to save but there are a thousand and one things which we all ought to do which we never do.

Some time ago a commercial traveller told me that he was asked by a small shopkeeper in the country about conditions in Dublin. The shopkeeper's son was getting a job in Dublin and he said to the commercial traveller: "Tell me, can a young man lead a good life in Dublin on £4 a week?" The traveller's reply was: "There is nothing else he can do." I suggest that £4 is putting it very low. The price of lodgings is very high and in many cases it means going a long way out of the city and having to pay travelling expenses or having meals out, which piles on the agony. I do not know that the Minister has convinced the House that he has taken the right course or that the proposals he has put before us in this Bill are wise. I am not convinced and I wonder whether, if there were a free vote of the House, the members of the Seanad would approve of the principles in the Bill.

Recommendation put and declared lost.

I move recommendation No. 3:—

That a new sub-section as follows be added to the section:— (2) Notwithstanding anything contained in the foregoing sub-section. Section 18 of the Finance Act, 1920, shall be construed and have effect as if the words "in the case of a widow, two hundred pounds" were inserted after the words "two hundred and twenty-five pounds" where such words appear therein.

The purpose of this recommendation is to suggest that there is a case for differentiation between a widow and an ordinary single person. In the Bill as introduced by the Minister the situation is that for a married couple there is to be a personal allowance free of income-tax of £260. The suggestion incorporated in the Bill in respect of a single person is that the personal allowance should be £140. Of course, as we all know, a widow is deemed an ordinary single person for the purpose of the Income-Tax Acts. I want to suggest that there is a very striking case for differentiation between a widow and an ordinary young bachelor. In 99 cases out of 100, when the man dies, his widow has to subsist on a considerably lower standard of living. It is always a very difficult matter for her to adjust herself to the new standard. That is an accepted fact and it is a fact to which we should pay due regard when considering taxation. I want to suggest, therefore, that there is an overwhelming case to ensure that a widow who is left in that position would be treated in a more generous manner than the young man of 21 or 22 who has not got into the same habits of life, who has not the same standard as that particular woman would have had when her husband was living and who suddenly had to change her standard of living in many regards.

I have suggested a figure of £200 as being, so to speak, a half-way house between the ordinary bachelor's allowance and the allowance for a married couple. The effect at present is that in the vast majority of cases a widow has to live, after her husband's death on whatever he may have saved. There are very few cases in which pensions are paid to widows and, if pensions were paid they would be considered earned income. What a widow has to live on in the vast majority of cases is merely the income from whatever her husband was able to save, or whatever she may have got from her own people. If there is anything more than £140 a year, as the Bill is drafted, she would have to pay tax on that figure. We all know how difficult it is to live on that figure at present. The real thing I want to stress is that there is an unanswerable case for a widow being assessed differently from that of a bachelor. I do not think the Minister will differ from me in that respect, though he may differ as to the amount of money to be provided. It is certainly a case where money should be provided.

I am not opposing the principle that Senator Sweetman has enunciated, but I fear that the wording of the recommendation would not carry out his idea. The proposal is that Section 18 of the Finance Act, 1920, be amended. Section 18 provides that the claimant, if he proves that for the year of assessment he had a wife living with him or was maintaining her elsewhere would be entitled to an allowance of £225. If the words that Senator Sweetman suggests were inserted it would be found that, in the case of a wife, a man would be entitled to £225, and a widow to £200. That would be the effect of the amendment and I do not think it would be proper.

I hope the Seanad will not be unduly impressed by the uneasiness, however commendable, expressed by Senator O'Dea. Possibly one advantage of the Constitution in relation to a Finance Bill is that we can only make a recommendation. If a recommendation of this kind is carried it can be put right in the Dáil. Consequently we do not have to worry about any slight errors that may occur. I have not looked into the question but I should like to refer to another proposal of Senator Sir John Keane in connection with which the Minister said he should have put down an amendment. It should be understood that the drafting of an absolutely accurate amendment to a Finance Bill is a highly technical job. We are in the position of being able only to make recommendations, and with 25 years' experience of this House it is fairly well understood that the same degree of accuracy in that respect is not required, seeing that the best we can do is to make suggestions. Senators are certainly not expected to go to a great amount of trouble provided that they can explain their ideas.

I strongly support the principle of this recommendation. I have had a certain amount of experience with regard to income-tax and I know, particularly in the first two or three years, that the position is an extremely difficult one for middle-aged women whose husbands died and left insurance policies and perhaps a little savings. Their tax free incomes are not only reduced to £140, but are regarded as earned income, because the money being invested, they get a small sum in return. In certain circumstances a woman may, after two or three years, get a job, but if so, that means that the home is gone. For the first four or five years the State should make the position easier in the case of widows. I am dealing with persons with lower grade incomes. There is a good case to be made for the State easing their position to some extent. The suggestion of Senator Sweetman of going half-way is reasonable, but if he had put down a recommendation I would be in favour of the married allowance being continued for two or three years. If it is not done now I hope the Government and the Minister will consider doing so later.

I wish to support the amendment. Senator Sweetman made an excellent case when he compared the position of a bachelor with that of a widow who finds herself in financial difficulties. Senator Douglas contemplated the position of a widow who might be able to take up some occupation, but the position of a widow advanced in years must be considered, as well as her ability to undertake work. The Minister should indicate not only that he has sympathy with the recommendation but that there is justification for it. The ordinary person can find no justification for the section. When dealing with Finance Acts the object should be to make them so simple that people in the remotest parts would be able to stand over such law as justifiable. The Minister is at present ignoring a very intense problem for a limited number of people, who are the most helpless members of the community. They are people who, having regard to the position they enjoyed in the past, are very reluctant to make their difficulties known to others. They are reluctant to disclose that they have "come down" in life. They do not want to go to public representatives but prefer to struggle on under conditions amounting almost to penury. I cannot imagine the Minister meeting such a position by telling us how much he would lose. If the law was to be altered age should also be taken into account. The position of a young widow is very different from that of an elderly woman. Whatever approach the Minister may make in this matter there is a case for the recommendation that nobody can continue to ignore.

Apart from the fact, as Senator O'Dea pointed out, that the recommendation as drafted does not mean what Senator Sweetman has in mind, there is a bigger objection, and that is this: why should we make a difference between unmarried people? There is no suggestion of any age limit, but some young widows are in a much better position than many unmarried people. If a widow has children she gets the children's allowance on the same basis as a widower. If she has a family relative living with her and helping to care the children she gets an allowance for that relative, just as the widower gets it. I do not see any reason for creating a difference between a widow and a widower. A case could be made that very often a widower is much worse off, and much more deserving of sympathy, than a widow, particularly if there are children living.

I must confess that the cynicism of the Minister appals me, particularly in regard to his last sentence that a widower is in a worse position than a widow. We all accept the principle that it is the man's job to look after his wife rather than the wife's job to look after her husband and only if it was the wife's job to look after the husband, would there be any force in the Minister's remarks. What he says implies that it is desirable that a wife should go out and earn for the husband. I could expand that further in one or two respects, but perhaps I had better not intrude on the atmosphere of peace that such an expansion would endanger. I merely leave it at that. I do not understand the technicalities that, because Section 18 of the Finance Act states that the claimant should prove in any year that he has a wife living with him he is entitled to an allowance of £225, and that in any other case the allowance is £125. So far as the technicalities are concerned the section, if amended, would mean that a claimant, who was able to prove in his return that he had a wife living with him, would be entitiled to £260, and a claimant who proved in a return that she was a widow would be entitled to £200 and in any other case to £140, I never tried to suggest that my drafting of the recommendation was perfect. On the contrary, I tried to ensure that the recommendation conveyed sufficient information to raise the net issue. If the issue was decided the Parliamentary draftsman could decide the exact form of words to be incorporated to meet the point at issue.

In our discussions on other Bills in this House it has been universally accepted that it is the principle behind an amendment that is the important matter. The principle behind this amendment appears to me to be quite unanswerable. The Minister made absolutely no attempt to answer it or to consider the situation in which a widow is bound to find herself after her husband's death. In spite of what the Minister has said, the husband is, in 90 per cent. of the cases, the wage earner. He has settled her, according to a certain standard in life, and it very often happens that, when he dies, her situation is changed completely. There is a case of some kind to be met there, and I regret very much that the Minister did not see fit to deal with it.

Recommendation put.
The Committee divided: Tá, 13 13; Níl, 13.


  • Baxter, Patrick F.
  • Counihan, John J.
  • Crosbie, James.
  • Douglas, James G.
  • Duffy, Luke J.
  • Fearon, William R.
  • Hayes, Michael.
  • Johnston, Joseph.
  • Keane, Sir John.
  • McGee, James T.
  • Ruane, Seán T.
  • Sweetman, Gerard.
  • Tunney, James.


  • Clarkin, Andrew S.
  • Concannon, Helena.
  • Corkery, Daniel.
  • Farnan, Robert P.
  • Honan, Thomas V.
  • Kehoe, Patrick.
  • Longford, Earl of.
  • Lynch, Peter T.
  • O'Dea, Louis E.
  • O'Donovan, Seán.
  • O Siochfhradha, Pádraig.
  • Nic Phiarais, Maighréad M.
  • Ruane, Thomas.
Recommendation declared carried.

An Leas-Chathaoirleach

The voting being equal, I am giving my casting vote in favour of the recommendation. The recommendation is accordingly carried.

Section 2 agreed to.

I move recommendation No. 4:—

That before Section 3 a new section as follows be inserted:—

Sub-section (1) of Section 21 of the Finance Act, 1920, shall be construed and have effect as if the word "during" was substituted therein for the words "at the commencement of" where they first occur in the sub-section.

Senator O'Dea, if he were here, might possibly find a flaw in this amendment as well. The object and intention of the amendment is to provide that children's allowances shall operate and be claimable in the actual year of birth, instead of the following financial year. I argued this point on the Second Reading. It is a matter I have raised before and I believe it is done elsewhere, but, whether it is or not, it is something which might very well be done. I am convinced that, particularly in the case of lower incomes, it is in the year of the birth that the most abnormal expense occurs, and it is a mistake that a claim cannot be made until the following year. I cannot believe that it would cost very much because it operates up only to the age of 16 and could be adjusted so that there would be only 16 years involved in any case, or 21 years in the case of attendance at a university. I am not proposing that there should be a greater allowance than at present, but I suggest that it should start in the first year, instead of operating after a full year, in some cases, and less than a full year, in others, because a claim cannot be made unless you can prove there is a child at the commencement of the financial year. I think the amendment is reasonable and I rather hope the Minister will agree to accept it. It might cost a little in the first year, but I cannot see that in the sum total it would cost anything.

We estimated that it would cost about £54,000 or so in a full year. There has been a sort of general agreement that the allowance in respect of children should last for about 16 years, unless the children were attending a school or other educational institute. This amendment would bring the allowance from 16 years to 17 years. As I say, it is a matter which could be considered in connection with the general over-all budgetary position. The amendment could be considered in future and particularly as amended by Senator Douglas in his speech—keeping the 16 years and making the allowance effective in the year of birth as well as the succeeding 15 years. We have to take all the amendments on the paper together. We brought both sides of the account together and any amendment such as this would throw the calculation out.

May I take it that it is a matter to which the Minister will give careful consideration in his next Budget? I am not asking for a promise that he will do so, but it is quite obvious that he was completely opposed to the last amendment, while, in this case, I am not quite sure if his remarks are meant to be completely hostile or not.

Not hostile, no.

I take it they are not, in which case I do not propose to press the matter further. It was not my intention—he will appreciate how difficult it was to draft an amendment of this kind—to extend it to 17 years. That is another proposal altogether. I want the children's allowance to operate in the years in which I think it is wanted most, that is, the early years.

Recommendation, by leave, withdrawn.

I move recommendation No. 5:—

That before Section 3 a new section as follows be inserted:—

An individual who has reached the age of 60 years shall be allowed a deduction from the amount of his unearned income, as estimated in accordance with the provisions of the Income-Tax Acts, of a sum equal to one-fifth of the amount of that income but not exceeding in the case of any individual the sum of £40.

This recommendation is put down in order to raise again a matter to which I very briefly referred on Second Reading. It was pointed out in the course of the discussion to-day that, where a man or woman retires and is entitiled to a pension, the pension is regarded as earned income. That I think is a perfectly proper provision, but the fact remains that the majority of people in this country are not in occupations which entitle them to a pension. With the growth of the Civil Service at the rate we have seen in the past few years, I admit that the time may come when those who are not entitled to a pension will be a minority, but we have not yet reached that stage and at the moment a very large number of people are not entitled to pensions and the only provision they can make for old age is either through insurance, so that they will get a lump sum on a certain date, or by means of saving or investments.

It seems to me that where a man or woman has reached the age of 60, and his or her income is small—and I am dealing only with the small income— we might very well treat it in the same way as earned income up to £200, and I propose that one-fifth should be allowed, with a maximum allowance of £40. My intention is quite clear, and I think the amendment is quite clear. It is that in the case of older people, 60 years and upwards, the first £200 of their income, even though it be technically unearned income, should be treated as earned income and that the one-fifth deduction should be allowed. That is to meet the case of people who are living on the small income from their investments and savings in their old age to put them to some extent on a par with those entitled to pensions. I do not say it is an accepted principle, as it does not always operate, but it is fairly generally recognised, and was recognised in changes some years ago in the Civil Service, that if you are entitled to a pension after a certain year you can operate on a lower income, as it is not necessary to make the savings. The reverse ought to be the case, that where there is no pension the rate of salary should be higher. Full income-tax is paid all the time on the higher salary, but when the income comes in from the savings, you find they are unearned and the allowance is only on £140. There is a very good case for making a small concession to those on lower incomes who have to live later on the income from their savings. The Minister may not do it this year, as it is extremely difficult to get any change made, but the reason for putting in this recommendation is so that the matter may be the object of discussion and if the Minister finds it reasonable he may deal with it next year.

This recommendation would not confine this additional relief to people with lower incomes, as the additional allowance would be given to people with up to a couple of thousand pounds a year. He proposes it to apply to people of 60 years of age and I think that is going too far, having regard to the surrounding circumstances. Senators often complain about the old age pensions which are given to people with little or no means and do not come into operation until they are 70. The normal person in the Civil Service or in outside employment who is in the income-tax class very seldom retires before 65 and some of them carry on until they are 70 or well over. If you are to make an addition to the personal allowance of various types of people, we should consider other classes first. A man of 60 or 65 finds his expenses falling rather than increasing. If he is a married man with a family, at that time he has most of them pretty well off his hands. I do not think we should accept this particular recommendation at present. If the situation were such that something should be done to increase the personal allowance to people who have retired, what might be considered would be to grant a personal allowance provided the total were within a certain limit. I would not go so far as Senator Douglas proposes here.

The Minister's conclusion is more hopeful than the opening part of his speech. My sympathy with this recommendation arises from my knowledge of a smallish class of people over 60, whoe total income is derived from interests on their savings. Now, £300 would be a low income for a widow who has been living on a certain scale up to that point. We all know that interest rates have declined, that the revenue from certain types of gilt-edged securities has declined and that the cost of living has increased enormously. There is a class of person, rather helpless, over 60 or 65, with a small income derived from savings and they have not received any benefit of any kind to meet the very much increased cost of living. What Senator Douglas asks is a very small concession —that they should be given a relief of not more than the income-tax on £40. I would be inclined to agree with the Minister, and so would Senator Douglas, that he does not want a substantial addition where people already have an income of an independent character. The Minister could frame this himself and consider it for a further year. It would meet the case of a very deserving class who find the impact of the higher cost of living difficult to deal with and who have no method of arming themselves against it. Senator Douglas would have achieved something by putting down this recommendation, if the Minister would consider it for a future Finance Bill.

The Minister's remark regarding people with high incomes is very misleading. The allowance is £40, no matter how high the income. I was adopting that only because it fitted in with the one fifth which applies to all incomes. I adopted the same principle and took one-fifth, £40, which works out at £200. I think that the £300 suggested by Senator Hayes would be a better figure. Whether the £40 applies in the case of higher incomes or not, does not matter very much. The differentiation between earned and unearned income which seems fair in persons up to the age of 60 or 65 becomes unfair over that age. It is an inducement in certain businesses for people to stay to 60 or 65 and get some unearned income, where it might be better if they retired and lived on the income from their investments. I urge the Minister to look into it.

Where the provision for old age comes through a pension, it is entitled to one-fifth up to a maximum of £300. Where it is their savings, it is regarded as unearned income and it does not get that benefit. There should not be that distinction between income which is by way of pension and income which is by way of savings because fundamentally the two are the same. You either save compulsorily, as is the case of civil servants, by having a lower rate of salary than you would otherwise be paid in order to get a lump sum and pension or you do it yourself but the State makes a very big distinction in making a difference of one-fifth in the income-tax chargeable. There is something there that requires consideration and I think the Minister will see, not that he approves of my amendment— I am not standing on any technicality — that there is something for consideration.

Recommendation, be leave, withdrawn.

I move recommendation No. 6:—

That before Section 3 the following new section be inserted:—

3.—Section 4 of the Finance Act, 1936 (No. 31 of 1936) shall be construed and have effect as if the words "eighty pounds" were substituted therein for the words "sixty pounds".

This recommendation is related to the allowances for children. I want to point out at once that the proposal is to increase the allowance in respect of two children only. The reason for the distinction arises from the alteration effected in the law in relation to children's allowances in 1944. After the measure passed through both Houses providing for children's allowances, a distinction was made regarding the allowances for the first two children and for subsequent children. From 1926 onwards there had been an allowance of £60 a year in respect of all children. That continued down to 1944, when the allowance was reduced in respect of children for whom children's allowances were provided. It was reduced from £60 to £43. I have made no attempt to increase the allowance in respect of children for whom children's allowances are provided.

In 1939 a man and wife with two children would have an income of almost £450 per annum before being subject to income-tax. The assessment on £450 at that time was £2 15s. Od. in those circumstances. One might say, therefore, that that was the figure at which taxation commenced in the case I have mentioned. Under this Bill, an income of £572 will bear income-tax in the case of a married man with two children of £5 9s. 3d. The recommendation would mean that that salary would be free of tax, which means really that I am asking the Minister to exempt from taxation a sum equivalent to £300, in 1939 terms, in the case of a taxpayer who is married and has two children. Having regard to the expenditure involved in a household of that kind, the proposal is not unreasonable and the cost would not be great. I hope sincerely that the Minister will be able to accept the proposal.

I would like to support this amendment on this basis: The allowance for children is intended to help income-tax payers to rear and educate their children. With regard to people who do not pay income-tax the question does not arise. With regard to people who have high incomes, the amounts, whether they are £60 or £80, are not really matters of very great import. But, to the class of person in the category of incomes under £1,000 a year these differences are very substantial. The person in the lower income class, who is liable to income-tax, who has not got a substantial income, has a very great struggle indeed now, a greater struggle than ever he had before, to educate his children. Everything that has to be bought for a child is dearer. Food, clothes, boots and everything of that kind is dearer and indeed the fees for education of every kind have been substantially increased. That particular class of person is, more than the working class and more than the higher income grades, in the kind of job where he has got a small increase and sometimes has got no increase at all. Really, what you might call the lower middle class person is the hardest hit person of all in a period of inflation or near inflation such as we have with us at the moment. For that reason I think the allowance for children should be increased if it could possibly be managed at all.

I know the Minister's case is that this thing all hangs together, it is all one piece, and so on, but, even from the general point of view of encouraging the existence of that class of person who is endeavouring to rear a family and to give them a particular kind of education and to rear them on a particular standard, who is a very valuable citizen—a citizen who has been harder hit than any other class or type by circumstances since 1939 and who deserves this improvement if it could possibly be granted to him, the proposal should be accepted. If it could be granted to him, I think it would give a revenue in other directions to the State. It would be an investment very well worth while by helping him to maintain his standards and by helping him to rear his children.

The whole question, as I see it, is, what is the fair allowance to give to a married man with children for each of his children compared with the personal allowance given to a single person? This year we are saying that a single person will have £140 free. While we keep the personal allowance for a single person at £140 we are doing fairly well by the married man in giving him £60 for each child. If we go very much further with it, it is the single people who will be paying all the expenses of marriage.

Perhaps that would force them to get married and that would be a good thing, would it not? Do not you want that done? I do.

I leave it to themselves. If they want to do it they can do it, and if they do not they need not bother. I think that £60 is a reasonable allowance to make for a child when we are making an allowance of £140 for a single person.

I completely disagree with the approach of the Minister. The Minister says we should look at this from the point of view of married people as against single people. I do not. I think we should approach it from the point of view that in the first case you are giving an allowance for one person, and in the next case you are giving an allowance for two persons, and in the third case you are giving an allowance for three persons. The question is, what is a reasonable additional allowance for a new life brought into the family which has to be cared for, clothed, fed, etc.? I must confess that in present conditions I consider £80 would be more reasonable than £60, but I cannot at all accept the point of view that you just compare married persons with single persons. I do not agree with Senator Baxter. I do not want any forced marriages for the sake of income-tax.

It is gentle persuasion.

You must face the fact that three persons have to be cared for, and the fact of the matter is that a child is not kept very much cheaper than an adult, if at all.

I think the Minister might relent somewhat on this recommendation. It is a restriction on children. The proposal in the recommendation is a moderate one. The total sum involved is small. Assuming that every taxpayer concerned had a claim in respect of two children it would mean a remission of £6 tax in each case, and I strongly urge the Minister to agree to this proposal.

I am not in favour of forcing people to marry, but I would imagine that the policy of the Minister, which has been expressed frequently with regard to a declining population would be to encourage marriage. While he says that under the recommendation single people would be paying the tax for married people, I think it would not be a bad thing to give such a slant to tax policy as would encourage people to feel that it would be better to marry, and also be an advantage from the State point of view. There is no asset as great for a country as an increased number of children.

£60 is very good encouragement.

Recommendation put and declared carried.

I move recommendation No. 7:

That before Section 3 the following new section be inserted—

3.—(1) Notwithstanding anything contained in any other Act the relief to which a taxpayer shall be entitled in respect of a female relative residing with and maintained by him shall be relief from tax upon £60.

(2) This section shall be deemed to have been in force during the year commening on the 6th day of April, 1946.

I put down this recommendation for the purpose of drawing the Minister's attention to what I consider to be an outstanding grievance, in the hope that if he is willing to accept the suggestion, he will have it drafted in proper form. I am not a skilled draftsman, and I do not want to press the recommendation in its present form. What I have in mind is that a taxpayer who has a relative residing with him should be given an allowance of £60. The figure at present is £25 and that amount appeared first, as far as I could trace it, in the 1920 British Finance Act. The figure has remained unchanged all these years. It is reasonable to suggest that if a taxpayer was granted £25 in 1920 he might expect considerably greater relief now. I do not imagine that the allowance of £60 which I suggest, would impose any serious burden on the Exchequer. The number of people affected would be small and for that reason I hope that the Minister will look sympathetically on the proposal.

I have spoken so much on recommendations of the same category that if the Senator thinks that we can afford all these allowances and increases I have to differ from him.

Could the Minister say what this recommendation would cost?

The recommendations that Senator Duffy has put down to-day would cost several millions. This would be one portion of the amount.

How much would it cost?

A sum over £100,000.

Recommendation put and declared carried.

I move recommendation No. 8:—

That before Section 3 the following new section be inserted:—

3.—(1) Notwithstanding anything contained in any other Act the relief to which a taxpayer shall be entitled in respect of a housekeeper shall be relief from tax upon £100.

(2) This section shall be deemed to have been in force during the year commencing on the 6th day of April, 1946.

The figure set out in the British Finance Act of 1920 was £45 and it has remained at that amount for the past 27 years. The position should be re-examined now. The practice has been to review personal allowances and allowances in respect of children, but for 27 years nothing was done regarding allowances for a housekeeper or a relative. I urge that the amount involved could be easily met if the Minister had goodwill and a desire to do justice where no attempt has been made to do it for 27 years.

In this series of recommendations, some of which have been passed, Senator Duffy wants to give something to income-tax payers, but he put no limit whatever as to whether a man has couple of hundred pounds or a couple of thousand pounds. The proposal is that he is to get various reliefs. The artisan that he speaks of is not paying income-tax or is only on the borderline. But for the person with a couple of thousand pounds— three, five or ten thousand pounds—it would mean a very substantial amount if the Dáil were to accept the amendments which the Senator has got accepted here. It is the man with from £2,000 to £10,000 a year who would benefit, and not the artisan or the workman.

I suspect that the Minister has not examined the matter at all. Surely, there would be more instances in which artisans, shop assistants and clerks would be involved than any other class in the community. Assuming that the amendment would apply to the more wealthy classes, the amount involved for them would be infinitesimal. It would amount to only a few shillings, but to the artisan it amounts to a lot. In his case, it amounts to a tax on £55. People working in shops or in offices in Dublin, and earning £6, £7 and £8 a week, would be affected more than any other class in the community under my amendment. I do not think the Minister has met the matter fairly. I doubt if he has examined the situation at all except to ask an official for a figure.

I rise to ask for some information from the Minister. I should like to know whether there is in any existing Income-Tax Act any exemption or relief in respect of a housekeeper. The reference to "housekeeper" in the amendment strikes me as being an innovation. There might be a difficulty in defining a housekeeper. I would like to know what the meaning of these words is:—

"Notwithstanding anything contained in any other Act the relief to which a taxpayer shall be entitled in respect of a housekeeper shall be relief from tax upon £100."

I am not aware, from filling up my income-tax form, that there is any provision in it for relief for a housekeeper. "Housekeeper" is a very flexible term, and it might mean anything. Apart from any other consideration, this is a rather novel form of amendment. The expression "female relative" is fairly clear. I do not think that there is any definition of a "housekeeper" in any Income-Tax Act.

The word "housekeeper" is not used.

I think the expression "female relative" is used in the 1920 Act.

Recommendation, by leave, withdrawn.

I move recommendation No. 9:—

That before Section 3 the following new section be inserted:—

3.—As and from the 6th day of April, 1946, the provisions of subsection (1) of Section 3 of the Finance Act, 1935 (No. 28 of 1935), shall cease to apply to any tenement or rateable hereditament which is in the occupation of the owner and the annual value of which was determined under the Valuation Acts subsequent to the 7th day of May, 1941, and the said Section 3 shall apply and have effect accordingly.

In 1935 a new system was introduced for levying taxation on houses. Prior to 1934, an allowance of one-sixth of the valuation was given in respect of repairs to houses. The 1935 Finance Act provided that, from that time forward, income-tax would be levied on five-fourths of the valuation. In other words, where the poor law valuation of a house was £24, income-tax was levied on £30. That plan was put forward, I think, at the time as a temporary measure. My recollection of the Minister's speech, to which I listened, was that he contemplated the introduction of a revaluation Bill, and that it was desirable to have some plan to adjust taxation to the real value of a house pending the introduction of that Bill. The way that works is that old houses, with low valuations, are taxed in respect of five-fourths of the valuation. The same principle is applied to new houses. We have now reached the stage that if the ordinary workman desires to get a house he has to go to an insurance company or to a loan society to get the money to enable him to buy a house at a tremendously high price. I know dozens of people working in offices and in shops in Dublin who have been forced, because of the difficulty of getting accommodation, to go out and buy houses at £2,500, houses which in 1939 were being sold at £1,000. I know of one case of a house bought for £950 in 1938 and sold last February for £2,500.

It will be remembered that when the Rent Restrictions Act was being debated here a distinction was made between houses erected or reconstructed prior to the 17th May, 1941, and those erected or reconstructed after that date. In other words, there has been no control in respect of houses erected since the 17th May, 1941, or in respect of flats reconstructed since that date. Consequently, the new houses are costing more. If one buys them or rents them they cost more because there is competition for them, and because those who buy new houses can let them at a higher rent than they can get for an old house. We have seen earlier this evening that the ordinary artisan is liable for the payment of income-tax. He has now to pay income-tax on five-fourths of the high valuation of his house. I recollect the case of a house that was erected in a small village in the County Dublin during the last ten years. The valuation put on it was £20. Alongside it there was quite a large residence, an old residence no doubt, containing 12 rooms. The poor law valuation of that house was £4 10s. Od. That large residence was being used as a guesthouse and was showing a substantial profit to the owner. The new house beside it, containing five rooms, had a valuation of £20.

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

I do not think there is anything further I need say on the amendment.

It is very hard to see what Senator Duffy has in mind in regard to this new section. He made the statement in justification of this section that, in the case of a small house of five rooms or so, the valuation fixed in recent years was £20, whereas, in the case of a house adjacent, an old house of 12 rooms, the valuation fixed was £4 10s. It seems to me that he has dropped £100 and that what he should have said was £104 10s. for the old building with 12 rooms. From what I know of rather large old houses around County Dublin, they have valuations of that order. The valuation placed upon new houses since 1941 is calculated on the same basis as the valuations fixed on old buildings for the past 100 years, and if a person building a new house now, goes to the Valuation Office, or if his house is reported to the valuation people, they will value it as if it had been let 100 years ago. There is no difference. As there has been no increase in the general valuation for the past 100 years, the valuation of new buildings is related to that of old buildings. If it is not done in any particular case, the owner has a remedy in that he can appeal against the assessment of valuation by the Commissioners of Valuation. Everyone knows that houses are now let for very much higher rents, whether old or new, than the rents of 100, 50 or 30 years ago, and, if we are to have an income-tax based upon property, it is only right that the notional income derived from property should be a little more modern than the Griffith valuation, and I think it was only reasonable to put this extra one-quarter on valuations for income-tax in the Finance Act of 1935. If Senators agree with the general principle of treating this type of property as being liable for income-tax, they would have no grievance if the valuations instead of going up by 25 per cent. had gone up by a greater percentage.

The Minister has misdirected himself entirely in regard to this amendment. I mentioned two premises in County Dublin of which I have personal knowledge. There is no guess-work about it—I can give the Minister the addresses of both houses. One was occupied by a member of this House and the other by a senior official of the Dublin Corporation. In the case of the latter, the poor law valuation of this 12-roomed house was £4 10s. Od., while the poor law valuation of the house completed in 1929 was £20. I know both houses, and I can bring the Minister, if he wishes, to a house in County Dublin, a licensed premises, with large living accommodation and a large garden and yard, the poor law valuation of which is £6 10s. Od.

The Minister talks now about adjustments made by the Commissioners of Valuation as if they were actually happening. Here in this City of Dublin there are two licensed premises facing each other in one street. The proprietor in one case spent a good deal of money on improving. The premises were then revalued. Prior to revaluation, both houses were valued at £35 or £40, but the house which had been improved was revalued and the adjusted valuation was £90, while the other house which was not improved still carried the old valuation. That is happening here in Dublin and through the country and when the Minister tells us these stories, he is merely telling us fairy tales. They remind me of the kind of stories I used to hear at my grandmother's knee and other low joints. The fact that the house is revalued on reconditioning is well-known. I occupied an office which had a broken end-wall and spent £800 on putting up a new end-wall. The valuation officials raised the valuation from £50 to £85, but the house next door still carried the old valuation. If the Minister will look into the facts, he will find they are as I described and, therefore, that what he is doing is utterly unjust. He is increasing the valuation by one-fourth for taxation purposes whether the house has a new or an old valuation. If the house has an old valuation, in very many cases the poor law valuation bears no relation to the letting value of the premises. I am concerned here only with dwelling houses of a restricted character where they are occupied by the owner himself and where the house has been valued or revalued since 1941.

I cannot support this amendment, although I agree with Senator Duffy that there are most glaring inconsistencies. It is not until something is done to the house that the machinery allows the house to be valued at anything approaching its real value. The only way to deal with this on a coherent, systematic basis is to have a general revaluation and bring the valuation somewhat into line with the actual market value. That was done in Waterford and it was hoped that the poundage rate would not go up on account of the increased valuation. However, I believe that has no effect. If you increase the valuation, it is an encouragement to let the poundage rate follow and the poor taxpayer may suffer in consequence. The valuation on the aggregate may be doubled, but there is no assurance that the poundage rate will be halved or anything approaching it. From the rather selfish point of view of the occupiers of houses, they may suffer very badly on a true valuation. The average £5,000 house in Dublin would be value for £50, whereas if you invest that £5,000 you probably pay tax of £200 a year. Although this would be the right thing to do, I think, from their own selfish point of view, that householders would be wise to leave things as they are.

If the resolution were worded in a different way, I would have a great deal of sympathy with it because I am quite aware that certain houses that were built recently are valued for their full value, whereas other houses erected a long time ago are valued at a very small valuation. In the first place, as regards the wording "to any tenement or rateable hereditament which is in the occupation of the owner", I have very much less sympathy with the man who occupies his own house than I have with the man whose house is let at a controlled rent, and a very small rent, and yet who has to pay income-tax on five-fourths of the valuation of the house. Secondly, what is the meaning of "which is in the occupation of the owner and the annual value of which was determined under the Valuation Acts subsequent to the 7th day of May, 1941"? My friend seems to forget that the valuation is a yearly valuation. Every house is presumed to be valued from year to year. Senator Sir John Keane shakes his head.

No, I do not.

That is really the fact.

That is the theory but that is not the practice, surely.

The fact is that the Commissioner of Valuation sends down a list of the valuations to the local authority every year. That is presumed to be the valuation of that house made for that year. I quite agree that there is no alteration in the valuation as a general rule unless an application has been made to revalue. If an application has been made to revalue, then the valuation may be increased or reduced but, for all practical purposes, the valuation is made from year to year. Therefore, every house would come under this definition if it was erected before 1941. Perhaps Senator Duffy means "the valuation of which was first imposed or determined subsequent to the 7th day of May, 1941", but, "determined" means determined from year to year so that the valuation of every house has been determined since 1941 whether it has been a revaluation on the application of a local authority or on the application of the owner of the house. I would submit, therefore, that this recommendation would apply to every house and, evidently, that is not what Senator Duffy intends. In its present form, I do not think the suggestion can be adopted and, therefore, I will have to oppose it. If it had been drafted in a different manner I would have a great deal of sympathy with it.

Recommendation, by leave, withdrawn.
Sections 3 and 4 agreed to.

I move recommendation No. 10:—


10. That after Section 4, and in Part I, a new section as follows be inserted:—

5.—All reasonable and proper fees and charges paid by any claimant within the meaning of the Income Tax Acts to any person for adjusting and agreeing such claimant's liability to income-tax and surtax and for the completion of all returns necessary for that purpose shall be allowed as a proper deduction (under whichever schedule the claimant may select) from gross income in the calculation of assessable income.

I made the case in regard to this recommendation substantially on Second Reading and I do not propose to delay the House discussing it at great length. This only affects an individual taxpayer because, so far as companies are conerned, so far as partnerships are concerned, where it is a question of profits and even so far as the individual is concerned where it is a question of Schedule D profits, the practice of accountants is to charge an accountancy fee for computing profits and to do actual tax adjustment work as part of such accountancy fee. The accountancy fee is allowable as a proper income-tax deduction, but we had earlier to-day an admission by everyone, I think, including the Minister, that even leaving out such a question as the computation of profits, the income-tax code has become an extremely complicated code. The Minister's point of view is that it is so complicated that he cannot complicate it further, but I do not think that this small concession would in any way complicate it further. The law as it is at present is so complicated and so confused that it is virtually impossible for the ordinary individual who is untrained in income-tax administration to be able himself to make out his return, particularly to be able himself to make out a claim for a refund.

In consequence of that, very often a small man in regard to income has to go to some professional person, very often an accountant. Naturally, that accountant has to charge fees, and I suggest in this recommendation that the amount of fees charged should be taken as a proper deduction from the income of that person in arriving at the figure at which he or she will be asked to pay income-tax. I do not know if the Minister has been able to make any estimate of the amount involved. There is a possibility that this proposal would, in fact, save money in the long run, because it would mean that when returns were presented to the Revenue Department they would be very much more easily dealt with, and would save a considerable amount of work in the Department.

There is a further point to be considered. If, for example, a person has to get an income-tax form filled up, and the accountant concerned charged £5 5s. Od., in that instance that £5 5s. Od. is already taxed by the Minister in the profits of the accountant. It is reasonable to suggest that when it is being taxed in one respect, it should be allowed as a proper deduction in another respect. The matter is not one of great consequence, but quite genuinely it would alleviate hardship and, in the long run, mean that inspectors of taxes would be able to deal with the work more expeditiously, because claims and returns would come before them in a more complete manner, and there would not be so much correspondence and adjustment.

I should like the Minister to accept this recommendation. I do not think it would cost the Exchequer very much in view of the reasons mentioned by Senator Sweetman. My experience is that auditors charge a bulk sum for such work. Why should one company be allowed the cost of having its accounts passed and the cost disallowed to another company? This recommendation would make matters easier for the revenue authorities and, as Senator Sweetman stated, they would also get the tax from another source. I recommend the Minister to accept the recommendation.

I desire to support the recommendation not as a concession, but because people like myself, who have to make returns for relatives, would be pleased to send them to accountants and to tell them that they would be allowed such charges. It would be also a very great gain, and a saving of considerable time to tax inspectors, if complicated claims were prepared by experts. It would not mean that ordinary simple returns would be made out by them, because nobody is going to pay £5 5s. 0d. for such work if they can avoid doing so. I believe this proposal would lead to the more complicated claims being prepared by experts and in the end would save money for the State. My experience with regard to claims made by companies is that when there are bona fide errors the inspectors are prepared to adjust them.

I wish to support the principle of the recommendation. I think the revenue authorities would be safeguarded against certain abuses by the expression in the recommendation "reasonable and proper". Work other than that appropriate to income-tax, amounting almost to clerical work, is sometimes done by firms who write out books. I know of cases where auditors are presented perhaps with a cash account only and have work to do that is not auditors' work at all. As the recommendation is drafted the revenue authorities have power to say what are reasonable fees.

I also want to put the psychological point of view. Does the Minister not realise that it is important to get the goodwill of the taxpayer? Many tax-payers are placed in a position in which they would be quite safe in withholding a certain source of income from the revenue authorities. I do not say that wholesale suppression would be safe, but there are border line cases where a taxpayer might say "I feel that conscientiously I must return this as a regular source of income" or, on the other hand, he might say: "As I have had shabby treatment I do not feel that I should return this. They did not allow me a fair chance to prepare my income-tax return and I am now going to strain my conscience against the revenue." That is human nature.

The Minister must allow in certain cases for the honesty and goodwill of the taxpayer. There is just something to sway that individual one way or the other. Goodwill is jeopardised if a perfectly fair charge is not allowed in a return. There is a psychological viewpoint which the Minister might bear in mind.

I am afraid Senator Sir John Keane is a bit optimistic if he thinks that anything we could put into a Finance Bill would make the paying of income-tax pleasanter.

Not more pleasant.

The question is, where are we to stop? If we were to allow such charges or such expenses to the ordinary individual in income-tax allowances, what burdens are we to put on the Revenue Commissioners to find out whether a charge was reasonable or proper, whether a solicitor was consulted about income-tax relief, or for some other business? There would be no end to this thing if we started off in this direction. The fact is that when a person gets income it does not matter to the Revenue Commissioners in what way he spends it. It does not matter what he gives to an accountant, a doctor or any other professional man. At the moment, if anybody wants to go to a solicitor or to an accountant to help him to fill up his form, well, it is open to him to do so. I do not think he will go unless he thinks he has a reasonable chance of getting a little bit more than what he pays for the advice.

Is it fair that the private individual should be put in a different position from that of the businessman? Theoretically, at any rate, in the case of a business man the auditor's fee goes in as a trade charge. Is that differentiation fair? I appreciate that the Minister has to have regard to administrative difficulties as distinct from fair treatment. This is a case where the interest of fair treatment should be allowed to prevail. In the case of a person in business, whether he is allowed to do it or not, the charge is included in the auditor's fee. If the private individual cannot do that, it is not fair.

It would be impossible, as the Senator will admit, in the case of the ordinary company or business concern to differentiate between what is accountancy for income-tax purposes and what is accountancy for the purposes of the concern's own business. The Revenue Commissioners admit the bulk sum. In the case of the individual, allowances are made for various things upon which he spends his money. There is the ordinary personal allowance. There is an allowance for children and things of that kind. It is a different matter altogether.

I protest very strongly against the last sentence which the Minister spoke a few moments ago —not his last remarks. It is largely that type of view which has created the feeling amongst tax-payers that they are not being treated fairly by the Revenue Commissioners. It may seem peculiar that I should seem to be defending the revenue officials against the Minister. I must say the Minister's suggestion was to the effect that people only go to accountants or solicitors because the revenue officials do not treat them fairly.

The Minister did not suggest that.

That was the effect of his remarks. It is not in accordance with the facts, and not in accordance with my experience. People go to accountants or solicitors because they do not know what the position is, and because, obviously, the revenue authorities are not going to be in the possession of the complete information. They have to go to somebody to get the information because of the complexity of the income-tax code. The Minister for Finance whoever he may be at the time, is responsible for that. Because of that complexity, individuals have to go to somebody for information. The position as regards companies is as the Minister has stated. It would be a wrong thing if the impression got abroad that people went to consult specialists in this matter because they thought that by doing so they were going to get out of being treated unfairly by the revenue authorities. That is not in accordance with the facts. The Minister did not answer my question as to whether he had computed how much this concession would mean in gross loss. It would not be a net loss because the revenue authorities would have the work presented more clearly and cheaper in the long run.

It would be impossible to give that figure.

Recommendation No. 10 put and declared negatived.


Question proposed: "That Section 5 stand part of the Bill."

There is a question of principle involved here which, I think, is a matter that should be considered by the Government. I refer to the question of publicity in the case of import licences. We have an enormous number of customs matters set out in the Schedules. Different people are given licences to import. These licences are given without publicity. A number of my business friends tell me that it is most undesirable. If it does not open the door to actual wrong practices, there is the possibility of wrong practices. The only safeguard in the interests of the public and of fair play would be some scheme of publicity in regard to the issues of these licences. The proposal I am making is not an impracticable one. Some of my business friends tell me that it ought to be done, and that my suggestion is quite practicable. The Minister for Industry and Commerce was asked about it on a previous occasion. I have never heard any valid reason against it except that it may show up one competitor's business to another. What right has one competitor to have undisclosed advantages over his other competitors? That is the principle in a nutshell. I ask the Minister to bring the matter before the Government and the Minister for Industry and Commerce in the interests of fair play. There should be full publicity in regard to the issue of these licences to people to import.

I understand that no power is being taken under this section to raise the duty on the import of parts for motor cars into this country. Accordingly, one has to assume that the policy pursued for some years is to continue. I do not know whether the Minister since he went into his present office has ever attempted to examine the implications of that policy, but it is time that somebody did something about it. In other countries to-day there is such a presture on man-power that efforts are being made to allocate the labour services in the various communities to the most essential tasks. The Ministerial policy in this respect is due for an overhaul. Taking English cars, I have here a long list of prices on this side and on the other side and there is no rational justification for the difference between the prices our people pay and the prices at which these cars can be secured ex-works in Britain. A situation in which a car purchased in this country is anything from £80 to £140 or £150 more to the Irish purchaser than the price ex-works cannot, under any circumstances, under any evidence of facts which can be produced, be justified.

I have not got a great deal of information on this, but any information available to me, and much more is naturally available to the Minister, convinces me that the policy at present is all wrong. I know that, possibly in a great burst of enthusiasm, perhaps for some other reason quite as worthy as the belief that we were going to give very considerable employment here by it, this policy is responsible for the difference in these prices, but surely we have gained some experience in the few years that have passed. If we examine what is happening and ask ourselves whether it is a sane policy for us to pursue or not, I think one can come to only one conclusion.

Motor-cars, whether produced in England or America, would be ordinarily put together in the works. The people who have been building them in thousands would be employed on that operation in the works and naturally they would be more efficient than anybody else at that job—the people accustomed to handling the particular type of car—but, instead of putting all the parts together and making the complete vehicle available, somebody has to pack all these parts. My information is that the packing of these parts alone is a more expensive operation than putting the parts together to make the complete vehicle. These parts have to be transported; the Minister collects revenue from them landing here; and they have to be unpacked and rebuilt. I presume the idea was that we were going to give considerable employment here as a result.

The outstanding fact is that a rather poor community here are denied the opportunity to procure something which, to a great many of them, is essential to their business, and they are denied that opportunity because of the policy of having a differentiation of from £80 to £140 in the prices at which these vehicles may be purchased ex-works Britain or America. That policy is being pursued for what purpose? Is it to give employment?

May I interrupt the Senator? I cannot find in the Schedule anything dealing with taxes on motor-cars?

It deals with marble chips and cardboards.

It is because it is not in it that I am protesting. It ought to be in it.

That argument is rather far-fetched. On that basis, Senators could deal with every other duty or material which is not included.

Surely you can have sins of omission as well as commission.

I submit, Sir, that where there is a section annulling certain duties, it is in order to say that other duties included in that section should also be annulled.

If that were permitted, where are we to stop?

I do not want to argue with you, Sir, but you could only deal with cases of duties which you thought should be annulled. You could not go outside them.

I do not want to be out of order, but the Finance Bill is the one opportunity we have of raising matters in relation to Government policy, whether it be the matter of a sin of omission or a sin of commission.

I am afraid that it would widen the discussion to such an extent that we would not know where to end it.

I do not understand your ruling, Sir, but I accept it.

Question put and agreed to.
Question proposed: "That Section 6 stand part of the Bill."

I want to refer to a point which I made on Second Reading. This section is concerned with an alteration in the rates of duty on tobacco. It appears to me that the Minister in this Bill imposes an additional duty of 2¼d. per lb. on tobacco but, for some reason, the increased price of the cheaper brands shows an increase of 4d. per ounce. I saw the price list, recently issued, of one of our tobacco manufacturers on which the cheapest price quoted for pipe tobacco was 1/7 per ounce. That tobacco was sold a year ago at 1/3 per ounce. The Minister in his Budget Statement said he was giving a special remission in respect of this type of tobacco, the hard, pressed tobacco. What happened subsequent to the Budget speech I do not know. I have asked retail traders how much they were getting out of the 4d. which has been added to the price of tobacco and they assured me that they are getting nothing out of the 4d., that the whole 1¾d. is going to the manufacturers under an Order made by the Minister for Industry and Commerce. I do not know how far the Minister for Finance has responsibility in this matter, but I suspect he has to take his share of the responsibility for Government policy, which is a collective policy. His policy as outlined in the Budget has been vitiated entirely by that Order, which enables the manufacturers to add 1¾d. to the price of tobacco, on top of the 2¼d. placed on it by the Minister for Finance.

We were trying to get an income-tax remission for wage-earners earlier this afternoon. Here is an opportunity to give relief to the taxpayer without interfering with the budgetary arrangements. If the Minister adds 2¼d. for revenue purposes, well and good, as it is going into the Exchequer; but it is a different story if the manufacturers, all of whom have made fabulous fortunes in the past, are to be permitted by another Minister to increase their profits in the way I have described.

The price of tobacco is almost entirely a question of duty. So far as I have been able to calculate, the duty on the cheapest brands works out at 19/9 per lb., or slightly less than 1/4 per ounce, and that tobacco is sold for 1/7. Some 30 years ago that tobacco would have been sold at 2½d. an ounce, after paying duty. I remember distinctly that the favourite smoke of the farm worker was the half-quarter, or two ounces, which cost 5d. The price of that to-day is 3/2, so that in terms of tobacco the cost of living for the farmer has increased by 660 per cent. The average farm worker who smokes four ounces of plain twist in the week is paying 5/6 to the revenue and the town worker who smokes 20 cigarettes per day is paying 9/- per week. These are important considerations, since so many of our people have low incomes. It has been pointed out quite recently by an eminent writer that 84 per cent. of the community get an income from wages or any other source not exceeding £150 a year, or less than £3 a week. Therefore, what is done by Budgetary process to take money from such people is of the utmost concern. If the Minister is to carry out the pledge he gave in his Budget speech, he must get after those who are allowed to increase the price of tobacco not merely by 2¼d. but by a total sum of 4d. an ounce.

Senator Duffy has raised one question, which, in my opinion, does not properly belong to this Bill at all, that is, the retail price of tobacco. This section deals with the duty and not with price-fixing. However, I can say that the Minister for Industry and Commerce explained to the Dáil that the margins to tobacco manufacturers, wholesalers and retailers were due for revision and were revised upwards after the Budget, when new taxes came into effect. It is true that the tobacco taxes are very heavy indeed, but it is one method of collecting money to keep the State going. If the proposition Senator Duffy made in connection with income-tax and supertax reliefs were adopted, it is not 600 per cent. we would be putting on tobacco but another 600 on top, making it 1,200 per cent. Cigarettes selling here at 1/8 are being sold in England for 3/4, I understand. On the whole, I think it is a better policy to keep the proposals as they are here.

There are alternative methods of raising taxation. The Minister is permitting the wealthiest corporations to get away without paying tax at all. Every time Córas lompair Eireann carries a passenger for whom no seat is provided, they are defrauding the revenue of £6 15s. Od. It is a common practice to allow buses to carry six, eight or ten people standing. The company pays duty on those buses in relation to seating capacity and therefore they are not paying duty in regard to those passengers. That is the kind of place the Minister might look for taxation, rather than increase the price of tobacco or lower the exemption limit in respect of income-tax on wage-earners. Before making a 660 per cent increase on tobacco, the Minister might have regard to other channels from which taxation could be derived without hardship.

It is rather disquieting to the public to learn that this increased price is not to go to the revenue, or even to retailers, but to manufacturers. There may be good reason for it, but not to get any of the reasons and to be told unexpectedly that that is the fact is extremely disquieting and makes one anxious about the whole of our price-fixing system.

Question put and agreed to.
Sections 7 to 15, inclusive, agreed to.

I move recommendation No. 11:—

That before Section 16 a new section as follows be inserted:—

Section 14 of the Finance Act, 1944, shall cease to have effect in relation to all accounting periods after 31st day of December, 1947.

I put this amendment down in the hope that I might induce the Minister to make a statement of policy with regard to the subject matter of Section 14 of the 1944 Act. When his predecessor introduced the 1944 Act he referred to certain changes in the law which were made for the purpose of preventing evasion of excess profits tax and it is very obvious that this provision with regard to subsidiary companies was so intended and I think, personally, quite properly intended, to prevent possible large evasion of excess profits tax. It has a certain effect which is not altogether desirable in so far as in relation to new business, in the formation of new companies, investors have to be extremely careful as to what they are proposing to do. For instance, if the Minister were to come to me and say: "I propose to start a new industry and a new small company with £1,000. I propose to put £500 into it. Will you put in £500 in order to encourage me", if I had £500 and if I thought it a good idea and was willing to start an industry here, I would be sympathetic but while this section remains I dare not do it unless I could find some way of being assured that the new company would not be tacked on to my own business and would not be liable for corporation profits tax on all its profits. If this is to be continuous, permanent Government policy we ought to know about it.

In connection with another amendment the Minister referred to a statement made a year ago and which he explained. Certainly it was not understood in the sense in which he explained it now. It is quite clear that he is not going to change it for this year but I put down this amendment because I believe it is reasonable that persons who are likely to invest in business or, particularly, present companies who may form new subsidiary companies, should be told whether this is to be regarded as permanent legislation, whether it is to be the permanent policy. If so, it will have a very restrictive effect on business but it should be known what it is. It may be merely a temporary expedient to deal with excess profits tax. If so, it would be a great advantage to have a statement as to the Government's intentions. If it is to be permanent, we would all like very much to know whether, although it was introduced in a temporary way, it is intended to be permanent legislation in regard to excess corporation profits tax.

Senator Douglas has explained that this section in the 1944 Finance Act was designed to prevent corporations setting up what were in fact dummy subsidiaries in order to evade excess corporation profits tax. The ordinary corporation profits tax still continues and it is for consideration, while that continues, the Revenue Commissioners would be allowed the discretion to say to a concern which set up subsidiary companies whether or not they will allow the two accounts to be separated when the assessment for corporation profits tax is being made. I have not come to any final conclusion about the matter, but I can see that if we were to have a system of subdivision of companies, it might be carried on to the extent that, although a company should pay several thousand pounds a year in corporation profits tax, we would get none, simply because each branch and subdivision of the industry was being run and accounted for by a separate subsidiary company. The Revenue Commissioners, although power was taken in 1944 to deal with excess corporation profits tax, still have power in connection with ordinary corporation profits tax that is payable this year. The question is whether we should do one of two things. We could either bring it to an end or we could bring an end to the discretion of the Revenue Commissioners altogether and simply say that even the Revenue Commissioners would have no discretion to separate the accounts of two organisations which were in fact one when it came to examining the accounts for the purpose of corporation profits tax.

In answer to Senator Douglas's question, I could not give any indication at the present time as to what the view of the Government would be on this particular matter. I have not made up my own mind as to whether it should be a permanent feature of our legislation or whether we should bring it to an end.

I do not wish to press this amendment but the Minister put a word into my mouth which I did not use. He said that I had said this was for the purpose of preventing evasion by "dummy" subsidiary companies. That is not true. I did not say "dummy". I said "subsidiary companies". This does not deal only with dummy subsidiary companies. It deals with perfectly genuine subsidiary companies which were formed for the purpose of new business and which were formed during that period. The law is very fairly administered as far as I am concerned. I am not disputing that. But, if the Minister thinks that only deals with dummy concerns, purely for the purpose of evasion, I must say that that is not the case under the Act as it stands.

If a business that I control wants to do an entirely new business, to start a subsidiary company to run, say, a dog racing concern—take something distinct from it—it could not know immediately that if I, as a shareholder, have 50 per cent of the shares in the new concern it would not be regarded as a subsidiary company. While that is the case, people are shying off certain development and to my own knowledge have been turned down. I would, therefore, urge on the Minister that he should examine this further and not wait for a year before giving some indication as to the policy. If he is going to continue it, and I can understand that he would probably consider that some provision is desirable for the reasons which he gave and which I am not disputing, I suggest that it wants considerable amendment and clarification as to whether or not it is to be only for the purpose of corporation profits tax. When it was for the purpose of excess corporation profits tax, it had to be pretty tight and the Minister would not consider even the slightest amendment. Now, it seems to me that the provision that a shareholder of the new company who happens to be a shareholder in another company will be deemed to be holding on its behalf applies not only to a shareholder who is a representative or who is acting on behalf of the other company but to one who owns his own shares. It is far too rigid. I think there should be a clear distinction between subsidiary companies formed for a convenience, such as departmental division, and ones which are the creation of a new business, which is clear and distinct and which is bringing in new business, apart from what was done before. The distinction is not there. It may be that it is the intention that the Revenue Commissioners, when they come to exercise their discretion, may make a distinction between the two, but that is no good from the point of view of the investor who cannot tell beforehand and who cannot be told, because the Revenue Commissioners could not in advance state what their attitude would be to a hypothetical case. That must be given when the accounts are presented.

Therefore, I say that this wants some consideration. It will have a detrimental effect on new development if the Minister does not come to a decision and announce it fairly soon. I do not say that a year is going to make such difference, if one knew what the policy was and what is going to happen, but if it is going to be left vague, then, I think, it will be detrimental. I do not want to press the amendment.

I hope the Minister will give this matter careful consideration. There is the danger, as the law stands, that the formation of a new company or the starting of a new industry, might be prevented. It is very hard to define a subsidiary company. All companies have memoranda of association which set out the objects for which they are formed. When a memorandum of association is drafted by a solicitor or by counsel it embraces everything that could possibly be manufactured by a particular industry. Very often a tenth of the things mentioned are never manufactured. If a new company is formed to make things not previously manufactured, and if that is done in a new building, it should not be regarded as a subsidiary company.

Mr. O'Donovan

If it is not a subsidiary company it would be a dummy one.

No. A dummy subsidiary company is what the Minister referred to. If a company was formed for the purpose of dividing profits I would regard it as a dummy subsidiary company, but if it were formed to start a new industry, even with the capital of shareholders of the old company, they should be given latitude. I know of one company where a subsidiary company was formed for I think a wrong purpose. I would regard that as a subsidiary company. It is very easy to know whether a subsidiary company is genuine in what it manufactures. If it is genuine I ask the Minister to be generous in regard to its taxation.

Recommendation, by leave, withdrawn.

I move recommendation No. 12:—

That before Section 16 a new section be inserted as follows:—

When the remuneration or any part of the remuneration of a director of a company has been disallowed as a deduction from the profits of a company for the purposes of corporation profits tax a sum equivalent to the amount of corporation profits tax payable by the company on the remuneration disallowed shall be deducted from the total amount of surtax, if any, payable by such director.

This recommendation deals with another matter mostly related to Section 16. Most Senators are aware that Section 15 deals with the case of what are called director-controlled companies which, in nearly every case, are family companies. They become so for various reasons, consisting of private individuals or possibly brothers who formed a limited company during the last 20 or 30 years, as being the most convenient way to carry on business that was previously a partnership.

One of the difficulties that the Minister had to face in the application of a specific tax on profits is what is to be regarded as a legitimate charge on profits. Rightly or wrongly the Revenue Commissioners have the idea that if a person controls a company, there is no danger of overpaying any of the people who have not enough shares to take part in majority rule. I think that is an illusion. They suffer from that. They believe that there is a very grave danger that corporation profits tax may be evaded by paying too much to directors, in other paying too much to directors, who own and control the business.

The position at present is that if a director has not more than 5 per cent., and gives his whole time to the business, he is entitled to be paid whatever the company think fit to pay him, provided he is not fortunate enough to have shares in the business. To my mind that is a bad arrangement. It is desirable that staff coming along and getting into managerial positions should put shares into a business. In a business that I know, of, in which the staff offered to make an investment, it had to be taken on deposit or not at all, because the effect would be that the company would be taxed on their salaries, which is not now the case. Obviously no company would agree to that simply to get a small amount of capital.

The whole reason for the difficulty is due to the fact that the State double taxes the amount which is disallowed. If there were no double tax involved it would not matter at all. The Minister could make it £1,500 or £2,000 or whatever the maximum figure he liked. If that was disallowed the corporation profits tax would be paid on it, the individual would pay surtax, but the amount of the corporation profits tax would be allowed from the surtax and there would be no grievance.

The Minister would also be in a position to prevent evasion by fixing a limit. If, for argument's sake, I was making sufficient profit in my business that I thought fit to pay £3,000 or £4,000 there would be no real grievance, inasmuch as I would have to pay surtax, but if the business needed it, it would be far better to leave it in the business and I would only be paying corporation profits tax. My suggestion is that there would be no sense of grievance and no difficulty if there was not double taxation. Double taxation exists. If for the sake of argument I am paid £2,000 and the Government says they would allow only £1,500 for corporation profits tax I would have no grievance.

My real grievance is that on £2,000 I am taxed for income-tax plus surtax and in the company I own and control I am also charged an effective 1/6 in the £ on £500. That I suggest is double taxation. There would be no grievance if that were removed.

The State would get the full amount of taxation. They could make a restriction on the company for corporation profits tax and then one would know what has to be paid. If some such provision could be made the present sense of dissatisfaction which exists amongst many companies would be removed. A company having paid 1/6 on the first £500 there would be no 6d. payable as surtax. I do not expect the Minister to accept this recommendation, but I suggest that there is something in it which might be carefully considered. Deputy Costello raised the matter in the Dáil and the Minister, if he was correctly reported, said that there could be four directors with shares and there would be no corporation profits tax. There could be four directors giving their time to a business and as the law stands there would be no corporation profits tax. There is nothing to prevent that providing they have no shares, and provided they are reasonably paid for the work they are doing. I respectfully suggest that the real grievance lies in the double tax. It would not matter what shares you held if it were not for the difficulty of the double taxation.

Senator Douglas's recommendation deals with a proposal that was discussed at great length in the Dáil. I think that we are very fair to the directors of director-controlled companies by increasing the exemption from corporation profits tax from £1,000 to £1,500. There has to be some limit. Otherwise there would be no corporation profits tax collected from such companies. The directors of director-controlled companies would be very foolish indeed, that is from the point of view of the ordinary person, to pay corporation profits tax if they could get out of it by the simple expediency of showing no profit, but instead taking all the profit in the form of directors' fees.

That is not in this recommendation. It was in the proposal before the Dáil.

I grant that. I am simply pointing out to Senators why the limit was raised to £1,500 and why we considered that it was fair and reasonable to increase the limit that had been in existence heretofore. It was £1,000 and we have brought that up to £1,500. Take the case of a director of a director-controlled concern and the investor in the ordinary public company. If Senator Douglas thinks that the director of the director-controlled company should get further exemption on that portion of his income that had been reduced by the application of corporation profits tax, what about the shareholder in the ordinary public company, or even the director of the ordinary public company? A company whose profits reach a certain level has to pay corporation profits tax, and there is no way of getting out of it.

Am I to understand from the Minister that in the case of a public company, a director's fees can be reduced under this?

No, they cannot. Earlier to-day the Senator was complaining about the complexity of the income-tax code. If we are to add his further complication that the Senator is seeking, that a director of a director-controlled company can make a claim on the Revenue Commissioners that his surtax should be reduced because it was portion of his salary that was over £1,500 on which he had paid corporation profits tax, there would be complaints and if that particular group of people could have these series of payments set off as relief for sur-tax purposes, then other people would think and claim very strenuously that they should get the same relief or some relief equivalent to it.

The Minister asked how are you going to deal with the directors of public companies? I think that is not fair because the fees of directors of public companies are not subject to corporation profits tax. Whatever fees are paid to the directors of public companies are a charge on the company before the corporation profits tax is paid. The Minister is aware that a Bill will be coming before us under which a Minister will receive round about £2,000 a year. He will pay income-tax on £1,500 of that £2,000. He will pay surtax on £500. Now, if we assume that to be the case and that I receive £2,000, why should I, because I have a private business, pay income-tax on £1,500, sur-tax on £500 and corporation profits tax on the same £500? Why have that distinction between the professional man and the man who happens to control his own private business? I say the distinction is unfair. The Minister says it would be too complicated to do away with that unfairness. If we assume that to be the position, the least that should be done is that I would not have to pay surtax on that £500. Even if I had not, I would still have to pay more than the professional man. The view of most people who are subject to it is that it is most unfair. I still think that the Minister has not made any case for it. Why, for example, should he pay a lower rate than I pay, and why have this distinction between the professional man and the man who has his own private business?

I do not think that the directors of director-controlled companies are in business just for fun. I do not think that it is for fun that they set up partnerships. We have had several instances of that in recent years where partnerships were changed to private companies. There are certain advantages to be gained by incorporating as a private company and operating as such under the law. Otherwise people would not go to the trouble of doing that and of paying stamp duty on the documents necessary to set themselves up as a private company. When a partnership dissolves and sets up as a private company, it puts itself in much the same category as the ordinary public company. It puts itself on the same footing in regard to corporation profits tax. It is assumed that in the case of the ordinary public company the director does not control it— that he is only an employee of the shareholders and manages the concern for them—that the shareholders will not agree to pay him by way of salary more than he is worth. If he is a shareholder to any extent himself he gets, after his own salary and after the wages and salaries of all the other employees are paid, and after all the other costs have been met, a portion of the profit, if there is a profit, by way of dividend.

That dividend has been reduced in the case of a public company by the corporation profits tax which that concern has had to pay, with no getting out of it. A case could be made—the question has been argued in England recently—that we should not have this corporation profits tax at all. That can be argued at great length, but we have this tax, and we have it in respect of all incorporated companies and we have given special concessions to director-controlled companies by way of the amount of salary they can draw from it and escape the tax. A number of these director-controlled companies were set up because it is a convenience and because it suits the individuals who own and control these companies. If there is anything to be gained by carrying out incorporation and if they feel aggrieved by the operation of the tax, they could escape it simply by dissolving and setting up the partnership again. I think it is not unfair to ask director-controlled companies, when the directors have drawn up to £1,500 each out of the company, escaping corporation profits tax on that amount, to pay their surtax on the rest of the profits drawn from the organisation.

I have a certain amount of sympathy with the Minister for Finance on a Bill such as this because a Minister will invariably be asked in course of Committee Stage to deal with an enormous number of points which are highly technical and very involved. I have a certain amount of sympathy with the Minister in his endeavour to grasp technicalities with which he would not be dealing in the normal course of events, but the Minister's position on this amendment is that he is putting up ninepins which do not arise in the amendment and knocking them down. The Minister made a very excellent case against the abolition of corporation profits tax in respect of director-controlled companies. He based his case on that and not on the case which arises on this amendment.

According to the figures given us a few minutes ago, if Senator O'Dea and I, as solicitors, were earning £2,000 in any one year, we are assessed for surtax on £500 at 6d. in the £, which is an equivalent to £12 10s. Od. If Senator Douglas earns £2,000, he has to pay corporation profits tax on the excess £500 at the rate of 2/- in the £—there is a deduction for income-tax so that the rate works out at 1/6 in the £—he has to pay, on exactly the same income, £45, plus the £12 10s. Od. which Senator O'Dea and I pay. In effect, it means that there is an additional tax on a man in business as apart from a man in a profession. That seems to me to be unfair.

Senator Douglas does not ask that corporation profits tax be remitted. All he asks is that a man should not be charged twice on the same figure. In other words, the State should take whichever is the larger sum—if corporation profits tax is the larger sum, the State is entitled to take it and, similarly, if surtax is the larger sum, the State is entitled to take it. All he suggests is that, on the same £500 of income, in the example we have taken, the State should not take twice. There does not seem to be any case for the State taking twice in respect of that sum. It would be perfectly logical for the Minister to say that perhaps corporation profits tax was too high or too low, or that surtax was too high or too low, adjusting his figures to an average income and to take his pound of flesh on that, but to take his pound of flesh twice on the same amount appears to me to be unfair and to be a position which requires revision.

I do not want to prolong this debate, but I cannot resist pointing out to Senator Sweetman that, in respect of the example he has taken, if portion of his income of £2,000 was £500 from a public company which had made profits and given him this £500 dividend, he would have got a higher dividend than £500, because he got £500 which was originally a sum which became £500 after corporation profits tax had been deducted.

I spoke of £500 which the Senator and I earned as solicitors.

I do not propose to press this amendment, but the Minister's last speech shows that he simply does not understand the case being made. I am dealing with the £2,000 earned by a professional man in his own profession, without any reference to dividends, and the £2,000 earned by a business man for his whole-time employment in managing a business in which he has shares. The Minister says it can be avoided. Of course it can, at great expense. He can get rid of his shares. He can sell them to somebody else, provided the buyer will agree to make him a governing director, so that he will get a salary. He can sell his shares under an agreement that his salary will be maintained. He could do it in various ways, but that is not what the Minister wants and I do not want it either, because it is highly undesirable.

He says that people are not in business for fun. I did not think Ministers became Ministers for fun. They are paid a proper amount, and, if they are not, they ought to be. The same applies to men who go into business. The Minister must surely know that the vast majority, if not all—I believe 99 per cent.—of the privately-owned companies do not make £10,000 profit. They became limited companies at a time when there was a £10,000 limit with regard to corporation profits tax, and when it was intended to deal only with large public companies. It was the Minister's Government who reduced it to £5,000 and then to £2,500. There is no use in saying now that people should have known what the Minister's Government would do some years ahead when they formed their limited companies. They had to work on the basis of the facts then known to them. The facts were that a very large number of companies had been set up and that the Government before the present Government deemed it good policy because they reduced the stamp duty from £1 per cent. to 5/- per cent. which encouraged their formation. I think the Minister at the time said he thought it was desirable to encourage the formation of these limited companies.

To say now, as the Minister does, knowing the facts as he must know them, that these private companies should not have been or need not have been formed when people knew the facts, when the facts were that they would not have been affected by this in any way, so far as the overwhelming majority are concerned, makes me feel that the Minister does not understand the case. The case I am making is that you are going to continue the corporation profits tax in some form and that you can make it fair by not charging both. Allow whatever the Government deems a reasonable salary, add back the rest, but do not charge both surtax and corporation profits tax. That would get rid of the difficulty. On impartial examination, a commission would say that it is quite practicable, quite reasonable and fair, on the whole. Personally, I am not surprised that the Minister did not accept the recommendation, but I am extraordinarily surprised at the attitude he has taken towards it. He does not seem to understand that I am comparing two types of earned income, not income derived from shares or in any such way. However, I do not want to press the recommendation.

Recommendation, by leave, withdrawn.

I move recommendation No. 13:—

That in sub-section (2), paragraph (a), line 26, page 8, after the words and figures "31st day of December, 1946" there be inserted the following words and figures: "or such other date as the Revenue Commissioners may approve not being earlier than August 31st, 1946, or later than August 31st, 1947."

I stated on the Second Stage in good faith that no notice had been given of this intention of the Government until early in December. The Minister corrected me, stating that he had given notice in his Budget speech. I want to apologise for any inaccuracy on my part. At the same time, I do not know a single man in business who regarded his Budget speech as notice. I was present then and always read the Budget speech carefully later. I did not read into it that he was going to insist on a physical stocktaking in every case on December 31st. It was not until the notice arrived in December that that was understood. I understood that the reference to December 31st referred to the fact that excess corporation profits tax was going to end then and that there would be an adjustment. If I had the slightest idea otherwise, or if the Minister had in this House explained that that meant that firms who do their stocktaking in November or January or February were to be expected to make an additional stocktaking at December 31st, I would have pointed to him that in many businesses it would be practically impossible. In the retail trade, they would need to expect an enormous remission in taxation to justify taking staff away for that purpose when they should be doing their Christmas business, and no one but those likely to go bankrupt in a short time would dream of doing it.

I put down this recommendation as I believe that the proper method is to have a normal stocktaking. The Revenue Commissioners will know from previous accounts whether there is a case for a small adjustment of one month and normally they would not allow it unless there was a good reason. I do not think the difference would be very much and no business should be penalised by the fact that the firm did not take stock on the 31st December because they did not think it was practical politics in their business to do it or because they did not know in time that they would have to do it.

I am sorry if I misrepresented the Minister, but I am telling him the truth when I say that I did not take that as notice, and I have consulted quite a number of other businessmen and none of them knew about it until December. I am sorry more publicity was not given to his speech. I was not able to find a newspaper to see whether that paragraph was given or not, but that makes no difference to the fact that it was not known.

The effect of this recommendation is to allow the Revenue Commissioners to fix the date for the stocktaking, which could be the usual date. I am not tied to the wording of the amendment and would urge the Minister to consider adopting it, having regard to the circumstances. They could fix a date for normal stocktaking and make the necessary adjustments.

I did everything possible to advise business men of what was going to happen in regard to a claim for loss on stock. I did it in the Budget speech and, in order to make assurance doubly sure, instead of putting an ordinary notice in the paper— which a lot of people might claim not to have seen—I got the Revenue Commissioners to send out a circular. We decided to do it in the autumn and as quickly as we could get it printed we sent it out, and the Government could do nothing more. Apart from that, what is likely to be the practical effect? I do not think it matters very much. There is one disagreeable aspect that I do not like, that is that we are continuing the advantages of this concession without having collected excess corporation profits tax. I do not think that should be done. It was clearly explained to the business people generally that, if they wanted to claim repayment for loss, they would have to do it on the basis of a stocktaking as at this date. If many of them contemplated that there was going to be a loss on the stock, pressure of other business would not have kept them from taking stock.

Would the Minister not consider the advisability of inserting some words after "31st December, 1946", such as "or within two months thereof". As Senator Douglas pointed out, stock would not be taken on New Year's Eve.

The Minister stated that a circular was sent out. Would he help us by stating when it reached the average business concern, as that would be of vital importance to the man in charge of the books?

About the 1st week in December, 1946.

I think the Minister mentioned the autumn. The first week in December is hardly the autumn. We all know the situation that arises in business concerns in the weeks prior to Christmas. The firm is particularly anxious, if it is considerate at all, to let the staff get away immediately after Christmas, so that they may take it easy after the pre-Xmas rush. To suggest in the beginning of December that stock had to be taken not later than 31st December does not seem fair play. To give a firm any real option the circular should have arrived in time to enable them to take stock on the 30th November, the last monthly date before that. The Minister has not met the point fairly by stating that the circular went out in the autumn. I know the difficulties of printing at present, but if it went out only in the beginning of December the Minister should have given, and should now give, traders some further grace.

Mr. O'Donovan

He need not have sent it out at all.

The fact is that he would not have sent it out but that he realised the business trade did not understand the position. The Minister would have been in a far stronger position to come into this House and say: "I gave notice and everybody should have known." The very fact that the Minister sent out the circular shows that the Minister himself realised that traders did not know that that was the position. That has underlined the fact that it was not known. It does not really appear to me that the Minister has quite done himself justice in respect of this amendment.

To-day, the Minister in reply to Senator Duffy, said that there was no difference in the periods of taxation for income-tax and excess profits tax.

Income-tax and surtax.

Surtax—oh yes. But there is, I understand, for excess corporation profits tax. The Minister will correct me if I am wrong but I understand that a company can make up its accounts from one period of the year to another. They are not tied down to the 4th April of any particular year.

The same thing applies to income-tax for a company.

For a company, yes. The accounts of a company can be made up from one named date to another named date. They were not tied down to the 4th April or to the 31st December. That being the case, why should the 31st December be mentioned here as a particular date? I would also suggest that it is a dangerous date to mention and that there should be a certain amount of latitude. I do not say that the Revenue Commissioners will take advantage of the date but they could, if they wished to.

I cannot pretend to know very much about the problem that Senator Douglas faces up to in this recommendation but from listening to the debate I think the Minister must find himself in a really difficult position. Do I understand that from the Ministerial statement on the Budget to December of the same year no public notice was given to the trade that this was the law? If that be the position and if at the eleventh hour the Minister's Department became convinced that notice had to be given to these people and issued a circular, obviously, it was asking for the impossible to ask for stocktaking to be done in the month of December. Anyone who has ever been to a business house before Christmas knows quite well that the thought uppermost in the minds of everybody connected with the concern at that time is the possibilities of the Christmas trade. That is a serious enough matter to plan and regulate without having the further complication of stocktaking. I do not know what the position is. I do not know whether some of these people failed to take stock at this particular date or not and whether as a result they are in legal difficulties now or not but I would like to know from the Minister what difference is it going to make to the Revenue Commissioners if he accepts Senator Douglas's amendment? I assume that hardships have been created. Whether that is due to lack of sufficient notice on the Minister's part or to carelessness and apathy on the part of the commercial community, is something which is rather difficult to prove. At any rate, the practice is to notify publicly what the law is. If the only notice that was given was that contained in the Budget statement until the circular was sent out in December, I consider that that notice was very late. I think it would be reasonable for the Minister to accept Senator Douglas's amendment or such amendment of Senator Douglas's amendment as would make the situation reasonable and tolerable for the people concerned without making undue difficulties for the Department.

I wonder if the Minister has had any experience of stocktaking. I wonder if any of his officials have had any experience of it. I wonder how many members of the House, with the exception of Senator Duffy and myself, have actually taken part in stocktaking. A person may have a very big business as an agency and might have only £100 or £200 worth of stock that could be taken in 15 minutes. If it is only one class of goods you are dealing with, but in a large way, it might be done in a couple of days. I am connected with two businesses, one which I personally control and the other of which I am chairman. Both of them take a month for stocktaking. When you talk about stocktaking on the 31st December, you mean stocktaking finished on the 31st December. You mean stocktaking done over a period beforehand and adjusted as to that date. In my business, early in December, you could not have the stocktaking done unless you had got staff to come in on Sundays and to-work overtime, which it would be grossly unfair to ask them to do. Senator Donovan said that the Minister need not have sent out the circular. Of course, he need not have sent it out but if he had come along in March with this proposal that only those who were fortunate enough to take stock on the 31st December could be allowed for losses of stock afterwards, he would have perpetrated a grave injustice. I have only a limited knowledge of certain businesses but I do know that it is probably only wholesale trades or a very limited number of trades that find it convenient to take stock on the 31st December and that it is very rare in the retail trade. In the retail trade, where you have a variety of stocks, stocktaking takes the greatest amount of time, as a rule. Next to that is the detailed manufacturing stock, such as textiles and where you have part-manufactured goods to calculate, raw materials, finishes, and all sorts of things. In that case stocktaking normally takes a month to five weeks.

If the Minister's case is, as he made it the last time, the case he made in the Budget speech, my answer is, without questioning his good faith in any way, that the fact is that he brought in his Finance Bill and that the majority of people, first of all, did not know in time to take stock on December 31st or that the number who knew and who found it possible to do so was very small and that he has got to take it on the facts. Even if he had given ample notice it would not have been fair, reasonable, or wise to put the vast majority of business concerns in this country to the expense of additional stocktaking at that date. Stocktaking is expensive. It means a loss of trade in the case of a retail business. If it was an easy task, and was not expensive, it would be taken every three months, as people would want to know how they stood. It used to be done twice yearly, but that custom is disappearing owing to the trouble and expense involved. To speak of it as something that could be undertaken easily is misleading.

I am not pressing this recommendation, as it is obvious that the Minister is not interested, and does not see the injustice of it, but various people concerned, when they see their losses, will look back on the section and find that they have no case. Later the Minister will have pressure brought to bear on him to alter the position. He will be almost forced to do so. I believe he will be forced to extend the two years' period. That can be considered when we see what the position will be. If he accepts the principle, that where profits were made on a rising market, it was a proper thing for a business concerned to use part of the profits in order to prepare against the losses, which are sure to come with a slump and a reduction of prices. If they cannot do that it is only reasonable that part of the tax should be repaid.

That was the procedure after the 1914-1918 war and I think it was a reasonable proposition. It cannot be done fairly by sticking to December 31st. The fact remains that people did not take stock and that the result would not be equitable. I have now done my best to draw attention to the matter.

I wish that the friends of Senator Baxter were here to listen to him fighting on behalf of people concerned with corporation profits tax, and also those who are close friends of Senator Duffy. If we were to accept a recommendation of this kind we would extend the time over which those concerned could make a claim for repayment of excess profits tax. It was decided, because of the surrounding circumstances, that it was good policy for the country to abolish excess corporation profits tax, as an incentive to the organisations concerned to go ahead, to increase output and to do more and better business.

I gave the companies a solemn warning and we must take it that organisations of the kind pay some attention to what is going on. They all knew that thoroughly, without exception—all interested in corporation profits tax— and took jolly good care to see what the Minister for Finance said, and what was going to be the situation. They knew that after the 1914-18 war a somewhat similar provision was made. I solemnly, clearly and distinctly gave warning in May, 1946, that they would have to take stock as on December 31, 1946, if they wanted to make a claim for losses in the future. If Senator Douglas read my Budget speech of 1946, I do not see how he can say that it was merely an announcement that excess profits or corporation profits tax would come to an end on December 31, and that there was no warning about stocktaking.

The speech contained these words:—

"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."

There could not have been a clearer warning to all concerned that if they wanted to make a claim in the future— no matter what day there was a closing of the books for the companies' purposes—for losses they would have to show the Revenue Commissioners what amount of stock they held on December 31, 1946, no matter for how long a period they took stock. The fact is, I think that all organisations affected in 1946 were quite pleased that their liability to excess profits tax was being abolished on December 31, 1946. It is only now that Senator Douglas comes forward with a plea which is, in effect, that liability to excess profits tax ended on the 31st December, 1946. He wants to extend the period for stocktaking to the end of August, so that during a further period of nine months, more than the two years I indicated, they would be able to make a claim for losses.

I want to say that the Minister's last statement is grossly unfair. I did not say that I wanted the period extended until August. The Minister read the extract from his speech. He stated last year that firms would have to show what stock they had on the 31st December. The speech did not say that it would have to be the actual stocktaking at 31st December. There is a very great difference.

Adjustments have to be made. If stock is taken on December 31st the audited figures will show sales, purchases and average rate of profits. For all practical purposes what the stock was can be found at December 31st. That was what I assumed the Revenue Commissioners would take as stocktaking. The Minister stated that the same provision was made after the 1914-18 war and that there was a fixed date. I did not know that. When the Minister says that there was a fixed date I am sure he is right. From memory I thought there was a variation. I accept the Minister's statement that a similar provision was made. Even if it was made it would not be a perfectly fair provision.

What I suggest is that for all practical purposes stock can be taken by any competent auditor if stock is taken at the usual time and a calculation made about the average rate of profit. The Minister turns that into a statement that I am trying to get a longer period for the making of claims. I stated that I doubted if two years were of much value.

The Minister was referring to my recommendation which tried to provide that the normal stocktaking time should be taken. I do not mind if it was made January of the previous year if he objects to August, 1947. Give it 12 months say, so that the actual stocktaking can be on the date it was usually taken. Otherwise there is the possibility of preventing the claims by a large number of persons. Nobody knows who they are. I am not aware of anything in the way of a trade slump taking place. I do not think that a slump will come within two years. I do think that this Government, or some other Government, will recognise that, when the slump does come, some provision will have to be made, and that they will make amendments. It would be tragic to leave it fixed for the one date.

Recommendation No. 13, by leave, withdrawn.
Question proposed: "That Section 16 stand part of the Bill."

On the Second Reading of the Bill the Minister did not answer my request that the Revenue Commissioners should be instructed to give some general classification of the heads of business under which excess corporation profits tax is paid. I asked the same question last year. The Minister then indicated that it might be difficult to do that. I asked again this year, but so far I have got no reply. It is important that the general public and students of economics should know under what general heads these profits are payable. This £40,000,000 is a heavy burden on the community, and my request is that this information should ultimately appear in the Report of the Revenue Commissioners.

My recollection is that I did reply a year ago to the point which the Senator now brings up. It is very difficult to make an exact assessment of the excess corporation profits tax paid by various individuals concerned and to group them according to industry or distribution. You have concerns which are engaged in distribution and perhaps manufacture. It would be hard to segregate the profits made in respect of distribution and of manufacture, and at the same time give a complete picture in regard to those profits. You would have to take into account not only the profits on which excess corporation profits tax is paid but also businesses run by individuals who paid excess surtax, which was the equivalent of excess corporation profits tax. If it were easy and convenient to provide an accurate separation of all the profits made, and say that so much was made on this type of business, so much on that and so much on the other, I would not have the slightest hesitation in asking the Revenue Commissioners to go to all the trouble that would be involved in making the attempt. It is because I see the difficulties—even after all their efforts, as well as the diversion of staff for that purpose and the impossibility of their producing a satisfactory account—that I have hesitated to give them the instruction. The Revenue Commissioners are like many other Government Departments—they feel that they could do with more staff to carry out the important work of collecting the taxes that are due. While that is the position, I feel somewhat diffident in asking them to carry out a task that probably would not end in success.

One statement by the Minister has left me in a state of bewilderment. He talked about the difficulty of segregating in respect of concerns engaged in, let us say, manufacture and distribution. That segregation has been made already. A census of distribution was taken years ago in which there are tables showing the number in each branch of distribution, the stocks carried in each branch of distribution, showing profits and sales and the cost of selling goods per £100. If all that information has been tabulated by the Department of Industry and Commerce, and if that division has been made for a census of distribution, no difficulty would arise in carrying the segregation further by having one further column of figures giving the proportion of the profits attributable to manufacture and distribution. The number of firms would not be great.

There are firms, for instance, like Dwyer and Co. of Cork. They manufacture boots, clothing, shirts, hosiery, and they are also wholesale distributors. Their business has been segregated on many occasions. I think there is a return relating to the hosiery trade on the manufacturing side. The figures of that company have been collected and segregated and brought into the total. The same thing has been done in the case of that company in regard to boots and clothing. I do not agree that the Minister is justified in saying to this House that the segregation asked for has not been made. I am not sure that he said that it could be done with a great deal of trouble, but at any rate he indicated that an attempt could be made to do it if sufficient staff were put on the job. He rather indicated that in his view the primary purpose of the Revenue Commissioners and of his Department is the collection of taxes. I doubt if that view will commend itself to every Senator. I suggest that the primary purpose of the whole State organisation is to enable the community to pay taxes, and that its second important purpose is to see that taxation is fairly distributed over the community.

We have been arguing to-day on the tobacco tax, on personal allowances in respect of income-tax, and that the distribution of taxation over the community is not fairly dealt with. The Minister now tells us that it would be too much trouble for the Revenue Commissioners to compile figures which would enable the Government and the Houses of the Oireachtas incidentally to assess as between the different parts of the community their fair share of taxation. I suggest that the Minister should seriously reflect on what he said here this afternoon, and see whether he cannot alter his attitude to the proposition put up by Senator Sir John Keane.

In this case, I entirely agree with the Minister. I do not believe the figures given in audited returns of profits would show the segregation of profits between the various classes of business. I know that if the Minister ordered a census or asked for special returns from the Department of Industry and Commerce as to the prices and quantities of goods manufactured, those returns could be given, and it is possible that, using a little imagination, one might be able to get an idea of the profit on each article, but that is not what the Minister is concerned with. He is concerned with the question of the amount of excess profits being divided between the commodities. To the best of my knowledge and belief, that is not given to the Revenue Commissioners in ordinary returns, and it is, therefore, impossible for them to compile these figures.

I intend to be very careful not to say something I may be sorry for after, but I am not surprised that Senator Douglas agrees with the Minister in his attitude. I am naturally not surprised that all the parties engaged—not that I am making suggestions against any individual—should not want the whole facts of these excess profits to be brought to light; but I think the public have a right to ask that they should. It is a sorry light on democracy that when things like this are taking place and we ask for information, when the public, through their representatives, ask for information, they are told it cannot be done. It is always possible for the Minister to put up some technical pretext. It is only a technical pretext, and I say it, although I have not access to all the information. If the Minister wants to do it, he could do it with qualification. Look at the returns of income and expenditure. Are they accurate? Are they not largely said, in places, to be estimates or approximations?

This thing could be done, not with perfect accuracy, not with mathematical exactitude, but in such a way as to give a true picture, although not accurate in detail, of the groups in which these excess profits were made. I cannot believe that the Minister does not appreciate that. There is some reason they do not want to do it. Why can we not be told by the Government that the Government do not want to do it? That would be intelligible, but to say that it cannot be done, that the Revenue Commissioners are too busy to give the public essential information, is utterly undemocratic. I have got no reply this year and I got only the vaguest reply last year. Now, when I press it, this is what I am told. It is utterly and entirely unsatisfactory.

Question put and agreed to.
Sections 17 and 18 agreed to.

I move recommendation No. 14:—

That before Section 19 the following new section be inserted:—

19.—(1) Sub-section (2) of Section 38 of the Finance Act, 1926 (No. 35 of 1926) shall be construed and have effect as if the word "eight" were substituted therein for the word "three" and the First Schedule to the Stamp Act, 1891, shall apply and have effect accordingly.

(2) Section 36 of the Finance Act, 1935 (No. 28 of 1935) is hereby repealed.

This is the last effort I intend to make on this or any other stage of the Bill to secure one small concession from the Minister. It is a concession which is of tremendous importance to a limited number of people. Its importance will not be measured by the amount involved, because I suggest that the total sum involved in this year will not exceed £3,000. Under the Stamp Act, anybody who gives a receipt for wages is required to stamp the receipt in the same way as a shopkeeper stamps the receipt he gives you when you pay his account. There is this distinction, however: the shopkeeper who gives you a receipt for cash is required to affix a 2d. stamp to the receipt if the amount involved exceeds £2. That also was the case in relation to receipts for wages up to 1926. An amendment was introduced in the Dáil to the Finance Bill of that year which raised the figure in respect of wages receipts to £3, and, in 1935, the figure was raised again to £4 and it still stands at that figure, so that a typist working upstairs in this House who is paid £4 per week has to pay for and affix a 2d. stamp to a receipt before she can get her wages.

This is the most outrageous proposal in the world, apart from the money involved, because the only people concerned, with very few exceptions, are servants of the State and of local authorities. When Senator Douglas is paying his staff next Friday he will hand everyone a pay envelope and ask for no receipt or acknowledgment. His staff are paid their full wages, and walk off. Senator Hearne will agree that that is his own practice and the practice of all other business people. But in the case of the Civil Service, the employee of the local authority and in certain other cases—not very many—the employee is required to sign a receipt, and if the amount of the wages is £4 or more, the receipt must be stamped by the employee, who must pay for the stamp. I have no objection to the employer paying for the stamp. If he wants a stamped receipt, let him pay for it.

Apart altogether from the absurdity of the thing, look at the inequality in it. A civil servant with £1,200 a year is paid a monthly cheque of £100 and is required to spend 2/- on stamps in the year, but the typist with £4 a week must spend 8/8 on stamps because she is paid weekly, so that the lower paid people are required to pay for 52 stamps, while the higher paid people have to pay for only 12 stamps. That is a most extraordinary system to carry into 1947.

When the British Parliament enacted the Stamp Act in 1891, let us not forget that the exclusion of wages up to the £2 level excluded practically every weekly wage earner. At that time, a carpenter had 30/- and a typist, if there were typists in 1891—I do not know whether there were or not—had probably 5/- or 7/- a week. The general run of building trade workers had 15/- a week and the lower grades of the Civil Service and the weekly wage earners employed by local authorities would have £1, 25/- or 30/- a week. There would not be one case in a 100 of a weekly wage earner employed by the State or by local authorities who was required to stamp his wages receipt. That is not so now.

I may be entirely wrong, but the calculation I make is that about 10,000 people all told are affected and the total receipts of the Revenue Commissioners for stamps in this respect amount to about £4,000 per year, or to roughly £3,000 this year. I ask the Minister to do one generous thing before he takes this Bill away from the House to-night: let him accept this recommendation and get rid of the injustice which is being done and of the absurdity that is being carried on.

Deputy Norton had this recommendation down for discussion in the Dáil, and unfortunately was not there to discuss it. I wanted to tell him, as I tell Senator Duffy now, that I intend to look into this in connection with the next Budget. There is not only the question of the stamp duty on salaries and wages but of the stamps on business receipts. I want to have a look at the whole situation, coming up to the next Budget, and see whether we should and to what extent we could alter the Stamp Act, not only in relation to salaries and wages but also in relation to business receipts.

Would that apply to cheques also?

I want to look at the whole business and have not had time to do so.

Recommendation, by leave, withdrawn.
Sections 19 and 20 agreed to.
Question proposed: "That Section 21 stand part of the Bill."

On the 25th of last month, a report appeared in the Evening Herald of a meeting of a well-known firm of grocers. I raise this on Section 21, as it is the section in which all taxes are brought under the care of the Revenue Commissioners and this appears to come under it. The chairman is reported as saying:—

"I regret that this meeting is taking place 14 days later than usual, due to the fact that the Revenue Commissioners did not assess our indebtedness to them for the year ended 28th February, 1946, until a fortnight ago.

Business concerns cannot trade indefinitely unless they know their liability to taxation. We had to agree to a settlement above that to which we felt we were liable for, in order to have fixed our liability to tax to 28/2/46 before meeting you to-day. The officials of the tax collectors or revenue authorities are, in our opinion, understaffed and underpaid, and thus many of their members go off to better-paid jobs, leaving those left behind to the unenviable job of trying to cope with more work than they can possibly deal with."

I have no more information than that as to whether these statements represent the facts or not, but I took the trouble to go to the Estimates and I found that for the current year we have 2,544 officials employed by the Revenue Commissioners. That in the last 15 years shows an increase of about 25 per cent., as the figure in 1932 was 1,995. The Minister said a few minutes ago that the Revenue Commissioners were understaffed. I found, it difficult to understand how that could be so, in view of this increase, and yet I must confess quite candidly that I think it is so. The delay in the revenue offices appears to be due entirely to the fact that they are not able to catch up with the volume of work. I cannot understand how it arises and I raise this in order to give an opportunity to the Minister to explain to the public how such a thing could happen, having regard to the increase in the number of officials. In passing, I might add that the cost of the Revenue Commissioners in 1932 was £605,450 and now it is £1,157,640, showing a substantial increase.

Although I took that paragraph out of the chairman's speech, I do not propose to take the Minister over the other matters in it, particularly the reference to a Government-controlled company manufacturing bottled poteen. That was a suggestion from which I must dissent. If it is true that a business company, in order to have its meeting on the 25th June, 1947, had to agree to an assessment that was higher than they believed correct for the year ending February, 1946, there is something wrong somewhere and I would like to hear the Minister's explanation.

I think that particular portion of that gentleman's speech was as unreliable as other portions of the same speech. I do not know whether it is a private or a public company—the statement was published, so I suppose it is a public one—but I feel that the shareholders should ask him why they were spending money in advertising opinions which would only bring discredit on the organisation, by making attacks which everyone could see were completely unfair and came from a gentleman who was a little more voluble and incorrect than discreet.

May I warn the Minister not to have a fit of apoplexy tomorrow morning, as one of the directors concerned is, I think, also a director of one of the papers that the Minister does not like?

Question put and agreed to.
Section 22 agreed to.
First Schedule agreed to.
Question proposed: "That the Second Schedule be a Schedule to the Bill."

Could the Minister tell me the exact amount of tax on the ordinary 20 cigarettes — Players or Afton—or is that an unfair question at this hour of the night? I know what the increase is, but I would like to know the total tax.

It is about 1/2.

That was my calculation and I wanted to make sure.

Question put and agreed to.
Third, Fourth and Fifth Schedules agreed to.
Title agreed to.
Bill reported with recommendations.
Agreed to take the Report and Fifth Stages to-day.
Question—"That the Bill be received for final consideration"—put and agreed to.
Question proposed: "That the Bill be returned to the Dáil."

During the debate on this Bill considerable reference was made to the excess profits tax, which is abolished as from December 31st, although that was not strictly in the Bill itself. A few minutes ago Senator Sir John Keane made a suggestion which seems to be utterly unworthy of him and utterly unlike him. He suggested that I had an ulterior motive in agreeing with the Minister that certain figures were not available. A great deal of very badly-informed and ill-advised criticism of the Government's decision not to continue excess profits tax has been prevalent and is, I think, largely due to a want of experience. People have got mixed up between payment of excess profits and the making of unfair profits, commonly called profiteering. It has been done in the Dáil. It was done, to a certain extent, by Senator Sir John Keane. People have the habit of taking certain published figures showing a higher profit in a particular concern in particular years, with no other data, no statement as to whether the trade has increased, or as to whether the turnover warrants it, the assumption being, as one Deputy said, if you had a loss in a particular year and showed a profit in the next year, you must have been profiteering. I respectfully suggest that that is absurd. Some people have been charging too high prices and have reduced their turnover and have not made excess profits at all. Others have enormously increased turnover through charging keen prices. One of the firms quoted in a speech recently— I am not mentioning any names—I am not connected with any of them—is one of which I have had some experience and I know their prices. They are quoted as having made excess profits. I have very little doubt that they paid excess profits tax, but I have also very little doubt that they trebled or quadrupled their turnover.

Senator Sir John Keane suggested that I would object, for ulterior motives, to publication of figures. I would love the publication of the figures if they could be accurate. There is nothing I would like better than accurate publication of the figures of the drapery trade. I do not believe the drapery trade as a whole made substantial profits during the war. I do believe that big multiple traders, dealing with all sorts of things that would not be dealt with by the ordinary draper, had an enormous turnover. I think they got that because of circumstances by which the English wholesaler was completely cut off and because of various other circumstances which I need not go into. But I would personally very much like to see the figures published. In my opinion anyone who is dealing with profits or profiteering should get the facts, should know what the turnover was, what the basis of it was and then form an opinion as to whether or not the firm was profiteering. I raise this matter because it seems to me relevant to the Bill and certainly relevant to the matters discussed on Second Stage.

I am very pleased that the Senator has given me an opportunity to make further remarks on this subject. I did not for a moment suggest that he, individually, was acting for any motive, but I do suggest that, as representating trades and a number of trades—a federation—that those interests are loath to have the information published. After all, the Senator does sit here more or less in a representative capacity, as a spokesman for certain interests. It is for the very reason that I should like to be more particular in attributing profits to groups that I am asking for this information. I know I cannot do it now. It is because this information is not given us that I am unable to make the case I should like to make. The public are left in the dark about the source of these profits. Of course, the Senator says that some firm in question made no profits. I accept that, but I do state, and the figure has not been challenged, that £40,000,000 in increased prices was put on to commodity goods during the war. It is not profits that I am so much concerned about as the fact that the public paid £40,000,000 more for goods in scarce supply. Who is responsible, I do not know, and I cannot know the source of this unless the information is given. I state categorically that I am fully justified in the general conclusions I drew. It is not necessary for me to know the turnover of individual businesses or groups of businesses. There is the outstanding figure—£40,000,000 more charged to the public for goods in scarce supply during the emergency. That is the case I am making and that is the case I stand by.

Question put and agreed to.
Ordered: That the Bill be returned to the Dáil with three recommendations.
The Seanad adjourned at 9.55 p.m. until 3 p.m. on Wednesday, 2nd July, 1947.