Finance Bill, 1950 ( Certified Money Bill ) —Committee Stage ( Resumed ), and Final Stages.

Debate resumed on recommendation No. 6.

Ba cheart go dtuigfeadh an Seanad gur rud mór tábhachtach é an rud atá i gceist sa moladh atá curtha síos ag an Seanadóir Hawkins. Mhínigh seisean na hargóintí i bhfábhar na cánach nó an dleacht a chur ar ceal. Ní dóigh liom gur gá domhsa cur leis ach ba mhaith liom a chur ar a súile don tSeanad gur ceist í a pléadh go minic le cúpla bliain anuas, gur ceist í ar hiarradh ar an iar-Aire aird ar leith a thabhairt uirthi.

Ba mhaith liom freisin a rá go bhfeictear dom gur thug an t-iar-Aire míniú ar an dleacht nach réitíonn leis an míniú a thug an tAire atá i láthair ina leith tráthnóna. Ba mhaith liom a rá nach raibh am agam dul siar ar thuarascáil na Dála agus an tSeanaid le haghaidh 1947. Ní féidir liom a rá mar sin an bhfuil an ceart sa méid adúirt an tAire anseo tráthnóna i dtaobh an iar-Aire nuair a bhí sé ag cur na ceiste ós comhair na Parlaiminte an uair sin.

The first thing I would like the Seanad to realise is that this is a very important matter. It is so important that at least one very important professional organisation has devoted considerable attention to it since the duty was imposed in 1947. There is also this fact, that certain business organisations who handle a good deal of house property and land are keenly interested, and feel the time has passed, when this duty should serve the purpose for which it was introduced.

Is that the Auctioneers Association?

No, not the Auctioneers Association. I will refer to it in a second. That prompts me to refer to a statement of the Minister this evening, that when the former Minister was introducing this duty he made it clear that this duty was really a revenue duty, a fiscal duty. I have not had time to look over the debates covering the Supplementary Budget, so I cannot say, to what extent, the Minister's quotation represents the mind of the former Minister, but I think that it would be no harm, if I referred the Minister to the proceedings of the Incorporated Law Society at the meeting held in May, 1949, and, if I may, to quote from the address of the president of that association. The meeting was the ordinary general meeting held on May 19th, and there the president of the association made these remarks:—

"The then Minister for Finance, Mr. Aiken, in introducing the proposals stated that their object was to stop speculation in house property values which was at its peak in the autumn of 1947. It was not stated at that time that the tax was proposed for the purpose of revenue. The case which was made by the Minister was that the continuing inflation in house and land property values had to be ended in the interests of our social economy, and particularly in the interests of persons of modest means who were unable to purchase houses to live in, and who were induced to purchase them with the aid of loans for amounts which were beyond their means."

I have a recollection that that fairly represents the mind of the Minister when he introduced the Supplementary Budget. The House will remember that there was a considerable amount of inflation in regard to house and property values at that time. These values, we know, have declined very much. In fact, I think the position is, at the moment, that it is very hard to dispose of houses even around the £2,000 or £2,500 mark, so that it is clear that the duty was imposed for the purpose of checking inflation, and that inflation has been curbed and has been removed, at least to a considerable extent. If that is so, then other grounds will have to be found to justify the continuance of this duty. May I continue the quotation:

"The council discussed the matter in the light of this information and it was decided that, in view of the Minister's statement and whether he was right or wrong in his view, that taxation of this kind would prevent or stop inflation, that the council could not, at that time, oppose the Act in principle."

There came a change of Government, of course, and the council then continued to press for the removal of this duty, and this remark of the President will be of interest:

"As you all know, the inflation in land and house values has ended, and if the tax was imposed with this object in view it seems to have achieved its purpose. In the view of the council, there is no longer any case for the continuance of this penal taxation directed at one section of the community, namely, the owners or prospective owners of land and house property."

The Incorporated Law Society, I think, had some discussion with the Minister and they had a feeling that relief should be given as, I think, is clear from this remark of the President. May I quote again:

"The Minister for Finance, in the Budget proposals, has stated that the tax must be continued for the time being and from this statement it would appear that the increased stamp duties are being continued, not for their economic and social effects, but for fiscal reasons, and that the tax is now being regarded from the point of view of its yield to the Exchequer. I wish again to reiterate the unfair and penal nature of a tax of this kind. If revenue is required it should not be sought from one section of the community, many of whom are least in the position to pay. These stamp duties have now assumed the form of a capital levy imposed upon one particular form of capital, namely, house property and land, and the persons from whom the levy is being extracted are in many cases those who for one reason or another are forced to change their residences, possibly for domestic reasons such as growing families, or persons who intend to marry, and who wish to purchase a residence in which to settle down. Both of these classes are being mulcted to the extent of 5 per cent. on their capital."

I think no words of mine can strengthen the case made in that statement for the removal of these duties. When I heard of this at first, I inquired of my informant whether the amount of duty was of sufficient importance to deter people from buying house property, and I was assured that £100 would be the tax on £2,000, and that a £100 tax of this nature would make all the difference. This person informed me that he knew of people who had changed their minds in regard to the purchase of houses because of this duty.

Who, is the Senator saying, would pay the £100 on a £2,000 house?

Who pays it raises another matter. Just as Senator O'Connell mentioned this evening when I was referring to this question of films, people can come along and devise means of evading the law, and I am sure, that if the intention is that the vendor should pay this tax, there are ways of transferring the tax on to the purchaser. That does not affect the case being made by this society, which represents all the solicitors of the country, people who know the extent to which this is affecting the disposal of house property.

Last week this matter was referred to by the chairman of the New Ireland Assurance Company. It is interesting to note the extent to which his view on this matter tallies with the view of the Incorporated Law Society. May I quote from his address to the company at its meeting on the 20th of this month:—

"I reported last year that we had experienced some reduction in the volume of applications under our house purchase scheme. While the position in this regard has greatly improved in the current year, your directors feel that the incidence of the heavy stamp duty payable on the purchase price of new houses has been the principal deterrent to many otherwise acceptable clients who just could not find the 5 per cent. on the purchase price, together with the necessary legal and other expenses involved in the purchase of a home for themselves and their families. It was hoped that the Minister for Finance might have found it possible this year to reduce this heavy impost in the interest of those worthy citizens who desire to own their own homes, mostly young couples starting out in married life, who are not eligible for houses under the various Corporation or other scheme, even if these were suitable to their position and requirements. If family life is the basis of the nation's wellbeing, as I believe it is, then everything that can be done should be done to encourage and assist young couples to own their own homes and so lay the foundation for a properly integrated future family life."

That quotation is taken from the Irish Press.

Does it say what their profits were this year in comparison with last year?

It does. The Senator has not the quotation there.

I am not concerned with that. I am concerned as to whether this is a reasonable statement or not.

Even that does say that business has improved, with the tax on.

It does. I think I read that out almost in the opening passage of the quotation, or words to that effect. Senator Hawkins has advanced arguments in favour of the removal of this duty. The Incorporated Law Society has been interested in this for some years and it has recently expressed its view that the duty is an unjust one in present circumstances and ought to be removed. This insurance company, which has a good deal of business with prospective house buyers, expresses the view that the duty is unfair and ought to be removed. Individuals have spoken to me about it and have convinced me that whatever function it served in the past it no longer serves a useful function and that it ought to be removed. On those grounds, I strongly support this recommendation.

I rise to support the recommendation. I believe that anyone who would seriously study the situation will realise that conditions at present are completely different from those that operated when the tax was imposed. I have been reading over the debates and I can hardly believe that the people who made the statements when the tax was imposed are now the people who are loudest in their approval of the continuance of that tax. As has been stated in the Dáil by various speakers, the tax was imposed at a time when the price of property generally was soaring. It served its purpose. It did what those who imposed it thought it would do, in so far as it reduced the price of houses and stopped the boom, when one house would be bought to-day for £3,000 and sold this day week for £4,000. We have now reached a very different situation. Property generally has deteriorated in value—whether houses or land, building sites or anything else. There is not this rush which had to be checked at that particular time. When the tax was being imposed, the man who is now Taoiseach, Deputy Costello, said:

"I believe this tax will merely result in making house property dear and housing for persons with limited means impossible."

If the Taoiseach thought at that time that that would be the result, he was within his rights in opposing the tax. Having seen the results, I put it to the Minister that the Taoiseach, to be consistent, should say: "We were in opposition to that tax at that particular time because we thought so and so would be the result. Now we have lived to see that that was not the result and, far from increasing the price of houses, the price has decreased in the normal trend of business." Deputy McGilligan, now Minister for Finance, at that time said:—

"It will mean there will be a rise in the already swollen prices being paid for houses."

I am prepared to grant that they were sincere then, but they should examine the situation and see if, in the light of subsequent events, it is necessary to carry on that duty.

I know something about the property market and while we have people on this side of the House stating that it is unfair to the vendor and other people on this side stating it is unfair to the purchaser, and both views on the other side of the House also, I say we have now reached the stage where it is unfair both to the purchaser and to the vendor. When the tax was first imposed, there were several cases where newly married couples went to buy houses. A. had a house to sell and put it up for sale. The price which would normally be realised was £2,000 and even by the time the normal legal expenses and auctioneer fees were paid out, it would still be within their reach. But the minute they found they had to pay another 5 per cent., they said: "We cannot go that far; we have reached the end of our resources and the building society will not advance any further money." That existed for a considerable time. The vendors found they could not get the price they expected, having had to make provision for the payment of the 5 per cent.; and the purchaser could not buy the house at a sufficiently low price to enable him to pay the 5 per cent. The result of it, in my opinion—others may differ—is that the vendor has now come to the stage where he is being forced to accept a price 2½ per cent. less than he would normally get if this duty were not continued, and the purchaser is forced to pay 2½ per cent. more than he would have paid.

When you go back on it, it is amazing to find the statements made by people who are Ministers now. We will have to take it that there is collective responsibility. Deputy Dillon, as he then was, described this thing as:

"A landlord's tithe, a dirty fraud, a dirty, deceitful game, a dirty wangle, flat-footed incompetence, a shuffling and cloutish way of dealing with the problem, a vicious and mean jab at those who are defenceless,"

in column 1171 of the Dáil Debates. That is fine language but there is not much sense to it. I suggest that the situation has not changed so drastically in this country that the people who were then defenceless have got on the offensive. I think that the people Deputy Dillon, as he was then, referred to are in the position that they must buy houses and they are in the defenceless position they were in when the then Deputy Dillon and the present Minister for Finance were prepared to back them. Now that they have become the Government their attitude has changed and they can say to the people: "You got so and so from the last Government; you cannot expect to get anything more from us.""You can go to blazes," in other words. It does not matter what the then Deputy Dillon said on that occasion. It only matters what he does. The Minister for Agriculture and the Minister for Finance must have sat calmly around a table and said: "We must swallow what we said, let the tax go merrily on and collect the money. There can be no pretext about lowering the price of houses as it is not necessary."

I do not know why people should change so drastically in such a short time. The position to-day is that building materials are far more plentiful than they were at that time and the question of building a house is not the great problem it was two or three years ago or even one year ago. At the present time there is very little excuse for anybody who goes seriously to work for saying that he cannot manage to build a proper house for himself and his family. Take the newly married couple who were going forward for accommodation a couple of years ago. They were facing a quite different problem. Even if they could get a site out in the country, not alone were building materials dear, but they were practically impossible to get, while to-day there is an entirely different situation. To my mind, the reason for imposing the tax has practically entirely disappeared. We now have a situation where the property market could be described as steady, and if the 5 per cent. tax were taken off in the morning it would merely mean that 2½ per cent, relief would be given to the vendor and 2½ per cent. relief to the purchaser. That is my opinion, in any case. It would allow the people who are clamouring for accommodation to purchase a house and start life on the right foot rather than to have to go to the directors of building societies or banks craving for a loan of a few extra pounds.

The Minister in his handling of this matter in the other House adopted a system which I think is as old as the language he was speaking and that is a long time—perhaps it is not quite as old as the Irish language—that is, that attack is the best form of defence. The Minister passed over a lot of the people who are the sort of members from whose backs attacks would run like water off a duck's back. He waited until he found Deputy P.J. Little and here is what the Minister, on 20th June on the Report Stage, said in his wrath that anybody should suggest that this tax should be taken off:—

"On the amendment proper, Deputy Little has called this a harsh and oppressive tax, as driving a lot of lawyers to the position where they may shortly be described as shyster lawyers. When the Deputy resumes his practice, as I suppose he has, and when this goes ahead in the inner lawyer's circle, he ought to be made president of the shysters' association, as it was he who put on this harsh and oppressive tax."

To say the least of it, I think that is an uncalled for attack on a decent man, a man who, I think, is regarded as a decent man by every section of the community in this country. The Minister for Finance, however, takes it on himself to hold him up as a suitable man to be chairman of the shysters' committee in the legal profession. Deputy Paddy Little, as we all know, has been in the legal profession as a solicitor for a very great number of years and I have yet to find the man who will seriously stand up and cast any reflection whatever on Deputy Little's character or conduct in the legal profession. If anybody else undertook to attack Deputy Little——

I do not see what this has to do with the matter before the House—quarrels in the other House and personalities.

Senator Baxter does not see what the debate in the other House has to do with this.

The Senator is altogether away from the recommendation.

I will bring it to bear on the recommendation in a couple of minutes. I ask the Minister or Senator Baxter, through you, Sir, with respect, whether that statement of the Minister's was made during the debate on this particular matter when it was brought up in the Dáil, on the subject of the imposition of the 5 per cent. tax. If it was not, the Minister was out of order in the Dáil and if it was I am not out of order now.

We are not responsible for any statements which were made in the Dáil.

Senator Baxter, of course, is not responsible for any statement made in the Dáil and God forbid that the Dáil should be responsible for anything Senator Baxter says.

Or for Senator Quirke.

We are not talking about me. God forbid that the Dáil should be responsible for statements made by Senator Baxter.

The Senator must come to the point.

I am coming to the point and I respectfully submit that I am quite in order. To say that because a man walked into the Division Lobby in support of this tax at one period he cannot now walk into the Lobby to vote against the tax with consistence is a most unreasonable attitude, the attitude of a man who has no mind to change. There are people who have no mind to change and who go blindly on bashing their heads against stone walls. A man is entitled to change his mind and see what the position was when the tax was imposed and compare it with what it is to-day. What I resent and what I am protesting against is the fact that a man because he does that must be attacked, chastised and classed amongst the worst elements of the community.

Not in this House. This House is not responsible for the attacks.

There is no reason why he should not be defended. People were attacked in this and in the other House——

You will have to get away from attacks and get to the recommendation. The Chair suggests that.

I hold that if people believe that the imposition of this tax is unjust or uncalled for at the present time they are entitled to say so in this or in the other House.

Hear, hear.

Senator Baxter says "hear, hear". If I said that people are entitled to be attacked because they have changed their minds will Senator Baxter still say "hear, hear"? If I read again the statement of the Minister's will Senator Baxter say "hear, hear"?

The Senator must get away from the subject of Deputy Little and deal with the recommendation.

I am sorry that the Cathaoirleach is losing his patience. The day is probably a bit hot but if I am right in my judgment of the debate in the other House the Ceann Comhairle must have had calmer weather because his patience was tried a lot harder than the Cathaoirleach's patience has been tried to-day.

It is not in order in this House for a Senator to make personal references to a member of the other House. That is a long standing rule in this House.

That is a stickler for you.

Perhaps the Senator will leave that matter to the Chair. The Chair will settle it.

I am delighted to hear that, Sir. I hope the same applies in the other House. Does it?

I know nothing about the other House.

I am afraid it does not. If it did, certain things which happened in the past——

Will the Senator come to the recommendation? He is going a little too far. If he does not come to the recommendation, I must ask him to conclude.

It is a long winding boreen up to it.

It is a long winding boreen from the Locke Tribunal up to here.

If the matter is left to the Chair, the Chair will decide it. May I ask the Senator to come to the recommendation now?

I am sorry if I have transgressed the rules. There is no point whatever in continuing this duty because money has become scarce in the country and the people who were in the market buying houses at £3,000 a year ago now find that they are unable to buy, despite all the talk about devaluation and so on. In the same way, people who were prepared to buy houses at £5,000 are not now prepared to buy at that figure. Money has become scarcer and this tax is really a means of collecting 2½ per cent. from the purchaser and 2½ per cent. from the vendor. I definitely support the recommendation.

There is no necessity to become very heated about this recommendation. I fail to understand what Senator Quirke was trying to get at and I fail to understand the point he was trying to make about consistency. I have to admit that, while he was very voluble on the matter of this tax to-day, he was equally silent when it was imposed when he sat here. It is always difficult to know exactly what Fianna Fáil desire in the matter of taxation. They want this tax taken off, and, when this Minister took off another tax which they had imposed, they did their utmost to prove that he was foolish and stupid in doing so and that it ought to be reimposed. When he remitted the taxation on drink, tobacco and cinemas, Fianna Fáil speakers at every opportunity insisted that it was a stupid and foolish thing to do and urged the absolute necessity of reimposing it. Probably with the exception of the auctioneers and solicitors, the Party generally would be disappointed if the Minister decided to do as they ask.

We must all admit that, no matter what side one is on, none of us likes to stand for the imposition of taxation. It would be delightful if we could live in the country and not have to pay any taxes, but we know well all the tortuous methods which people employ in an effort to get around their obligations to pay taxation. There is no use pretending that it is popular for anybody on this side to defend a tax, but the Minister found a situation which you had created and which you, in your silence, supported. There was not one word of the arguments you have tried to make here this evening uttered by any of you when the tax was imposed.

And there are no apologies now.

There are no apologies for your inconsistency. The only difference is that the people shifted you from this side to that side and you are not going to get back here by the kind of arguments you made here this evening.

And Senator Baxter is a model of consistency over the past 25 years.

He has never been afraid to speak his mind, to say unpopular things and take the consequences. However, that is by the way. The argument which started this discussion was to the effect that there was a condition of inflation and that this tax was necessary in order to stem this rising tide of inflation. The Minister was quoted as having said during the debate in the other House that the effect of this tax would be merely to cause a rise in the price of houses. If one were to draw any conclusion from the arguments made here this evening, one would feel that the effect of the tax was to reduce the value and lower the price of houses and that in fact, because the tax is there, there is less demand for houses and property generally. In the case of the New Ireland Assurance Company, demands were not being made on their funds to the extent they desired, although the chairman's statement as quoted was that conditions were better this year than last year. I do not know how conditions last year compared with those of the year before, but, if we had the whole story, we would have a fuller picture of the situation with regard to the New Ireland Assurance Company, whose practice apparently it is to give loans for the purchase of houses. Perhaps the Minister would be able to enlighten the House on what the situation is. The Incorporated Law Society have spoken about this. I believe that if there is any case to be argued in regard to the remission of the tax it is the case of small farms down the country. I think a case could be argued for that.

With regard to the position generally, we know now that it is operating as a tax which the Minister is collecting. The difference between the Minister and his predecessor is that whatever taxes he is finding he is spending them wisely. There was a good deal of taxation collected in the days of his predecessor which was not spent wisely, and, if all their plans had come to fruition, it would have been spent much more unwisely and the taxation would have been higher. The Minister is getting hold of this tax. It is not pleasant for the purchaser or the vendor, or for the auctioneers or the members of the Incorporated Law Society. I do not know whether, if property were higher and there were a greater number of sales—Senator Quirke might be able to enlighten the House—the auctioneers would be prepared to come down from their 5 per cent. to 2½ per cent. and whether members of the Incorporated Law Society, for whom apparently Senator Ó Buachalla speaks here, would be prepared to lower their charges, if transfers of property were greater, either from the point of view of total turnover or numbers of units of property transferred.

From what the Minister has stated here and from what we know of the situation, there is no slowing down in the numbers of units of property being transferred and apparently no reduction in the total values of the property changing hands. Senator Quirke makes a statement to the contrary. That apparently is his view and he ought to know better than I do.

I think I do.

In that regard again, perhaps the Minister will be able to enlighten us. Perhaps there are not as many farms on the market as there were—I do not know. Perhaps farmers are finding it more profitable to hold on to their property now, and are not as anxious as they were some years ago to dispose of it. There are definitely thousands of new houses on the market for sale and, as Senator Quirke stated, there are materials and greater assistance from the Exchequer, as well as more opportunities for the transfer of houses.

And reducing the price of old houses.

And presumably new houses too, so that the cost to purchasers is definitely lower to-day than it was some time ago. In so far as the purchaser is paying, or the vendor is paying, the argument that young people setting up house could not find the money to do so is not half as strong now as when the tax was first imposed. Frankly the case made by speakers on behalf of this recommendation has been so contradictory that there is difficulty in understanding exactly what case they made.

As far as I understand it, this tax was not popular and neither were the taxes on drink or tobacco which were supported by the Party opposite. Not one of these taxes is popular, but the Minister has to decide how best he can serve the various activities of the State. If this recommendation were within narrower limits, and had relation to small property worth from £500 to £1,000, it would present a different picture. As far as the Minister is concerned, he is carrying on what was done by his predecessor, and maintaining a position for which the Party opposite stood. Apparently the only thing wrong about the tax now is that it has the support of the present Minister for Finance.

As many speakers have been referring to this problem I venture to add a few words. There has been a very interesting argument going on as to who pays the tax, whether it is the purchaser or the vendor or if it is split fifty-fifty. In my opinion the question is decided by the circumstances of each transaction. There is what I call a purchaser's market, and when that comes about, the vendor has to pay and also vice-versa. The real problem in connection with the purchase of a house concerns the person who cannot take out a cheque book and write a cheque for its value.

I am referring to a person that I call for want of a better word, a black-coated worker, who is, probably, excluded from a corporation scheme but is looking for a house. He is not in a position to take out a cheque book and write a cheque for the cost of a house. What has he to do then? He has to go and find the price of the house and then get cover at a bank. Somebody tells him the valuation of the house which is, probably, substantially less than the price he is asked to pay, even with the Government grant taken off. He has then to find the difference in the price as well as solicitor's and other costs. What really happens is that there is a very narrow margin and this tax is added to the margin. We are not discussing a matter of £2,000 but a matter of £100 added to the £300, so that £400 has to be found instead of £300 on getting possession.

My suggestion for what it is worth is that the Minister or the Government should be a little more generous in regard to valuations. It should be remembered that every house put up by a corporation or by other bodies costs the State a substantial amount. At the present time there is a steady market for desirable houses. I will not say anything about materials being more plentiful. I suppose it would be unseemly in my position as a builders' provider to do so. But Senator Quirke spoke about the difficulty of obtaining materials for houses. I thought the Senator might say that the merchants could not provide the newly-married couples for them.

There is no trouble about that.

That is not the builders' or the merchants' part. I intervened to refer to the question of finance, accommodation, and as to who will pay the tax. That is really a subject for a debating society that I will not pretend to answer now. I am one of those reckless people who spoke in favour of the recommendation but I will vote against it.

I am very glad that Senator Dockrell intervened because I think he got us down to the real problem. I am in agreement with Senator O'Brien when he stated last week that there is no particular virtue in political consistency. I have very much sympathy with the case made by Senators opposite, because they are trying to prove that what was a good tax in 1947 is a bad tax now. In my opinion it was a bad tax in 1947 and is a bad tax now.

We are following in the Minister's footsteps as regards tourists.

Will the Senator ever sit down and debate that question? The Senator is very good at interjection but not so good in debating.

I think it is an excellent idea if the Senator is following the Minister's example, particularly when the Minister happens to be right. He is not infallible and neither am I. However, this is an excellent illustration of how dangerous it is to put on taxes more or less in a panic, and finding that a tax, put on in 1947, is afterwards found to be unpopular and acts unfairly in certain cases, but cannot be repealed. From the point of view of any Minister for Finance, anybody who has been in politics for any time knows that no such Minister is able to do anything like what he would like to do. He has to agree to a great deal of expenditure. He cannot take off all taxes and has to pick and choose in a particular year between one tax and another. I shall not probe into the Minister's mind. I shall not ask him to say whether this is a good tax or a bad tax. We know he did not take it off. But, I do want to suggest that at the moment this is a tax which should not be viewed simply from the point of view of revenue. Sooner or later, this tax will have to be modified or taken off but I think it should be viewed from its possible effect on the provision of houses for the people. I think that in a short time it will be found that the maintenance of too high a stamp duty is operating against the provision of houses.

Remember, it is not only the man who builds a house who helps somebody else to get a house. The man who, rightly or wrongly, fortunately or unfortunately, has made a sum of money and buys a larger house for himself, sells the smaller one and enables somebody else to buy it. The net effect is that you get more accommodation. If a house is built, it is another house and it undoubtedly will help.

I do not see that there is the slightest bit of good for the Seanad to try to pass a recommendation of this kind but I do think that we would be justified in asking the Minister, between this and next year, to consider particularly this tax from the point of view of the effect it will have on the building programme and in relation to subsidies, etcetera. I am confident that that is a thing he is doing or possibly has done.

Frankly, I think we are rather futile in the eyes of the public in trying to make taxes of this kind Party issues and debating whether something that was good in 1947, or ideal in 1947, is now extremely bad. The fact is that it was not ideal in 1947 and may or may not have been justified. It is not ideal now and in certain cases it is operating in an undesirable manner.

The time has come when the Minister should reconsider this tax. He should listen to the appeal of Senator Douglas. Senator Douglas's statement was quite sound. I personally believe that it is an injustice to continue this tax at the present time. It may or may not have been necessary to have done it in 1947. I was not a member of the House then. I know that a considerable number of people resented it at the time. The Government of the day were convinced that they had no alternative. Granted, they had no alternative. The tax has had the desired effect.

What does the Senator mean by "desired effect"?

It put a stop to the soaring prices of houses.

That was not stated to be the objective.

The people were of the opinion that the idea in introducing the tax was to stop the inflation that was setting in in the high cost of houses. That was what the people understood, regardless of anything that was said by way of interjection by the Opposition. The people were led to believe that it was introduced for the purpose of stopping people rushing in and paying high prices in a period when building materials were very scarce and dear and when houses were scarce. Now that we have returned to a more normal period, the Minister should consider the matter. I do not care whether it is this Minister or some other Minister.

I regard it as an injustice that a young man who is settling down, in addition to having to get a couple of thousand pounds together, has to pay £100 by way of stamp duty. The time has come when that should be changed, especially in view of the fact that materials are fairly plentiful, that more people are prepared to go into the building business and houses can be more easily acquired. The Minister should face up to it. I regard it as an injustice.

Irrespective of what the former Minister may have said and irrespective of what the present Minister said when he was a Deputy, the people of this country regard this duty as an injustice in normal times. The times are fairly normal now, more normal than they were in 1946 and 1947. The Minister should listen attentively to what Senator Douglas has said. Senator Douglas's contribution was quite sound. The Minister should give a promise to this House that in the next Budget he will seriously consider the matter and have that section of the Finance Act of 1947 repealed.

Frankly, like Senator Douglas, I do not like this tax but there are so many taxes that I do not like that that is scarcely an argument. The debate has wandered around the question. The matter has been largely debated on both sides on the basis of what was said in 1947. "Oh would some power the giftie gi'e us, To see ourselves as others see us." We ought to debate the question on the merits. I did not like this tax in 1947.—that is not saying whether it was just or not in 1947—but, if this tax was a just tax in 1947, it is just to-day.

We must regard this from the point of view of the Minister for Finance. The Minister for Finance has a very difficult task. His job is to assess the burden of taxation as best he can on the people who can best bear it. I might debate the matter on the same lines as Senator Hawkins and Senator Quirke and throw stones and say: "You voted for this in 1947 and you are coming to-day to oppose it without any valid reasons." Senator Quirke will retort that he has numerous reasons. I am trying to argue that the arguments are the other way and that if this tax was a just tax in 1947, it is a just tax to-day.

In Senator Quirke's own words building is not the problem it was in 1947. In other words, builders have a better opportunity of providing houses now than they had in 1947 and can produce them at a cheaper rate. There has been no argument put up in the debate by anybody that the condition of the people who purchase houses is worse now than it was in 1947. I could argue to the contrary and say that the position of almost everybody who purchases a house now is better than it was in 1947 and that he or she is better able to bear the tax now on any particular commodity than he or she was in 1947. We could go into the question in a variety of ways. In 1947 there was a standstill wages Order. There has been a great increase in wages since 1947. On the question as to whether the people are better of now than in 1947, I think the consensus of opinion in this House would be that they are something better off. Senator Quirke may not agree, but I think that the consensus of opinion is that they are. I do not think anybody can get up here and make a tangible argument for the case that the people generally are worse off than in 1947. I do not like this tax but I want to discuss it in the light of what the Minister has to do. The Minister has to assess his bill on the shoulders of the people who could best bear it. As Senator Douglas said, a Minister sometimes takes the line of least resistance. A Minister who finds certain taxes amongst his existing taxes says to himself: "Which of these can I most easily retain or dispose of?" There are certain taxes which he reduces, certain taxes he wipes out, and certain taxes he retains. The Minister was not able, in his review, to remove this tax and the Minister found no argument whatever for abolishing it. He did not find that the circumstances of the people who sold houses or who bought houses were worse than in 1947. In fact, I suppose he persuaded himself they were better, as I am persuading myself they are better. As far as I can see, the Minister was justified in retaining the tax that was put on in 1947. It would be for the people who are proposing the recommendation to prove that there were other taxes that the Minister could more easily impose than the tax recommended to be taken off. The retort can be made that they do not recommend the imposition of any tax, but we could all go on proposing recommendations that certain taxes should be wiped out until we reduced the Budget or the Bill to a nullity.

If we conscientiously propose a recommendation we have got to make some case. I want to see some Senator getting up and saying, that if the Minister takes off this imposition, which I do not like, what is going to be put on instead of it. I am one of the people supporting this Budget as a whole. There are various parts which I do not like. There are any number of items in the taxation proposed by this Minister, and by the past Minister, which I do not like, but I have got to swallow them, whether I like it or not. This is, certainly, one of the taxes I like least. While I am appealing to the Minister, that at the first available opportunity, I hope in the next Budget, he will do away with this tax, I think it is fair to say that the arguments for the retention of the tax have been greater than any argument made against it. I do not see that the position has worsened, in any respect, as regards the vendors and purchasers of houses. If the tax was a just tax then, I cannot see that it has been proved that it is an unjust tax in 1950.

I believe that the Minister said in his speech on the Finance Bill, either last year or the previous year, that this was a tax that he hoped at some time to modify. Certainly, it is not a tax which he introduced. It has been a hereditary element of the budgetary structure for some years past, and it will be very difficult for the Minister to remove it this year. I personally, do not like this tax, and the reason I do not like it is, that it is a tax on ownership. I believe ownership is a very important factor in our life, and that we should in our method of taxation, see that it would encourage ownership and make it as widespread as possible. Any form of tax on property is a tax or deterrent on ownership and, for that reason, I dislike it. I would like to support what Senator Baxter said when he asked the Minister, especially, to consider the tax on small properties up to about £1,000. If we want real responsibility in this country, we will not have it, until most of the people in the country own something in the country. That is the reason I am against this form of tax. I do hope that the Minister will, as soon as he has an opportunity to do so, modify or even remove this tax completely. It is a tax which this side of the House never approved of, and while the other side of the House did approve of it at one time, they have now come to a realisation that it should go. I hope, then, that the Minister will, in a very few years time, be able to remove this tax completely from the Finance Bill.

A lot of the argument for the recommendation has been based upon what the solicitors' profession have said and what the chairman of the New Ireland Insurance Company has said. I want to say, right away, that I am not impressed by either of these. I met the deputation from the Incorporated Law Society. They are a very fine body of men. They play a very important function in the life of this country, and they are people who, undoubtedly, as a profession, have gained for themselves considerable repute, and it is a reputation that I would be the last person to take away from them. When they come into me to develop a case for a particular tax, I have to become a bit of a realist. Above all people, joining them with the other branch of the profession, they are people most expert in making a case, and everybody will make a better case, the more his personal interest is involved. I do not think I am saying anything that the solicitors' profession as a whole would repudiate when I say they were particularly anxious about sales of properties, and whether sales of properties were going to be impeded by the tax. As a matter of fact, one of the spokesmen on that occasion, said property sales had almost come to a standstill; yet, that was one of the arguments when you are on the defensive that you like to hear, because it was so ludicrous, it was easy to defeat. I was able to point out the duty taking fruits of the tax and what transfers had been in value. I was able to point out what our experts, the Revenue Commissioners, had forecast as the probable revenue from the tax in a later year. We have not in any year forecast a fall. Sales of property are still going on, and if you take £600,000—it is around that figure —revenue derived from this tax, it means there is property of £12,000,000 changing hands each year, and if the unit price is gone down, it must mean that the £600,000 has, not merely been retained, but is increasing, and that there are more individual sales, and it is on the individual sale the solicitors look to get a return.

When the solicitors made that case, they were entitled to make it and made it vigorously and in an efficient way. I do not think it is going to gain credence unless the solicitors are to be thought of as social reformers or as people completely altruistic. They were speaking on behalf of the profession and wanted to see sales continuing and were definitely relieved when they found they were going to be continued at the old rate. The forecast was borne out and in fact this year we estimate a slight increase in the fruits of the taxation. Property sales are not going down. The rather solid arguments the solicitors made have only been weakened by the completely exaggerated statements made as to property sales being brought to a standstill.

Regarding the statement of the Chairman of the New Ireland Assurance Company, I was interested to note that Senator Ó Buachalla quoted it only in part, though even that included a statement that the situation had improved during the year, that is during the year in relation to which the forecasts were that it would be disastrous, a complete disaster in regard to sales of property. There has not been any complete disaster. Even the statement proved that. I wish the Senator got the whole report. I think he would have found that profits had increased, that dividends were greater and that the chairman, at the end, as well as complaining about the property tax, had also gone on to say that the wear and tear allowances, which would cost the State this year £800,000, should be removed in accordance with what the industry put up. That meant he wanted £800,000 in regard to industry and would like to have, say, £480,000 remitted in relation to the purchase of property—all for the good of new Ireland, or The New Ireland.

Speaking of the auctioneers, they are people rather shy of bringing forward proposals. I met them also. They, too, were rather concerned about the sales of property and made a wonderful case, the first time I heard them, on the inflated values put on house property. When one of the people receiving the deputation with me suggested that that might be a reason for the auctioneers to remit part of their 5 per cent. and take, say, 4 or 4½, a sudden chill came in the room. It was pointed out that that would assist sales and that, even on the statement they were making, a 4½ per cent. return to auctioneers on the inflated value of property would have brought them in as much as 5 per cent. On a more reasonable return. They did not accept the argument. The auctioneers want us to remit the 5 per cent., the solicitors want their 3 per cent., the Chairman of New Ireland, although business is improving, wants £800,000 for industry, all to be provided so that everything can be merrier still than it is now in the garden. These are the outsiders.

The people most intimately connected with the tax are those now concerned in this proposal. I did not say this had been stated to be a revenue tax: I said that what was said was tantamount to an admission that it was a revenue tax. The Minister for Finance, asked what the purpose of the tax was, asked what was going to come from it, said—may I quote:—

"It is the vendor whose price is going to be reduced by the 5 per cent. Five per cent. instead of going into the vendor's pocket is going to go into the pocket of the Treasury."

That was 1947. I did not believe that would be the result and for that reason I protested. I believed that in the then conditions, when the vendors had the whip hand, they would impose this tax on the purchasers and the purchasers in some way or other would have to cover it by getting the accommodation, and they would be fleeced a little more. I start from that point. The amazing thing in this debate is that the arguments coming from the side of the House in favour of the removal of this have been coercively in favour of retaining it. There is no better argument than that of Senator Quirke. He said in the old days that there was difficulty in regard to houses, inflated prices, a great scarcity of house property, and prices soaring. At the moment he says that certain houses are unsold. It seems to me, to add to the possible superfluity of houses, that building materials are plentiful and that there ought to be a recrudescence in house building. In those circumstances, all that situation is changed.

Senator Dockrell has said that the best part of the debating society argument is whether there is or is not a purchaser's market. I think there is, certainly more so than in 1947. In those circumstances, who is likely to pay? Senator Quirke puts it, even at the worst, that the purchaser has to pay 2½ per cent. and the vendor 2½ per cent. I do not think it is even as bad as that. I think that at the moment there is a bit of a purchaser's market and that the vendors are probably being asked to pay the whole difference. The only case that could be argued at this stage is as to whether the vendor is being mulcted too heavily. With regard to that—when one makes a general statement, exceptions can be made to it—in general I do not think this community will be terribly worried about the vendors of house property. They did really well during the war and they dug in.

The President of the country, when he was Minister for Finance, came in with a threat of new legislation at one time with regard to taxes, on the ground that he found people making money out of the exigencies of the needy. If any people were doing that, it was those engaged in house building and as a class I would find it very hard to persuade myself to give them any remission at this point. I think we have a lot to get back from them that they made from the needy elements of the community during the war years. That general statement does not apply to each individual who might be thought of. People now in the position of owners of property, who want to sell it, will be hit, but the Minister for Finance has to take the whole general situation and in the circumstances I have no heart about giving away £480,000 to the vendors of house property.

I was amazed to hear someone say that money was scarce now. I do not find money scarce. I look at the bank returns, seeing the amount of increased credit being given, and consider also the amount of money being pumped into circulation through all the capital development the present Government engaged in in 1948, increased in 1949 and which we hope will be increased still further this year. I do not see how anyone could say that money is scarce. In fact, it is because money is plentiful that there is a little bit of danger about this tax. It may be that certain people will get money so easily into their hands that they may be paying something above the price at which the house would be sold if they were able to stick out a little longer. It is not a question of money being more scarce, but of people being more price conscious, particularly with regard to house property when they look back over the bad years of the war when they were scandalously treated by the house vendors of those days.

As far as the argument goes with regard to a drastic change in such a short time, people who use that argument ought to remember that circumstances have changed very drastically in two years. The situation in 1947— in which there was a great scarcity of all houses and of certain houses in particular, with the terrible need there was and the pressure on people to get some sort of accommodation—played into the hands of people with houses to sell.

An argument that was used in 1947 appropriate to those circumstances would be futile as an argument in present circumstances where there has been such a complete change. I have no doubt about it, no one could argue otherwise, the price of houses has come down. That is due to a variety of circumstances and there are fluctuations still going on; there are ups and downs and nobody can say with certitude that the property market is in a settled state.

I have the feeling that if this tax were remitted at the moment and the duty diminished the vendors might seize on that as an excuse for an increase in prices once more and that is a development which I do not want to take place. Although this may press hard on certain people, I intend to keep it for this year.

I want to join the company who are against taxes. I am against this tax and against every tax. The ideal I have is to leave every individual in the community with more money in his pocket to jingle and to spend as he proposes instead of the State taking it from him to spend. There are certain things, of course, for which the State must take money—housekeeping expenses. I cannot carry out the ideal I really have because pressure is put on me from every side, from my own supporters in the Government and from the Opposition, to increase State intervention in certain developments, and as far as that goes more and more of the people's income must be taken to be spent in what I feel in the end is a wasteful way instead of leaving it to the people themselves to spend. I would like to see this tax remitted but I would not give it high priority. Allowances were mentioned and I would like to bring subsistence allowances into greater consonance with the value of money. I would give that matter priority, and while I would put this tax close to it, I would certainly not give it a high rank.

The best argument for this tax and against the recommendation has been made by those who support the recommendation and are opposed to the tax, while Senator Dockrell made the best argument against the tax. I would like to discuss the matter with him later. With his knowledge, more precise knowledge and better information than any other member of the House has, notwithstanding that, he says he will vote against the recommendation. That should commend it.

I regret that the tone of the Minister's reply seems to be much less sympathetic towards this recommendation than it was this time last year. I understood last year that he would, before the introduction of this Finance Bill, give sympathetic consideration to the removal of this particular duty but that sympathetic approach seems to have been abandoned in the 12 months that are passed.

The discussion has centred mostly around the position of young people who are anxious to purchase homes for themselves but I would like to draw to the attention of rural Senators particularly that this duty affects more people than that. It affects property of any kind over a certain figure whether the property is transferred on death or as a marriage settlement. That is a tax which should not be imposed. Such a tax should not be imposed where property passes from a father or a mother to a son or daughter in the case of death or as a marriage settlement.

It does not apply to a son or daughter on transmission from a parent.

I am glad to hear that.

You must not have known the virtue of your own Minister.

Senator Baxter said, I think, on this recommendation that the situation was of our creation. I wonder does Senator Baxter remember that there was a European war from 1939 to 1945?

There were always wars in your time.

I am afraid that the rumours have advanced beyond rumours since we spoke on that subject last week.

I hope not.

Senator Baxter would like to forget the position which arose not alone after the last war but after the first world war; that position existed in 1947 and it is very doubtful whether we are clearly out of it yet.

Senator Dockrell expressed sympathy with the recommendation and with his knowledge of the building trade and the supplies position his contribution was certainly very important, but his solution did not recommend itself to me. What he suggests as the solution of the problem which we propose to try to rectify is to give more cover. I take it that what he meant was that the banks and lending societies should be more generous in their valuation of the buildings. While the person seeking financial assistance would welcome that at the moment in the long run he would have more to pay because the bank would be prepared to make a greater percentage of the cost of the house available to him. Take the £2,000 house. The imposition of this tax means that an additional £100 has got to be found. If the applicant—as in almost 99 cases out of 100 he must-has to seek a loan from a building society or bank, he must, together with the rest of the £2,000 or whatever proportion of it he can get, raise £100 extra to meet this stamp duty. That £100 has to be paid. For what? As a tax for having tried to provide a home for himself. It does not end there. Having borrowed the £2,000 to be repaid over 25 to 35 years, he is forced to pay for an additional period 5 or 6 per cent. per annum on that £100. The auctioneer's fee can be avoided perhaps because all transactions are not conducted through an auctioneer but he has to meet legal expenses.

It is all very fine for the Minister to suggest that the builder, auctioneer or solicitor or all three combined should say: "We will make a reduction sufficient to enable you to meet the tax which the Government are compelling you to meet." The Minister has made no case. There is also the question of the delay in the conveyancing as the result of the imposition of this tax.

I can safely say that the majority of the members on the other side of the House are as anxious to see this tax removed as we are and they regret, I am sure, the Minister's attitude. I am disappointed that his approach is not what it was last year and that he has not given us some ray of hope that even next year he would be prepared to remove the tax. It is certainly hitting very hard those people who propose to purchase a home for themselves.

Recommendation put.
The Committee divided: Tá, 12; Níl, 26.

  • Clarkin, Andrew S.
  • Concannon, Helena.
  • Fitzsimons, Patrick.
  • Fogarty, Andrew.
  • Hawkins, Frederick.
  • Hearne, Michael.
  • Loughman, Frank.
  • Ó Buachalla, Liam.
  • O'Reilly, Patrick.
  • Nic Phiarais, Maighréad M.
  • Quirke, William.
  • Summerfield, Frederick M.

Níl

  • Anthony, Richard S.
  • Baxter, Patrick F.
  • Bennett, George C.
  • Burke, Denis.
  • Burke, Robert M.
  • Butler, Eleanor G.
  • Butler, John.
  • Counihan, John J.
  • Meighan, John J.
  • O'Brien, George.
  • O'Connell, Thomas J.
  • O'Farrell, Séamus.
  • Orpen, Edward R.R.
  • Davidson, Mary F.
  • Dockrell, Henry M.
  • Douglas, James G.
  • Hayes, Michael.
  • Ireland, Denis L.
  • McCartan, Patrick.
  • McCrea, James J.
  • McGee, James T.
  • Ruane, Seán T.
  • Ryan, Jeremiah.
  • Smyth, Michael.
  • Stanford, William B.
  • Tunney, James.
Tellers:—Tá: Senators Loughman and Clarkin; Níl: Senators D. Burke and McCrea.
Section 17 agreed to.
Recommendation declared negatived.
Sections 18 to 20 inclusive, agreed to.
SECTION 21.
Question proposed: "That Section 21 stand part of the Bill."

The Minister made it clear on the last occasion that the Transition Development Fund would be wound up on 31st March next. He indicated that a new Housing Bill would be introduced in the meantime. I assume that the new Housing Bill will contain provisions making available to the local authorities the same, if not more generous, grants as they would have had if the Transition Development Fund were still in existence.

There is a Housing Bill being introduced but whether it will deal with that is another matter. I said that the payments that had been made for some years out of the Transition Development Fund would be transferred, or appropriate payments would be substituted, and borne on the Vote for the Department of Local Government. What those will be, I am not in a position to say. I do hope to get some new scheme with regard to the grants for houses to substitute for the present very complicated system under which grants come from about three sources. I want to simplify that. We are continuing the Transition Development Fund until 31st March, 1951. The Senator ought to possess himself in patience until some time in the early stages of 1951 to discover what will be the situation after that. I can make no promises.

My anxiety is that the local authorities who were engaged in housing and who were urged by the Minister and by all concerned to expedite the erection of houses should be quite clear as to the conditions under which they were asked to erect the houses. The view was given that the Transition Development Fund would cease on 31st March, 1951, and it should be made known as early as possible to them what provisions will be made for the future.

So it will.

It takes more than one or two years to develop and complete a housing scheme.

There will be no hiatus. I cannot say at the moment what the scheme will be. It is not specially my work.

They will be no worse off than they are now.

I hope not. I hope to get simplification and I hope the costs will come down.

Question put and agreed to.
SECTION 22.
Question proposed: "That Section 22 stand part of the Bill."

I notice that this section refers to a Capital Service Redemption Account. I think the Minister, on the Second Reading, said we could look through the Estimate and any item with which we did not agree could be queried. Last year, when the Minister was speaking on the Finance Bill, he spoke of a loss that was incurred on the turf account. I think it ran into millions. That item is included as a capital item. I take it that that loss is still there and that it is a liability that the State will have to discharge. I do not know how it has altered over the past 12 months, but now that we are starting a capital account in which, presumably, all the items can be included, I would like to ask the Minister where our liabilities are shown as against the turf account, what they amount to and whether they will be brought into capital account.

Captain Orpen

I regard Section 22 as being one of the interesting features of this Bill. We see here the creation of a redemption fund to amortise this £12,000,000 odd that is being borrowed for capital purposes. Perhaps, with your permission, Sir, I might quote the words of the Minister in his Budget statement, where he epitomises what he regards as the economic obligation of the State:

"One of the primary responsibilities of a Government is to promote by an enlightened budgetary and investment policy the continuous and efficient use of national resources in men and materials."

What I find so interesting in viewing the various items for which the Minister proposes to borrow, and under this section, amortise over 30 years, is that, taking merely the three items in the Vote for Agriculture, the amount that he proposes to borrow is £3,800,000 and there is £350,000 for poultry this year. The interesting point that strikes me on that is the astonishingly small sum it is necessary to find to amortise some of the borrowings once the production following this capital expenditure gets going; in other words, once this capital expenditure starts to earn actual, real dividends.

Obviously, if you are proposing to collect the money for the redemption of capital expenditure from earnings that follow from this capital expenditure, you can only do that in simple manner if the resultant product is in some way canalised so that it passes through a bottleneck.

Take the case of poultry. I do not know what is the total figure that has been borrowed for poultry development but now the actual export of eggs has reached the astonishing sum of £5,250,000 this year. Twopence in the £ would easily amortise the borrowing. I wonder has the Minister ever considered, in the light of his Budget remarks, that, let us say, to augment this redemption fund, he could collect sums off the various items that go to make up the total that he has borrowed for productive purposes. I suggest the case that I have given, poultry. Obviously, the Minister cannot collect anything in any way for a considerable term of years off land reclamation, which is the big item, amounting to over £3,000,000 this year, but if, in the process, he could satisfy himself and the community that some of these borrowings were in themselves self-liquidating, he would be justified in the eyes of all in undertaking greater capital expenditure.

Senator George O'Brien when he was speaking on the Second Reading rather suggested, that if he had any criticism as regards the Budget, it was that the Minister was not borrowing enough. I wonder has it occurred to the Minister that in agriculture there are certain products that lend themselves to some sort of tax collection in a simple manner. I would like, as I said in my Second Reading speech, to see large sums of money spent on research. I would not in the least mind, once a saving was effected by the increase of knowledge, if the money to run that research was collected off the farming community. I think it would be only right and just, and sound business. Obviously, all borrowing for desirable purposes done by the State cannot necessarily be self-liquidating, but I think a great deal or something more can be done than is done at present, to see that certain sorts of capital expenditure by the State can, by suitable mechanism, be made self-liquidating.

Let me finish on this note: it has always been one of the great problems in all countries, where you have a large number of small farms, to find any mechanism for injecting fresh capital into the agricultural system. Here in this, or related to this, section, the State, to some extent, is finding capital, and directing that capital to be sunk in agriculture for a specific purpose. I have given the example of how, quite obviouly, from the increase in the export of poultry and eggs, money already borrowed can be amortised with a very small levy on the £5,750,000 that the export has amounted to since the initial poultry scheme started, I think, in 1948.

Let me give one other possible example of what I mean. We all know that research might indicate how manures can be used more effectively. At present, the farmers are spending £3,000,000 on manures, and an improvement or saving of waste of 2 per cent. would bring in quite a large sum of money which could be usefully devoted to research. I suggest, that now the idea of a capital budget and a capital redemption account has been instituted, that we should see and judge whether it is not possible actually to increase useful borrowing, provided, in some way, we could make these debts incurred either self-liquidating or, at any rate, partially so.

The point of detail put to me was as to how the losses, so to speak, on the turf fuel up in the Phoenix Park are going to be met. That lies in the future. They are not at all referred to in this Section 22. There will be very heavy losses arising to the State as a result of the accumulation of unsaleable or practically unsaleable turf in the Park. It is one of the debts we got from the last Government. It will have to be liquidated. How it will be done, I am not in a position to say at the moment. It is being carried on overdraft at the moment, and it is not the best possible financial situation to have it so appear. On the other side, there have been savings here and there. I was able to get a profitable sale of the Constellations that were bought and, obviously, going to be used at a loss to the State. I turned these into a gain, in any event, on the capital side. There are certain other sales that can be effected. Even though they do not bear any relationship to the money put in at the beginning, they can be used to offset the very heavy loss, and if the State gets out with a loss on the fuel accumulated in the Park of some £4,000,000, it is going to be lucky. That is one of the things we have got to take on, left to us by those who preceded us.

As far as this capital account is concerned, I should make it clear, that Section 22, with the sum of £655,432 has relation only to the sum of £12,113,680 which is set out as the Capital Services on the face of this year's Estimates. That is not the only Capital Service to which we are going to apply money. In addition to that £12,000,000, there will be found in the Estimate of Receipts and Expenditure that is always presented round about Budget time, what is called under the line expenditure. This year, there is set out a sum of £19,630,000. As I explained on the Financial Resolutions in Dáil Éireann, that figure does not cover the full amount, because certain returns will come to some of these funds from time to time, and they will also be ploughed back into capital development during the year. If you add the £19,000,000 odd, and the £12,000,000 odd, there is a sum of about £32,000,000, but the sum we are setting aside is not £32,000,000, but more nearly £34,000,000, for capital development.

Section 22 has relation to the £12,113,680. The section need not have appeared there, but under the existing legislation, and without any special provision in the Finance Act of this year, any moneys devoted to capital services in the Central Fund Act and the Appropriation Act would be charged on the Central Fund, as also would any sinking fund attached to any long-term borrowing, by way of national loan. Making an innovation this year of these capital services, which are carried in a preliminary way on the face of the Estimates, we decided it was better to mark the occasion by including this special section, which makes provision for the payment into a special account year by year, over 30 years, of the sum of money set out, of which the sum mentioned at the top of page 12, £423,000, represents the debt. The difference between the two represents the amortisation account.

As to what Senator Orpen asked me about the poultry borrowings, I am not in a position to reply at the moment, but I know that in the £12,000,000 is a sum of £350,000, which is an advance of £100,000 on the sum set aside last year. That is all I am in a position to say about it at the moment.

In sub-section (5) provision is made for the payment of £423,979, which I understand is to cover the interest to be paid on the £12,000,000 which the Minister proposes to borrow. What is the rate of interest?

3½ per cent.

The total amount to be borrowed is £12,000,000.

For these purposes.

The Minister has set out the purposes to which the £12,000,000 will be put. Over a period of 30 years, provision is made for the setting aside each year of £655,432. We have now from the Minister that the sum of £400,000 odd is for the payment of interest. Many of us at one time or other considered the interest rather high, and I remember on many occasions the Minister himself giving expression to the point of view that the prevailing rate of interest was rather high. For housing in general, he subscribed at one time to the proposal that not alone was 1¼ per cent. sufficient for the State to borrow at but that the applicant should be in the position to receive loans at that rate of interest. However, there is very little we can do about it now. This provision is made over 30 years and we will have the privilege of paying back £20,000,000 over the period. That is a huge sum. We must take into consideration that the £12,000,000, with the other sums the Minister mentioned, coming altogether to £34,000,000, is to be expended this year. We must make provision for the repayment but must also look forward to the probability that it will be necessary to borrow £12,000,000 more next year and for a number of years to follow. If the State is to be burdened with £650,000 each year, at the end of the period we will be faced, for every £12,000,000, with paying back £20,000,000. That will be a big burden on the State. The money invested or expended will have to be expended on works of a reproductive nature.

Members on this side of the House have no objection to borrowing. Our objection to some of the provisions is that many of the items should be provided for out of taxation.

For instance, housing grants. We had considerable sums spent over a number of years on many useful schemes—land improvement schemes, farm improvement schemes, farm building schemes, and so on. All these moneys were provided out of taxation. Now we are having something in the way of a new idea and all the provision necessary to carry out these works is not to be met out of current taxation. This year it cost £24,000,000 for administration costs alone and we are faced with finding something in the region of £700,000 to provide for the payment of loans that have to be raised in the future.

The administrative costs were something in the region of £24,000,000 this year? How could that be?

Out of a total proposed expenditure of £87,000,000.

Does the Senator mean Civil Service personnel charges and so on?

The total administration of the Government Departments of this country costs something in the region of £24,000,000. When we take all this into consideration, we cannot be too happy about the position. We are anxious to draw the Minister's attention to exactly where we are going and what the position will be. Particularly when Marshall Aid ends, it is important that whatever money is being expended should be raised through taxation at the moment. We all remember in the early stages that many protests were made, particularly as a result of the conditions arising out of the world war when money was made very plentiful by the banks. Quite a number of farmers purchased land and stock and when the slump came and the banks decided to call in their cash they found themselves in a very awkward position. What happens the individual can happen the State. If repercussions come along and we find ourselves in difficulties here, we will find it very hard to meet both our national debt and whatever debts we owe to other countries.

I would like to inquire from the Minister under this Section 22, which provides for the setting up of a capital account, whether the moneys made available by the State to local authorities under the Small Dwellings (Acquisition) Acts are provided for in this capital account.

I do not know; I hope not.

If we are to take it that the Minister is not definite as to whether these moneys are being provided under this section or not, in the event of their being provided I would like to draw the Minister's attention to the fact that many local authorities are of the opinion that the decision to make available loans for the erection of new houses only is a hardship.

That is under legislation and I am not changing any legislation now.

I was rather worried as to whether the matter could properly be raised on this section.

An Leas-Chathaoirleach

I am afraid not. This is the Capital Services Redemption Account.

Question put and agreed to.
SECTION 23.
Question proposed: "That Section 23 stand part of the Bill."

I would again appeal to the Minister to give serious consideration to the effect of taking the £300,000 from the Road Fund. This section proposes to take that round sum from the Road Fund. The local authorities I think are prepared to argue that this money is theirs and that they are entitled to it. Irrespective of Party outlook they argue that any Minister for Finance who proposes to take money from this fund is taking money to which they are justly entitled. That fund was regarded as the kitty out of which roads could be made.

Does the Senator remember what the then Minister for Finance said in 1947?

I regard all Ministers for Finance as being prepared to take the line of least resistance. They will get money in the easiest possible way and when they cannot get it in that way they resort to more intricate ways of getting money.

I do not wish to bring the House into a debate on the question of whether the road grants were justly reduced some time ago, but I have always felt that there was no proper plan in the giving of moneys to local authorities. They were given seemingly on some basis which had no equity. Many local authorities, particularly in the West, in Kerry, Clare, Galway, Mayo, Donegal, Leitrim, part of Longford and Cavan—I am outlining the congested districts—could never by local taxation raise the money to take proper advantage of the road grants when they were more substantial than they are at the present time, and the result is that their roads are not up to a reasonable standard.

Because of their contracting taxable capacity and because the councils of these counties with their engineering staffs and organisation were tied hand and foot in the production of turf, they were not in a position to bring their roads up to standard as quickly as the eastern counties. No wonder that when counties in the West hear rumours that £300,000 is to be spent by an apparently rich local authority on one road of 12 miles from Dublin to Bray they must feel a grievance as they could not get that amount of money to spend over their whole area with 1,000 to 1,200 miles of roads to be made. Irrespective of political outlook, the members of the councils of those counties felt that there was something wrong with that sort of thing and that there was something very unjust and inequitable in the administration when one county could afford that amount of money while others cannot afford to bring their roads up to a reasonable standard.

By means of some plan the Minister should try to arrange that grants would be available after a proper survey and having a regard to their needs to certain counties whose taxable capacity has contracted. The reduction of the road grants caused a loss of £60,000 this year and £60,000 last year to one council in which I am interested. A penny in the £ to that council would mean something less than £600,000 on the poor law valuation of that county. It would be quite impossible for that council to raise enough money to give a service comparable to that of richer local authorities. Many local authorities in the West that cannot get money to do the things they would like to do feel that this money should not be taken away but that it should be given to the local authorities. The Minister in conjunction and collaboration with the Minister for Local Government should provide, after a proper survey, moneys out of the Central Fund which would ensure that such local authorities would have enough money to give reasonable service and he should attempt to make them equal to counties better able to meet their responsibilities.

On this section, I am only interested in the Road Fund to the extent of seeing how much money goes to the Exchequer from it and from the Exchequer to it and how to stop money going from the Exchequer to it. How it is distributed after it gets there is a matter for Local Government and I will refer to that Minister what the Senator has said.

Virtue should be unostentatious and I am being made ostentatious with regard to my virtue on this. When increased charges were put on motorists in 1947 it was stated by the then Minister for Finance that these would not accrue to the Road Fund but would come to the general Exchequer. In those days the amount was small; over a full year it would be £300,000. Many more vehicles are registered now, however, than in 1947 and if I were following strictly what the then Minister for Finance in 1947 had arranged I would take, not £300,000, but something near £500,000, so I am giving back some £200,000.

It does not sound convincing.

At least I am not grasping £200,000 which I would under previous legislation take. I am allowing that money into the Road Fund and I hate to allow money into the Road Fund because there has been great extravagance with regard to the money spent on roads in this country.

If the Minister had regard to the counties with contracting taxable capacity he would not say there was extravagance. He is judging by the standard of certain local authorities.

I am going by counties I have travelled through as well as counties I have lived in.

Question put and agreed to.
Sections 24 and 25 agreed to.
First and Second Schedules agreed to.
Bill reported without recommendation.
Agreed that remaining stages be taken to-day.
Bill received for final consideration; and ordered to be returned to the Dáil.
The Seanad adjourned at 9.50 p.m.sine die.