Gaeltacht Ministry. - Finance Bill, 1956—Committee Stage.

Three recommendations have been received. Recommendation No. 3, in the name of Senator Miss Davidson, is ruled out of order as it proposes what is, in effect, an increase in taxation. The Senator has been communicated with to that effect.


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

The Seanad should strongly recommend to the Government the need for drastic reform of the whole code of income-tax. It may be suggested that that is something which should have been done long ago. However, it will be agreed that the position to-day in regard to the development of production is much more serious than it was at any time, for the simple reason that, unless we can get a very great spurt in production during the next few years, and, in fact within the next year, the economic position of the country will be very, very serious.

It is true that the Minister has decided to have this whole matter investigated, but the reference of a matter of this kind to a commission of investigation involves, very often, a slow process and very often does not give any result. In many cases, the decision is reached long after it could serve any useful purpose.

I am not prepared to support the view expressed by some people that income-tax should be completely abolished, but I do think that very drastic changes can and should be made in the code. In the first place, Irish productive industries should be given special consideration. It is not very practical to say to people who have money to invest that they should invest it in productive industry here, if, when they proceed so to invest it, either of two things may happen. They may lose their money, as often happens, in which case nobody will bother about them, or, if they make a profit, the income-tax people begin to bother them very quickly.

Business people who have money to invest and who, as good citizens, are genuinely worried about the condition of the country and, as good neighbours, worried about the need to provide employment in their own town or village, are in many cases anxious to invest money in some productive industry, but are frightened off by the threat that, immediately the project shows a profit, they will be hounded down by the forces of the Revenue Commissioners. It should be possible to make some far-reaching concession to such enterprise. A very big concession has been made to those engaged in mineral exploration. That, if you like, is a bold step in its own way. Equally, people who are prepared to develop in any direction the latent resources of the country should be considered.

We have then the position of the salary and wage-earning classes. In many cases, their incomes are known to everybody, including the revenue authorities, and, if they have a taxable income, they have no escape whatever. Those people in many cases feel aggrieved when they compare their position with people who are on a scale which is in many cases difficult for the revenue people to follow.

There are many people engaged in business transactions which are never recorded and their incomes can never be very fully or accurately assessed. People with fixed incomes feel a grievance when they compare their position with other people who they know, from their own personal knowledge, have larger incomes than they themselves have. Perhaps the incomes may not be so secure, but undoubtedly, they are larger.

I have often felt that some consideration should be given, at least in this respect, to people with fixed incomes and, of course, a suggestion of the kind I suggest would include every other section of the community: that every £ invested in savings certificates or in State institutions each year should be deducted from their income. That is to say, if a person had an income of which £50 was taxable and if he decided to invest £50 it would be deducted right away from his income and left out of consideration altogether.

It would be easy to see how substantial a concession of that kind would be and how far-reaching its effect would be in encouraging people to save. You do not promote savings by merely appealing to people to save, but you do encourage people to save if you offer some very specific and definite inducement. I think that would be a clear-cut and definite inducement to persons who wish to invest their money in national securities.

There is a great deal of ill-informed opinion as far as income-tax is concerned in regard to farmers. A lot of ill-informed people, in the City of Dublin in particular, are under the impression that farmers pay no income-tax, or that the amount on which they are assessed is entirely inadequate. These people are completely unaware of the fact that the system of rateable valuation in this country hits the farmer in a way that it does not hit other sections of the community, inasmuch as the rateable valuation of land is much higher, in proportion to land income earning capacity, than is the rateable valuation of other property.

Thus, a farmer with £100 valuation would have a much lower net income than a person with £100 valuation in any other vocation. I compliment the Minister for taking up the cudgels on behalf of the farmers in this matter. I also congratulate his predecessor, Deputy MacEntee, who also defended the farmers' position. Governments in their wisdom have found out that it would not be equitable to impose income-tax on agricultural land on exactly the same basis as on other property. They have made this decision mainly, I think, for the reason that the rateable valuation of agricultural land is excessive, having regard to its income producing capacity.

We hear a good deal about the abatements and concessions made to farmers. Of course, the abatement only affects valuations under £20. The abatement in regard to employment can be secured only by incurring very substantial expense. For example, a farmer will secure an abatement of £17 if he incurs the expense of £250, £260, or £270 in the employment of a worker. Thus, it will be seen that any large farmer who would come into the income-tax paying class has got to make a very hefty contribution to the public purse by way of rates.

If he has £100 poor law valuation which is not covered by an employment or primary allowance, the direct tax on that £100 valuation would be at least £158, or it might be, according to the county in which he resided, as high as £200. That is a hefty and substantial contribution. It is as much as one could expect from a man in that position.

There is another aspect of this question which should be considered when the Minister is considering alternatives to income-tax. Is it not better to do in regard to city ground sites what is being done in regard to agricultural land? The farmer is subjected to a heavy direct tax in the form of rates.

I do not want to interrupt the Senator, but I do not want a discussion on the whole general question of local taxation.

I do not want to get into that, either.

The Senator has gone some distance already.

What I am trying to point out is that, just as the farmer gets an abatement for employment on that heavy assessment, in the same way a fairly heavy assessment could be placed on a city site and that tax should be levied regardless of whether the site was developed or not. I am suggesting that as an alternative to, or as an improvement on, the income-tax code.

I know this was advocated many years ago as a tax on land valuation and site valuation. I think it was considered by many legislative assemblies. How far action was taken, I do not know, but certainly if a person owns a valuable site in the city, that site should be subjected to a fairly substantial direct tax regardless of whether he uses it or not. If he uses it for building purposes, he will be liable at the present time to a high rate. His valuation will go up immediately. If he does not use it, the rateable valuation does not rise to the same extent, but I suggest that he should be liable to pay at least some direct tax upon it.

Everybody will agree—it is now coming to be accepted more widely than it was in the past—that income-tax is what might be described as a disincentive tax. It is something that tends to discourage productive effort rather than encourage it. Taxes should be, in the main, incentive in their action. Thus, if you tax a building site which is being left unused, you are more or less creating an incentive to use it, whereas if you increase the tax on a man who enlarges or extends his property or enlarges his income, you are more or less acting in a way that will deter him from being progressive and endeavouring to increase his income. I think it is generally recognised that the man who sets out in a productive way to increase his income is indirectly increasing the income of the State, and the Minister should not take the easy way with regard to this matter, the easy way being to put the whole question into the hands of a commission and then sit down and wait for four, five, six or seven years for its report. I think he should take some action immediately as an earnest of his goodwill and determination to encourage productive effort.

I regret that, through illness, I was unable to speak on the Second Stage of this Bill last week. I should like to take the opportunity, in speaking on this section, briefly to congratulate the Minister on his announcement that there will be a review of the income-tax code. I think it is a matter of far greater urgency than some Senators, judging by the reports of the debates on the subject last week, appear to realise. The position of the salaried workers in Ireland at present, those on fixed incomes, is really desperate. One victim of the gods in Greek mythology was symbolised by a man chained to a rock with a vulture perpetually gnawing on his liver. I think that figure might stand as a symbol of the fixed-income worker who has no opportunity of evasion and who is on the whole bearing a far greater proportion of income-tax than his fellows. I suggest that the matter should be speeded up as far as possible. It took us two and three-quarter years to obtain the report on industrial taxation, and if it takes us as long to get a report on income-tax, quite a number of our salaried workers will have emigrated.

Those of us who represent graduates of the two universities are particularly conscious of this problem, because the teacher, the civil servant, the engineer, the man on the fixed salary is very often a graduate, and the sense of grievance of such people has, as I think any Government will admit, repercussions far out of proportion to their numbers, so that it behoves any Government who want to remain in power to pay attention to any special grievance of this group. They are very hard put to it to make ends meet and a speedy revision of the income-tax code is the only thing to meet the situation.

When I was speaking before on university education, I think I placed the Minister under a misapprehension. I was talking about the small proportion of Government expenditure that was allocated to university education. Unfortunately, I omitted the operative word "university". Subsequently when reading the Official Report, I realised my mistake. I did not think it fair to correct the unrevised report, as the Minister had replied to a speech I made, but which I had not intended to make, on account of the omission of that word. I would point out that not only are university graduates penalised to a large extent in not being given sufficient funds for training——

What is the Senator at now? Is this under income-tax?

Yes. Many graduates are on fixed salaries and, in addition to being hampered in their training, are also hampered when employed by belonging to a not large but respectable group which is required to bear a disproportionate amount of income-tax. I would say also that horror has been expressed by several Senators and Deputies as to the prospect of applying income-tax to farmers. The horror is very often in direct proportion to the number of farmers in the constituencies of the speakers, but I suggest that that horror does not affect quite a number of us. If a farmer can produce a roll of notes after selling ten or 12 beasts at a fair, as I have seen, and boast that no income-tax inspector was going to set eyes on that money, something must be wrong, and if there is not, the setting up of a body to investigate such matters might reveal to the general public that there is nothing wrong. Those on fixed incomes at present do think there is something wrong. I would urge the Minister to begin now and not to rely on unskilled labour, but to employ as many wholetime experts as possible. I again congratulate him for having announced that he is prepared, unlike some of his predecessors, to revise the income-tax code.

I should like to say a word in support of what Senator McHugh has said and to add another class of taxpayer which I think deserves very careful consideration by the Minister, and by those who examine the income-tax code. I refer to the pensioners. Their plight is particularly unhappy now that, as Senator Fearon told us vividly last week, the pound is crumbling away at the rate of one penny every month. These pensioners are rarely getting any increase in their pensions; yet, they have to pay income-tax at a very high rate. I would appeal to the Minister and those who may be advising him in the matter, to consider giving special concessions to pensioners, especially those who are pensioners from service with the State. Those who served the State since 1922 and went on pension in recent years are in a very unhappy position. I hope that their position may be eased by some kind of income-tax concession.

I am surprised at the statement made by Senator McHugh with regard to income-tax on farmers. He spoke about a roll of notes at a fair. If the farmer gets that roll of notes, as Senator Hickey knows, he knows to what purpose every one of those notes must be put, for the farmer is one person who has to budget. The last person to send on to a farm is the townsman, because when townsmen were put on the land, they were not able to budget and when they got a roll of notes, they "blew" it. That is why they were not a success on the land.

I am living in a town and I rely on the votes of townspeople as a member of the public body, but I think we will have to be realistic about agriculture. The trouble is that there is too much taxation on agriculture in this country, and it is not income-tax, but rates. As I said here the other day, in one part of Tipperary, I know farmers are paying £3 an acre in rates. I wonder what bullock made £10 this year, but if it did, £3 was taken off in rates.

I do not think I could usefully add much in this discussion to what I have already said in the Dáil. We are all inclined to look at any tax as being an unjust and unfair imposition when it hits us, and, when we speak about the necessity for revising that tax, we usually mean trying to ensure that somebody else does the paying.

I could not at all accept that the situation in regard to income-tax is anything like as simple as Senator Cogan implies. Income-tax in its existing form is an extremely complicated code and the danger is that the more one would try to simplify the code, the more inequitable it might become. It is a nice thing to try to balance the equity of the impositions, on the one hand, and the simplification of the code, on the other. I think that is clearly a task that would require the careful and detailed consideration that a commission would be able to give, rather than that we should endeavour, as we would if we followed the Senator's suggestion, to deal with what is a highly complicated subject on a hit-or-miss basis.

I made my point of view quite clear in relation to farmers and central taxation, as well as local taxation, in the other House. I do not think I could add anything here to the view I expressed then. However, in reply to Senator Stanford, I would say that, in the Finance Act of 1951, there is a provision by virtue of which special cognisance is taken of the position of pensioners over 65 years of age with limited means. The provision was introduced in that year to meet, perhaps, part of the point of view advocated by the Senator.

The House, I am sure, is also aware that, in relation to the type of building lots to which Senator Cogan referred, there is a provision on the Statute Book by virtue of which, in certain circumstances, building rents are created out of such vacant lots. Income-tax and surtax, if they also be payable, are charged not merely on the rents issuing but on the capitalised value of those rents. Perhaps the Senator was not fully aware of that when he was speaking.

Question put and agreed to.
Question proposed: "That Section 2 stand part of the Bill."

I do not wish to deal generally with the whole subject of income-tax on this stage. I propose just to refer to two points which I think arise on this section. The first is in relation to life insurance premiums. The present Budget is supposed to be a savings Budget and is supposed to encourage people to save. On the Second Reading, we discussed the various incentives to saving contained in the Budget. One form is to encourage people to take out life insurance policies. Therefore, from the point of view of encouraging saving, I think life insurance policies should, as far as possible, be exempt from tax. In England, the exemption of such policies from taxation has gone much further than here. There is a concession in this country but, merely from the point of view of encouraging saving, I suggest that the income-tax concession on insurance premiums might be extended.

Another aspect of the matter is that self-employed men nowadays, such as people in the professions and people without pensionable positions, find it difficult to make provision for their old age. It is only fair that such people should be encouraged in every way to insure by way of endowment policies on which they could purchase annuities at 65 or whatever age they decide they can no longer continue to work. We are rather behind other countries in the encouragement we give in the income-tax code to this type of saving. I would ask the Minister—apart from the commission because I think it is something which could be dealt with separately on its own merits—to consider the possibility of giving further concessions in regard to life insurance and endowment policy premiums in the income-tax code.

The other aspect of the same problem—I know it is a very old question and I know the answer I shall receive, but, at the same time, there is nothing like repeating your application—is the taxation of annuities. A great many people consider it very unfair that, when a person purchases and annuity for his old age, the whole of it is subject to income-tax. There are certain concessions, but, generally speaking, it is correct to say that an annuity is subject to income-tax like any other income. In these annuities—it is the reverse of what I was talking about before—the insured is trying to acquire a capital sum at a critical period of life when, for instance, as a self-employed man, he is not able to earn any more. I suggest the acquisition of that capital sum should be facilitated by remissions of income-tax. An annuity, in the opposite way, is a capital sum which is turned into income for old age. I suggest there might be some facilities to people so as to have the maximum income during their declining years and declining earning capacity and, I am sorry to say, seemingly declining money values.

This is an old subject of debate. I think I know the answer I will receive. I shall probably be told that it can be brought before the commission but, in spite of that, I will weary the Minister and the House by repeating this demand for further concessions on insurance premiums and annuities.

I should like to support Senator O'Brien in his plea for more consideration for those who take out insurance policies, so far as relief from income-tax is concerned. It is a useful form of saving for the insured person's family, that is, if the money would be kept in the country as far as possible. However, there is one aspect of the matter which I should like to ask the Minister to consider. As Senators are aware, some few years ago a former Minister for Finance introduced a differential system on behalf of Irish assurance companies. The idea behind that step was to provide an incentive to people here to insure their lives with wholly Irish-owned insurance companies. I do not know whether the differential which was introduced at that time proved to be a sufficient incentive to people to support Irish insurance companies. If my memory serves me correctly, I think the amount of the differential was something like 1/6—the difference between 3/6 and 5/-. I may be wrong in that and I shall have to look it up.

1/3, I think—half rate as against two-third rate.

Having regard to the reduced value of money, I am inclined to think that that differential is entirely inadequate for the purpose of making sure that insurance companies in this country will be supported by the general public.

I listened with a great deal of sympathy to Senator Crowley some few weeks ago when he spoke on the question of insurance. He referred to the amount of money leaving this country and being taken across the water because a good many people do not insure with Irish-owned insurance companies. This is a matter that requires very careful investigation. I do not propose to enlarge on the subject at this stage, because there may be several difficulties connected with the matter of which we are not aware at present. Generally speaking, I think it is only right and proper that whatever inducement is necessary will be given to encourage people to take out insurance policies with Irish insurance companies.

Senator O'Brien referred to a comparison between the reliefs given here and those given across the water in respect of insurance premiums. Broadly speaking, the relief here, on policies now taken out, is in respect of foreign life assurance policies, half of the full taxable rate and, in respect of Irish companies, two-thirds of the full taxable rate. These are substantial reliefs and I think would probably be found to involve something of the order of £650,000 if an exact computation of all the aspects concerned were to be made.

The Senator stresses very properly the value of life assurance as an element in saving and it is an element we must remember whenever we are considering what is proper and what is good to be done in this respect. While I have sympathy from one point of view with regard to his suggestion about annuities, I must also perhaps make the point fairly to him that, whereas life assurance is an element of saving, annuities are an element of dissaving.

Question put and agreed to.

I move recommendation No. 1:—

In sub-section (1), line 14, after "banks," to insert "or with any company in which the individual is employed".

In this section, it is proposed to give to persons investing in savings banks and commercial banks relief to the extent of £25 on the interest on money invested. The reason I put down this amendment is that I believe we ought to encourage people to invest money in the industries in which they are employed. I know that it is extremely difficult to get additional working capital in small industries in the country. If we are to encourage the employees in these industries to start savings groups, we ought to allow them relief on the first £25 of the interest paid. I think that would be very desirable. There is a great social benefit in having people invest their money in the industries in which they are employed and it would, further, be a great national benefit because it would help struggling industries.

I believe a number of small companies are being called on at the moment to reduce their overdrafts. The banks do not lend money in a long term way and these companies must try to find it otherwise to finance their work. I could see no better way than to get the co-operation of these workers in industry by encouraging them to invest their money where it will give the most benefit. They could be made to feel that it would be much more beneficial to invest in the industry rather than put it into Post Office savings. They know that the money put into the Post Office savings can be taken out and put to the building of houses in Donegal or somewhere else. It would seem to be much better to give employment in the places where the money is earned.

I feel that if there is an argument for giving this remission in the case of investments in Post Office Savings Banks or commercial banks, there is a much more compelling argument for giving it in cases of investment in the industries where the people themselves are employed. I hope the Minister will, even at a later stage, give consideration to this matter.

I agree with Senator Burke that it is desirable from every point of view that those employed in an industry should be encouraged to invest in that industry, but I think the method he has suggested is the wrong way of doing it. I think the best system of investment is in the equity shares of the business. In this Bill, we are providing inducements in that respect by giving a 20 per cent. remission of income-tax which will arise in respect of certified investments of that type. I think the method which has been suggested by Senator Burke in the amendment would be nearly impossible to administer and temporary loan capital is not the type of capital that is required by those it is proposed to assist. It would be highly desirable that employees in an industry should take their share in so far as they are able in the expansion of that industry, with the further employment that it would give, and in making more secure their own employment by some type of shares in the industry being made available to them. That, I think, is the way it should be done rather than the method suggested by Senator Burke.

Certain difficulties would arise in that regard here. There are a number of small private companies in this country that might not wish to have additions of equity capital. Employees, on the other hand, who might invest in their own industries might wish to take that money out at a time of emergency, or for other purposes, as they can do when they invest it in Post Office savings. In that case the money would be given to the employers in the nature of a loan at the standard bank rates of interest and these people would then be in a position to take out the money when they wished to do so. That is why I asked the Minister to consider this point.

We have a large number of small industries in this country and we have an entirely different industrial situation here from that in Britain. There is a limited amount of dealings on the stock exchange in this country. There is not a big amount of buying and selling of stocks and in these circumstances, I think we will have to encourage not alone the commercial community but the industrial community in some way to patronise investments in those industries suited to the type of economy we have in this country.

The Minister has indicated that he is favourable to employees taking shares in the industries in which they are employed. Might I take it from that that he would consider granting the same concessions in regard to tax on these shares as is being granted under this section?

They can get the benefit on certified shares under this section, just the same as they already get.

One of the difficulties is that if an employee invests in the capital of the company, he will not be able to call on the money or sell his shares when he wants to.

One of the reasons why I have introduced the two concessions in Section 21 in relation to death duties and the extension of the income-tax concession is to endeavour to make for a greater marketability, but I suggest that Senator Burke is entirely wrong when he says that industry wants the type of temporary loan capital he suggests. That is not what industry wants to expand.

Recommendation, by leave, withdrawn.

On behalf of Senator O'Connell, I move recommendation No. 2:—

To add a new sub-section as follows:—

(5) The rate of income-tax payable by a building society in respect of the dividends and interest paid to its shareholders and depositors shall not exceed 50 per cent. of the standard rate of income-tax."

Do I understand that the Senator has the authority of Senator O'Connell to move this recommendation?

I have. On account of family illness, Senator O'Connell is not able to attend. As explained on Second Reading, by Senator O'Connell, the interest paid by a building society to its depositors is paid free of income-tax but by an arrangement which seems to have operated since the establishment of these societies in Britain, the building society pays income-tax in one lump sum to the Revenue Commissioners, at a rate which is fixed, with or without agreement with the society and which is less than the standard rate—this rate has come to be known as the "composite rate".

So far as can be learned this "composite rate" is computed in the following way: the society supplies to the Revenue Commissioners a list of its shareholders—their names, addresses and the amount of the shares and/or deposits held by them and the commissioners, then, through their inspectors, make an investigation into the taxable capacity of each of these investors and place them in the following categories: those who are not liable for any tax; those liable at the reduced rates (3/- or 6/- as the case may be); and those liable for the full standard rate. An average is then struck and this constitutes the composite rate.

It is obvious that the greater the number of investors who are not liable to tax or to the reduced rates, the lower will be the average or composite rate payable.

The building societies here complain that this rate is inflated by reckoning all those people in Britain who invest in the Irish societies as if they were liable for the full standard rate here, whereas because of the double income-tax agreement between Britain and this country, the Revenue Commissioners are not entitled to demand any tax from residents in Britain who invest money in this country. These people should then be included among those who are non-liable for tax, thus obtaining a lower and more accurate "composite rate".

For a long period—20 years or more —the composite rate has been fixed at two-fifths or 40 per cent. of the standard rate. This rate, it is understood, was originally fixed by agreement between the British societies and the British Revenue authorities and applied to the societies here when the change of Government took place.

This two-fifths rate was in operation up to five years ago when the commissioners here, without consultation with the societies, doubled the rate and since then have demanded from the societies a rate of 80 per cent. of the standard rate, in other words, on every £1 which the societies issue by way of interest to their investors, whether these investors are resident here or in Great Britain, or the Six Counties, the society must pay 6/- to the Revenue Commissioners.

In the circumstances, this is a very heavy burden. It prevents the society from building up reserves by way of liquid assets which are necessary to meet its liabilities to its shareholders and hampers considerably the activities and operations of the society. The real sufferers are the people who are anxious to obtain assistance to build or purchase their houses.

It is interesting to note how the British societies have been and are being treated by their Government. At present, the standard rate of income-tax in Britain is 8/6. The composite rate demanded by the Revenue Commissioners there is 4/10 or 57 per cent. of the standard rate. Though our standard rate is 1/- less than the British, the composite rate here is 1/2 more than it is in Britain. It is because of the considerate and sympathetic treatment given to the societies in Britain that they have been enabled to build up such huge reserves. If the rate here were 57 per cent. of the standard rate, as it is in Britain, the composite rate would be 4/3 instead of 6/-.

If allowances were made for the lower average income level here, and the fact that the tax allowances form a higher proportion of the taxpayers' income than in Britain, a more appropriate rate would be 50 per cent. or 3/9, and that is what is asked for in this recommendation.

Some people consider that these societies must be making huge profits because they charge 6 or 6½ per cent. on loans, or 7 per cent. as has recently been announced. But it must be remembered that they pay their investors 3¾ per cent. free of tax. This compares very favourably with the rates payable by the banks, or even by the Post Office Savings Bank.

The two largest societies in this country have recently issued a statement showing how each £1 earned by them during the year 1955 was expended.

The following are the particulars, to the nearest penny:—



Paid out as interest to investors



Income-tax payable to the Revenue Commissioners



Management and administration expenses



Balance available for reserve






This, of course, makes no provision for loss on realisation of investments or bad debts.

A profit of 4d. in the £ cannot be considered exorbitant or even sufficient for the proper and efficient working of the society.

In these circumstances, a request that the rate of tax payable on the interest issued to investors should be 50 per cent. instead of the present 80 per cent. is not unreasonable.

It is understood that the four-fifths rate fixed five years ago is now due for revision and the societies hope that the new rate will be fixed after consultation between their accountants and auditors and the Revenue Commissioners as is done in Britain, and that an opportunity would be given them to see how these calculations are made and to put forward such representations as they consider necessary. They do not object to paying what is just and reasonable having regard to the nature of the work on which they are engaged, but they do object to being asked to pay a rate which they consider unfair and, because of its method of computation, one that is artificially inflated because of the inclusion of factors which should not be so included.

I am sure the members of the House are, as I am, sorry that Senator O'Connell is prevented through illness from being here to-day, because it was quite clear from what he said on the Second Reading of the Bill that he had an interest in this matter. Senator Miss Davidson has given the basis of how the composite rate of tax was calculated. Broadly, that may be correct, but I think there are certain other aspects of the matter of which the House should be aware. First of all, if one is going to consider the position of building societies here and building societies across the water, we must remember initially that building societies here are completely exempt from corporation profits tax that building societies across the water have to pay, maybe not the full rate of profits tax, but a rate of profits tax. Secondly, I think we must remember that the type of person who has money in the building society here and in the building society across the water is slightly different. It is because of that, perhaps, there is a difference in the arrangement to which the Senator referred.

The exact basis of law in respect of building societies, as in respect of companies, is that the societies would pay on their dividends, less income-tax and that it would then be left to the individual shareholder to claim a refund, if he was not liable to income-tax on the dividend at the full rate or at a reduced rate. It is in an effort to ease administration, both from a revenue point of view and more particularly from the building society point of view, that the composite method was evolved. I do not think there is any doubt whatever that the building societies are very anxious not to go back to the strict method that operates for companies and that would operate for them, if the composite method had not been introduced.

Incidentally, I am afraid the Senator is wrong when she suggests that the rate was fixed by the British Government. The rate was fixed by us in the year 1935 and was varied in 1951, after consultation, I am told, with the building societies. In fact, I think it must have been after consultation with the building societies, because it was after the building societies in question had furnished to the revenue authorities a list of those who were receiving interest in the same way as the Senator herself indicated that the rate was fixed.

What happens, as Senator Miss Davidson suggested, is that the building societies furnish a list showing the shareholders to whom interest is paid. Out of those shareholders are taken those people who have more than £5,000 on deposit with the society concerned and also companies, because obviously they would be in any event liable to income-tax at the full rate and the society's rate is calculated then on the remaining holders according to the rates of tax to which they are liable.

There is no special law in respect of taxation of building societies' interest or dividends, or in respect of building societies' profits themselves. There is only the general law and this composite arrangement is only entered into as a means of facilitating building societies and the revenue. The fact is that I understand the building societies are particularly anxious that the composite method should be continued.

There is perhaps a little difficulty in the line the Senator suggested in respect of people living abroad, but the difficulty there is that the double taxation agreement of 1926 and 1928 lays down certain very strict and specific methods by which the tax arrangements are to be administratively worked out. I think part of the difficulty arises perhaps because the persons to whom the Senator made reference do not and could not deal with the matter on the basis of the requisite certificates from the appropriate inspector of taxes on the other side.

The existing arrangement is being carried on for the current year because it may take some considerable time to investigate the results of the returns that are being made available now, but I should like to make it clear that there is no new legislation adversely affecting building societies in any shape or form. It is a purely periodic fact-finding review and whatever facts emerge from that review, the composite arrangement will be carried on on that basis in the future.

If it transpires in the fact-finding review that the composite method should not be four-fifths but three-fifths, no change in the law arises and that would be the figure. One thing we must remember is that the basis of subscription to building societies here is rather different from what it was in the past. By advertising comparatively high rates free of income-tax, building societies attracted larger subscriptions and larger holdings, and the building societies now are not composed solely, or even mainly, of the type of person of which they were composed some years ago who subscribed a minimum amount for the purpose of being shareholders in the real co-operative sense of the term. It is largely because of that change in character in the past 20 years or so that the fact-finding inquiry was undertaken and resulted in a new basis for the composite arrangement.

Recommendation, by leave, withdrawn.
Question proposed: "That Section 3 stand part of the Bill."

I find this section very difficult to interpret. I cannot find out exactly what it means. As I understand the section, its effect is that a married couple will only be entitled to a tax rebate on the first £25. While they were single, each was entitled to a tax-free rebate of £25, making a total of £50. It seems difficult to understand why they should be penalised when they get married. Further, if instead of having deposited the amount, they had held securities which come under Section 7, the rebate they receive, either before or after marriage, is the same. If they had been employed before marriage and if they continued in employment after marriage, they would both be entitled to earned income relief, although, in the case of the wife, the earned income relief would be smaller. Personally, I think it would be only fair to increase the £25 to £50, in the case of married couples. Perhaps, this is a matter that could be dealt with on the Report Stage; if the Minister decides to accede to my request, I do not think that the cost to the Exchequer would be very great and it would certainly encourage savings.

The difficulty here is the difficulty of preventing what one might term a fake. If it was to be dealt with on the lines the Senator suggests, then it would mean that a married man who had, shall we say, £50 interest received from the sources in question, he would only have to transfer half of it into his wife's name and then it would be automatically free. What I am trying to do in the section is to provide new and additional incentives to save. A mere switch or transfer of that sort would not be any addition to the national savings pool.

There are undoubtedly difficulties in the way that the Senator suggests, but the administrative inconvenience there would be to taxpayers as a whole in having to have separate assessments for husband's and wife's income and having to go back to ascertain the source of the investment of each, would, I think, outweigh the advantages of the case to which the Senator refers. It is a question of balance—I quite freely admit that—but I think on the whole the balance is fairly strongly in favour of the method I have suggested in the section.

I took it that sub-section (2) referred to where the two spouses have separate incomes. The words in sub-section (1) are "an individual" and is it not quite sure that both the husband and the wife would not be treated as an individual under sub-section (1). Sub-section (2) seems to me to deal with a separate position, but sub-section (1) has the rather unusual word "individual".

I think sub-section (2) does deal with the question of the separate return, but I took it that Senator Guiness was anxious to refer to a broader aspect than that. If the position is that when a husband or wife makes separate returns, they have a larger total than the £25, then the obvious thing would be that we would be flooded with these cases of separate returns. I think the situation, as I understand these two sections, is this: if a person puts in a return on the basis of which he has an income from the source in question of £25 or less, then that £25 is free of tax. If it is more than £25, he is free of tax up to £25. If that individual is married and he returns, as certain people have to do, his wife's income in addition, then it means, if the total of the two is more than £25, they get between them the concession in respect of interest up to £25 per annum. If, however, they are in a position that they are unable jointly to make arrangements for the payment of their tax and wish to have their tax individually assessed, so that they will pay it separately, then they can divide the £25 between them in the proportions of their income. This division is contemplated in cases where people are not making the normal joint married return.

Having regard to the importance that is attached at the moment to encouraging our people to save, and that must be attached to it in the future, I consider that the concession which the Minister is making in this section a very small contribution indeed. We have had from the Minister's statement the facts of the review of last year, which he referred to on Second Reading when he pointed out that during the past year there was a reduction of not less than £21,000,000 in our total savings. Side by side with that, there was a drop in the bank deposits of something over £13,000,000. This is a very serious position and the Minister has pointed out, both here and elsewhere, that if we are to continue with our capital development, if we are to find the moneys to provide employment for our people and develop this country, there is no source open to us except savings.

Having regard to the fact that last year we had a drop of £21,000,000, does the Minister presume to assure the House that, by this small concession to persons who are investing their money in the Post Office or in the banks we are going to over-balance the £21,000,000 and arrive at the position which we can continue with our capital development programme? Our very first act here this evening was to give authority to the Revenue Commissioners, for the next 12 months, to collect in income-tax 7/6 in the £1 on income, after making a very small allowance to the earners of these incomes. Having regard to the fact that there was a drop in our savings last year and that on top of last year's position we are now extracting from the people an additional £13,000,000 in taxation—£7,000,000 odd as the result of the special levies——

Three million.

Well, it is £13,000,000 in its entirety. This year, we are placing a further burden on the people we are expecting and encouraging to save £13,000,000. We are extracting these moneys from 65,000 people less than were here five years ago. I would suggest to the Minister, that being the picture, that some more active steps must be taken, if we are to encourage our people to save, and I think the first step must be that the Government itself should give a lead by cutting down that expenditure which we were promised would be cut down many years ago.

That is not dealt with in this section, and the Senator must confine himself to what is being dealt with.

The section makes allowances for people who put their savings in the Post Office or savings bank. The Minister has both here and elsewhere made it known to the people why he is making this concession. I suggest that if this concession is to accomplish what the Minister wishes, and what we would all wish, that, through our savings, we will be able to carry on with our capital development programme, we must have a new approach to savings. Those people who save find themselves—one word for it would be "victimised"—as a result of these savings. Those who save for their old age find, when they reach the age of 70 and apply for the old age pension——

The Senator is not in order in proceeding along those lines. I want him clearly to understand that. He should read the section and see with whom it deals. He should also read the sidenote and make a speech that is in order on the section.

I have referred to the points I wanted to make. I hope the Minister realises how important it is to bear these points in mind. Having regard to the present position in the country, some active steps must be taken to encourage the savings which are so essential to our success.

I have been wrestling with sub-section (2). May I, in all earnestness, suggest that there should be a rule banning sentences of over 100 words in Acts? It is not a laughing matter. I am very serious about it. As a student, I had to wrestle with the sentences of Thucy-dides and we were warned that it was very bad to have a sentence of over 100 words. I can foresee anxious toil by lawyers and others to determine the meaning of the section. Sentences of over 100 words should be absolutely banned by the Government.

May I remind Senator Stanford that, in a deed, a sentence never ends and that there is never punctuation? A deed may run into 5,000 words.

If we could apply the same rule to deeds, then I should be very glad.

I do not propose to reply to Senator Hawkins, because it would be almost impossible for me to do so and keep within the ruling of the Chair.

Question put and agreed to.
Question proposed: "That Section 4 stand part of the Bill."

This section deals with married men's allowances. Would the Minister look into a matter which I think is deserving of attention? Consider the case of a man with children whose wife dies. Such a man gets a personal allowance for his daughter while she housekeeps for him and as long as the children are under 16 years of age. However, when the children reach a certain age the personal allowance is cut off for the daughter, although she is still housekeeping for her father. I regard that as a great injustice. Would the Minister investigate that position and see that the father will get the personal allowance? I know of many such cases.

Very frequently, the girl's chances in life are spoiled. There might be three children aged 15, 17 and 18 and the girl doing the housekeeping may be just 19 or 20. She is doing the housekeeping for the family, because the mother has died. The father gets an allowance for this daughter, who is known as the housekeeper, but the moment the youngest child reaches 16, that personal allowance is cut off. Will the Minister see if it is possible to continue the personal allowance for that man, until such time as somebody does the housekeeping for him?

I do not think that Senator Hickey is referring to the personal allowance but rather to the dependent relative allowance or the housekeeper allowance. The age is 16. In addition, if there is any question of continuing their education, then that age limit does not apply.

Very often they are going to school.

It seems to me that the penalties are imposed on the married man. If they live in sin, they will get £25 each. If he gets married again, instead of keeping the daughter at home, he will get an allowance for his wife. A married man, his wife and a couple of children would pay much more income-tax than three or four single people living in the one house. The Minister for Finance has a very heavy burden to shoulder but, sometime or other, I hope he will look into these anomalies. As Senator Crosbie has said, all the income-tax is against the married man.

Will the Minister make any promise to go into the matter?

All I can promise is that I will examine it before next year.

Question put and agreed to.
Sections 5 and 6 agreed to.
Question proposed: "That Section 7 stand part of the Bill."

The Minister referred to this matter on Section 2 when he said he thought it was very much more helpful in relation to the amendment I put down to Section 2. This applies only to public companies. I agree that it is an improvement, because now it will apply to any further capital subscriptions in the companies that have made application under Section 7 of the Finance Act of 1932. However, it is of no benefit to the vast majority of companies in this country, and, in my opinion, it will not encourage savings in that respect. Reading Section 7in toto, I do not think it covers the point I made at all on Section 2. It might help big business, but it will not be any help at all to the small businesses which are the generality in this small country.

I think the Minister is to be congratulated on Section 7. I should like him, when he has time, to consider the limitation under the 1932 Act that the certificate is not to be given where the issue is for the purpose of paying off existing debts. I know that has been treated rather generously in recent years, but it seems to me that this point deserves consideration.

The main purpose of the section is to provide an incentive for the expansion of industry to bring about increased production and employment. An issue of shares for purposes such as Senator Cox has mentioned would hardly come within that broad scope. On the earlier amendment, Senator Burke talked of the difficulty of selling shares in companies. The only types of shares that are saleable at all are public shares and, therefore, I was entitled to believe that he was talking about public shares.

The Minister mentioned public companies. I understand that, in the town in which I live, about 4,000 persons are in insured employment and I do not think any more than 50 per cent. are employed by public companies.

That does not arise on this section, which deals with public companies.

Question put and agreed to.
Question proposed: "That Section 8 stand part of the Bill."

I think the Seanad is entitled to some satisfactory explanation for the increased taxes on cigarettes and tobacco. Having regard to the protests made in this House and in Dáil Éireann and throughout the country four years ago when the last increases were introduced, it is almost unbelievable that the present Government should contemplate an increase now.

I do not know by what process of reasoning this increase of 6d on 20 cigarettes, the increase in pipe tobacco and the other levies included in this head can be justified. The Minister might say that he needs the money, but every Minister for Finance needs money. I have never known a Minister for Finance at any time to come into the House without being in need of money. If it was wrong in 1952 to increase the price of 20 cigarettes to 2/5, as it then was, it is surely an even greater wrong to increase the price to 2/10 to-day. I think there is a very widespread discontent and dissatisfaction in regard to these increases. Many people may have been prepared to accept a small increase of 1d on an ounce of tobacco or 2d on 20 cigarettes, but I do not think that anybody anticipated that the increase would have been as steep as it is.

It is true to say that in some respects tobacco is less essential than food, but in the ordinary budget of the worker's household, there could be very seldom much reduction in the consumption of tobacco. Anybody with any experience of how the people in the small income group budget for their household will know that the price of cigarettes and tobacco is a considerable item. There is not usually a reduction in the consumption of these commodities when the prices rise, because, generally speaking, there is not much room for reduction. What actually happens in many cases is that there is no reduction in the consumption of tobacco in the worker's household, but to meet the extra costs, they will cut down on more essential things such as meat and clothing. That is a most undesirable thing to have happening.

It would be interesting to know whether the Minister in imposing this levy was hoping that consumption would continue at the present rate, or whether he was hoping for a reduction in the consumption of tobacco. The Minister mentioned in his Budget statement that he was influenced in this matter by the fact that tobacco was an imported commodity. At the same time, he made a fairly generous provision in his Estimate for what he hoped to collect from this tax. It seems from that that he certainly does not anticipate that there will be a reduction in the consumption of tobacco.

I think the increase in the duty on cigarettes and tobacco could be perhaps justified, if it were brought in as a general sales or purchase tax, spread over a wide number of luxury commodities, instead of over a small number as in this case. I think that, in imposing this tax, the Minister has been unjust, and that his Department, influenced in some way by a certain element of laziness, did not bother to explore other avenues by which the money could be raised and decided to follow the easy method by taking the last penny that could be expected from a duty on tobacco. I think it would have been comparatively easy for the Minister to have avoided this tax altogether, if he had kept expenditure at the level at which it was when he came into office. I am not suggesting a reduction of expenditure, but I do suggest that if he had kept it at the level it was at when he came into office, it would have been unnecessary for him to impose this increased levy on a commodity used widely by the workers. It is the manual worker, the man who works in the fields, who enjoys tobacco most, and much more so than the man who works with a pen or his brain. It is a tax on the manual worker and for that reason it is a tax that could and should have been avoided.

Senator Cogan is wrong when he says it was clear that I did not budget for a reduction in the consumption of tobacco. I did. I had anticipated that there would be a reduction in consumption and I took that reduction in consumption into account when I was preparing the figures which I mentioned in the other House.

I do not propose at this stage to go into the whole question of the total expenditure in the Budget. I do not think it would be in order for me to do so, but I do say that given the bill that we had for this year's Budget, it was only right that tobacco, which is a non-essential, should bear its just share of that burden.

Question put and agreed to.
Section 9 agreed to.
Question proposed: "That Section 10 stand part of the Bill."

This section proposes to increase the tax on petrol and other oils used in commercial vehicles and it proposes to place a burden on the industrial and agricultural community of this country of no less than £1,795,000. That is the additional amount which the Government proposes to collect in this levy. That is almost £2,000,000 which is being taken from industry and from a small number of people in agriculture. We must necessarily ask the question as to where the money is to come from. It is obvious that it is to come from the pockets of the people concerned. These taxes are going to make their contribution to further increases in the cost of living and are going further to encourage those people, who find themselves in a position to do so, to demand that justice should be done to them and that the increased cost of living should be mitigated by compensation in wages, so that they will be able to meet the new charges and the additional costs arising from this levy. By doing this, we are making the way very clear for the sixth round of demands for increased wages and if these demands, or portion of them, are justified, some of those who are in a stronger position than others to enforce them will probably succeed in having them granted.

On a point of order, for the life of me, I cannot see how the Senator is relating a sixth round of wage increases to Section 10 of the Finance Bill.

An Leas-Chathaoirleach

I understood the Senator to be discussing Section 10, which relates to hydrocarbon light oil. I think the Senator is quite in order.

In connecting it up with a sixth round increase in wages?

An Leas-Chathaoirleach

The Senator is in order.

When these demands are granted, as they probably will be, particularly in the case of the stronger unions who will be in a position to enforce them, they will make a further contribution to an increase in the cost of living, and the spiral will go on and on, until we reach the stage at which, when we come to discuss the Finance Bill next year, we will be dealing with a much more difficult position than the one we are in to-day. In the last few days, we have had evidence of the state of the transport undertaking. An additional charge on petrol means an additional burden on industry and commerce which must be passed on to the consumer.

I maintain that this additional taxation of £1,795,000 represents an additional burden on industry and commerce and agriculture and that it is unwise to impose it at this time. While the opportunity presents itself to the Minister in this House this evening, he should reconsider the whole approach to this matter, particularly in the light of the position the transport undertaking finds itself in at the moment, in order to avert the development of a much more difficult position. There is nothing that we on this side of the House can do in relation to this Bill, except to draw the Minister's attention to the difficulties it may create and to make whatever recommendations we can. That, I think, is the recommendation that we would make, that this additional burden that has been placed on the community, of £1,795,000, should be removed.

Senator Hawkins on this occasion has discussed the possibilities of a sixth round of wage increases and I trust that, as he has been allowed to refer to that matter, I, too, will be given the same latitude. Let me be perfectly frank, as that matter has been mentioned. No country can carry any standard of living, except the standard of living that it gets from its production, and, so far as we are concerned, we are in exactly the same position in that respect as any other country. The essential thing at the present time is to ensure that we increase our production in such a way that there will be for everyone in the community a larger cake, so that the standard of living can be improved. It is entirely fallacious to suggest that by any one section or the other merely attempting to increase the slice which they may obtain at the expense of other sections of the community, the national economic life can be improved as a whole and the standard of living of all our people raised.

I suspect that Senator Hawkins knows that very well indeed and I suspect that he knows, too, the economic damage that might be done to the country as a whole, if there were repercussions of the type he has indicated here, and I believe that he must have raised these matters in that knowledge, because he is as well aware as I am of the national implications that are involved. I regret that he should have done it on this section.

It is because I appreciate the dangers involved in the imposition of these duties and feel they may give rise to the position that I have forecast here that I have drawn the Minister's attention to it. It was in order that that position might be averted rather than encouraged that I raised the matter.

The Minister stated that he recognises that this country is in exactly the same position as every other country. I can only say that it is a pity that he and his colleagues did not realise that sooner. We on this side of the House realised that all along. It is the people on the other side of the House who tried to lead the Irish people into a fool's paradise, a fool's paradise from which I hope the people will be able to succeed in escaping.

The increased taxation which is being levied on industry, agriculture and transport in this section will not be very helpful in promoting the increased production which is absolutely essential if this country is to get out of the slough of despond. Every branch of the economic life of the nation depends in a large measure on cheap transport. It is essential that goods should be brought as quickly and as cheaply as possible from the farm to the consumer and from the factory to the consumer. Anything that raises the cost of transport must inevitably have a detrimental effect on production generally.

It is admitted, and I think it will be admitted by all Senators, that there is an element of luxury in the consumption of petrol, a certain amount of travelling merely for pleasure, but the greater portion of the petrol used by the public generally is used as part of the economic life of the nation. It is used in the transport and distribution of goods and in the collection of agricultural produce from the farm. If this tax involves an increased cost, it will be inevitably passed on to the consumer in the case of industry or, in the case of a farmer, it may be passed back to him. Usually, the manufacturer is able so to arrange things that the burden of increased cost does not fall back on him, but is passed on to the consumer. The farmer does not always have the same control and may be called upon to bear part of this impost.

In addition there is a number of very deserving sections in the community who depend for their livelihood on their cars. The Minister has not so far indicated that any substantial concession or any concession of any kind will be afforded to these people. Hackney car owners in the country and taxi owners in the city are a section of the community who are hard hit. Apart from the increase in taxation they are up against very severe competition. They are up against the fact that the number of cars has increased so much that people are not to the same extent depending on the hackney or taxi driver. They are also up against a certain amount of what might be described as illegal competition.

In any case, their task is a difficult one and their living is a precarious one. I think the Minister will agree that they deserve special consideration. If some direct concessions cannot be made in regard to the price of petrol, I think a concession should be made in some other way, possibly by a readjustment of the road tax on their vehicles. Certainly, the full impact of this increase in duty should not be passed on to them.

The Minister should have considered this matter more carefully before he introduced this very drastic levy. I know and appreciate that it is an easy tax to collect and there is always a temptation in the Department of Finance to go for money that is easily got. There ought to be considerations of equity and justice in matters of this kind and there ought also to be consideration for the overall economic position of the country.

I accept that there would be some burden to some degree in the way that perhaps Senator Cogan suggested, but let us be clear about this. That could be discounted to a considerable extent by more rational schemes of distribution. Apart from that, we must accept that, in our present circumstances, there is a very great deal of non-essential motoring.

People who have cars naturally like to use them. That is natural and understandable but, in our present economic circumstances, we must turn for the provision of the revenue that is necessary to carry on the country to less essential types of expenditure. We must all agree, I think, that there is at present a very great deal of non-essential motoring. In so far as industry is concerned, it might be possible for them to avoid some of the impact by reorganising their methods of distribution. The House will note in particular that heavy diesel oil such as is used in the buses in Dublin was not included for that purpose in the additions.

I agree with the Minister that there is at the present time in this country a good deal of non-essential motoring. But I submit, at the same time, that that is no justification for the piling on of taxation on those who acquired their motor vehicles for the carrying on of their own avocations. If there is unnecessary consumption of petrol in this country for pleasure and for unnecessary things, then there is a case to be made for some differentiation between those who use their vehicles for pleasure and those who require their vehicles for business.

I am surprised then that the Minister would not consider that aspect of the matter. In emergency days, it was possible to differentiate between the people who required their motor-cars for their business and the people who did not require them for their business and surely the same thing could be done again.

Does the Senator advocate the same thing—rationing?

What I am advocating is that there should be some way of differentiating——

There is a way— rationing. Is it felt that that is a desirable method of dealing with the situation, physical control in that way, which is rationing, with its administrative complexities and costs, and with all the dislocation of business that was involved in rationing during the emergency? I agree it was necessary during the emergency but, quite frankly, I am surprised that the Senator should advocate that now.

I am afraid the Minister is putting words into my mouth which I did not use. I made no reference whatever to rationing.

Nor do I advocate it now.

The Senator advocated the same method as before, and that is rationing.

I did not advocate the same methods. I referred to the days of the emergency when it was possible to differentiate between those who used their motor vehicles for their business and those who used their motor-cars for pleasure. That is not synonymous with advocating rationing.

Let us be frank with ourselves. The number of cars in the country has increased enormously. In my own county there are upwards of 1,300 mechanically propelled vehicles in the past year and four months. Is it not sticking out a mile that that was the place to look for revenue? We have reached the stage in Ireland where, if one wants to travel a quarter of a mile of the road, one must use a motor-car. It is ridiculous for Senators to try to make political capital out of this matter. As I said, the number of cars has increased and every street in village and town is lined with them.

After all, we cannot deny that the two things upon which taxes were imposed were the two things that can bear them. They are luxuries if you wish. I will admit that petrol is necessary for a man doing business. I live 145 miles from Dublin and when I come to Dublin by car, it takes ten gallons to do the journey both ways. If we are so nationally minded, why does not every member of this House come by train, instead of using his car coming from his residence to Dublin?

What about the Minister for Finance?

Any member can very easily come from any city or town, almost, in Ireland by train to Dublin, for which he can get a voucher. You can get, let us say, from Cork to Dublin in three hours, and yet many of us come by car. Why? I think it is contemptible to be trying to make petty political capital out of the imposition of these taxes. After all, we had another long discussion earlier to-day on smoking——

An Leas-Chathaoirleach

Smoking has been disposed of.

I would suggest that we should be broadminded about this. All Ministers have to get money in various ways. It does not matter what side of the House they are on, taxes have to be imposed. Taxes have been imposed in the past on petrol and possibly the opposite side did not grumble about them. Our Minister finds it necessary to put on this tax, and I should have thought it would have been accepted as necessary.

First of all, I must say that I take very grave exception to the remarks of the last speaker when he spoke about scoring contemptible points over one another here. I do not know to whom he was referring——

Cork exaggeration !

I want to point out to the Senator that we on this side of the House have the right and the duty to condemn taxation everywhere we see it, if we think it is not justified, and let nobody come along here and tell me when we discuss these things on a common-sense basis that I am indulging in contemptible tactic of any kind. I think the Senator ought in decency to withdraw those remarks.

Senator O'Gorman has made a very strong attack, if I may use the word, on himself and his colleagues for the attitude which they took in regard to a lower rate of taxation on petrol and other similar commodities four years ago. At that time, there was not the mild constructive criticism we are indulging in here to-day, but rather a storm of protest organised amongst every section of the community in so far as it was possible for the members of the then Opposition to organise that protest. We are, on the other hand, simply pointing out that while the increased burden in 1952 constituted a heavier burden, the added 6d. on top of that now in the present depressed condition of the country is a very much greater burden relatively, and a much more serious thing from the point of view of the welfare of the community.

Neither Senator O'Gorman nor the Minister has made any attempt to meet the points that have been raised in regard to the deserving sections of the community who depend for their existence upon the use of their cars or vans. Those sections of the community can be quite easily identified and segregated, and something should be done for them, either by amendment of this section or by some other legislation. Perhaps the easiest way, and the method that would involve the least administrative difficulty, would be to withdraw this section altogether, and leave the rates of taxation at the level at which they were. There is no doubt whatever that the taxes on petrol were already bringing in an enormous amount of money into the Exchequer. I think it was running at the rate of over £7,000,000 a year. That is a fairly substantial contribution, but the Minister has gone further and is seeking to extract still more. While there may be some sections who can bear these charges there are others who cannot, and I think that on the whole the effect of the tax will be detrimental to industry and trade. One effect which I notice it has had already is that grass is beginning to grow around the petrol pumps containing the top grade petrol.

Grass is beginning to grow throughout the country, thanks to the rain we have had just recently. We are all very grateful for it.

I do not think the Minister can claim the credit for the rain.

Neither I nor the Senator.

If I wanted to be personal, I could claim some credit because I cut the best crop of hay and succeeded in bringing down the rain. How many people have changed over to the lower grade petrol, I do not know, nor do I know what effect that will have on the Exchequer, or whether it will have any effect, but I think the Minister should give serious consideration to the claims made on behalf of those who depend almost entirely for their livelihood on the use of their cars or vans.

I understood the Minister to be sympathetic to increased agricultural production, and I am sure that he realises that this is a considerable tax on agricultural production. If he lived in the country as I do, he would see that almost every farmer now has a car, and, with the car, a trailer to take his stock to the market and to do all his business. The business heretofore done by horse is now done by motor-car and trailer. This is a considerable tax on agriculture, and the Minister should reconsider it. He does not, I am sure, want to tax increased agricultural production, and he should give some consideration to ways and means of not taxing agriculture. Senator O'Gorman was a little bit heated a while ago and said things which I think we did not like on this side of the House, but I am sure he did not mean them. We will let it go at that.

Perhaps I should withdraw the word "contemptible" and substitute "pin-pricking".

Question put and agreed to.
Question proposed: "That Section 11 stand part of the Bill."

One of the effects of this section is, as I said on the Second Stage of the Bill, to impose for the first time a tax on fuel used by the railways on their own permanent way. This tax has been imposed on the diesel oil used on the diesel electrics and diesel rail cars which public transport has been encouraged by the State to acquire so as to re-equip itself and avoid using the more expensive coal. The purpose of this measure, or any section of the Finance Bill, is to collect revenue to meet necessary expenditure. I have a certain amount of doubt as to whether such a purpose will be achieved by this tax, because it will mean, and can only mean, that, while public transport will have to pay 1d. per gallon in future on diesel oil, the losses will be increased by that extra expenditure and those losses will eventually have to be met by the Minister or somebody after him. In that way, it seems to me that it is simply putting the money from one pocket to another and is not justifiable.

However, maybe the Minister thinks that the extra expenditure should be collected, or could be collected, by increased rates and fares on the railways, by charging the passengers who use the railways more or by charging the merchants and the live-stock traders more for using these services? I hardly think the Minister has that in mind, because I note that he again made the point that he is purposely excluding from any extra taxation under this Budget diesel fuel used by the buses. The effect of that exemption, it seems to me, is that the heavy diesel consuming road lorries will not have to meet any extra taxation and these are the very vehicles that are tearing up our roads and bringing the maintenance costs of the roads to their present high figure of £213 per mile per annum. That was the figure in 1954-55 and I am sure that it will be even higher for 1955-56.

As I remarked on the Second Reading, that expenditure of £213 has to be met to the extent of two-fifths by the ratepayers; in other words, the ratepayers have to pay about £90 a mile per annum for the upkeep of the roads in this part of the country. I made the point, when we were dealing with the special levy some months ago, that the Minister had excluded from the effects of that levy the lorries being imported, and here again we have special facilities, special recognition for them, while the fuel being used on the railways is, for the first time, being taxed by the Minister for Finance. I think we should always remember that the roads which these locomotives are using are maintained by the railways themselves, were built by them, and are not partly maintained by the ratepayers. The railways themselves have, as ratepayers, to meet to some extent the cost of the upkeep of the roads carrying the lorries which are at present practically driving them out of existence. I think it is fair to say that the Minister in framing his Budget had regard to the necessity for reducing unnecessary imports. He can hardly imagine that, by imposing this extra taxation, less diesel oil will be used on the railways, or that there is room for economy in the use of diesel oil on the railways.

I wonder does he think now that the programme of conversion from steam to diesel, advocated and backed by the Government by way of backing the loans of C.I.E., should be abandoned and whether C.I.E. should cancel as far as they can, the orders they have for the remaining diesel locos and diesel railcars? I wonder, on the other hand, does the Minister think that they should now go back to the outdated steam locomotive or whether that is now a Government policy. That of course is fantastic because the cost of coal imports would be far heavier and more damaging to the economy of the country.

I would make a very strong appeal to the Minister to look again at the effects of the extra tax on diesel oil and ask him, between this stage and the Report Stage, to consider whether it would not be in the best interests, not alone of public transport but of the whole economy of the country, not to impose this extra taxation. I have hinted to him that the natural reaction, if he can, by one fell swoop, get £26,000 from the pockets of C.I.E., of the employees of public transport will be to think: "Is it as easy as all this to extract this income? Are we not in as difficult a position as the Minister in trying to get the necessary income? If he can do this, why should we not abandon our thoughts of restraint? Why should we not try to recoup ourselves to some extent?"

I ask the Minister in all earnestness to look into the effects of this tax and see if, even at this stage, he can abandon it. It will not really cost him anything and the ultimate effect of it will be very bad indeed.

The effect of abandoning this proposal would undoubtedly cost the revenue a substantial sum. Let it be quite clear that the Acts which set up C.I.E. provide that it should so adjust fares that it would operate within its revenue, taken over a period of time. I do not think this is the time or the place to enter into a general discussion on transport policy. The Tánaiste indicated the other night in the Dáil that he was giving that matter his attention at present. It is, of course, primarily the responsibility of the Minister for Industry and Commerce to bring proposals in that regard to the Government. We must all appreciate that the facts of the situation are as he outlined them in the Dáil. Public taste is running in one way while the policy of Governments has been in another direction.

So far as this section is concerned, this is a tax merely of one penny a gallon—not a very serious sum per gallon, but in certain instances, where there is the very heavy user, the amount could, and does in certain cases, add up to a very considerable sum; but it is one of the things that is difficult to do administratively, to see where taxation can be placed in the most equitable manner, while at the same time doing the least damage to the community as a whole.

There are certain users of this oil who can meet the cost involved. If others find it difficult to meet it, then I have every sympathy with them. Of course, all legislation, and particularly taxation legislation, must be based on the assumption that the greatest good for the greatest number is what we are all endeavouring to achieve. I should be very wrong indeed if I held out to Senator Murphy any hope that I could reconsider this section in the light of what he suggested and I should also be very wrong if I allowed the suggestion to go without repudiation that the effect of this is in fact to add to the cost of borrowing. It is not. The public transport legislation in that respect and in the manner of meeting revenue and expenditure over a period is clearly laid down.

Question put and agreed to.
Question proposed: "That Section 12 stand part of the Bill."

This section imposes an increase in the price of the box of matches. While some people may describe my reference to that as a contemptible thing, nevertheless it is an increase of 33? per cent. on the box of matches.

In all previous Budgets and Finance Bills that were loudly condemned by the then Opposition, no attempt was made to increase the taxation on matches. The box of matches was left untouched during all those years. Now we have a Minister for Finance of a Coalition Government who is putting this additional taxation on the purchaser of matches. The Government must find themselves in very straightened financial circumstances indeed when they have to have recourse to this step.

That is what you would like.

I think this section places a duty on imported matches. Do we make all the matches we require, or nearly so, within the country and do the people making the matches here import some of the raw materials? I think it is correct to say that they import some of the raw materials. If the raw materials can be obtained in this country, I think they should be used in preference to importing them. Furthermore, I believe the attention of the people who make the matches should be drawn to the fact that if they can produce the raw material within the country they should do so rather than import it.

If the Senator will look at the Second Schedule, where the rates are fixed, he will see that there is a lower rate of excise duty than of customs duty, that is the rate of duty in respect of matches made in the country is lower than the rate in respect of imported matches. If he compares Part I and Part II of that Schedule, he will see that there is a lower rate for home-produced matches.

The point I was making was that the people who make matches in this country are importing the raw materials and that it might be no harm to prevent them from doing so. Why do they not use the raw materials that can be provided at home?

I will bring that matter to the notice of the Minister for Industry and Commerce. It is for his side.

Question put and agreed to.
Section 13 agreed to.
Question proposed: "That Section 14 stand part of the Bill."

This is a tax on table waters. Here, again, it is necessary to ask if it is really necessary in this State, where there is a very substantial organised movement to promote temperance, to seek by taxation to promote intemperance? Is it necessary to impose a levy on the member of the Pioneer Total Abstinence Association, who, spurning the allures of the public-house, contents himself with a modest drink of mineral water? Is the Minister justified in penalising the modest vice of that citizen? He is already being penalised inasmuch as, avoiding alcoholic excesses, he is, perhaps, able to take his family for a drive in the family car. He is taxed on his petrol. Again, avoiding the evils of excessive drinking, he may like to indulge in a cigarette. He is taxed in that respect. Now, again, if he feels thirsty—and even a total abstainer may occasionally feel thirsty —he finds that his type of drink is also taxed. In passing, I would say that I might welcome some form of taxation on mineral waters, if it were part of a campaign to encourage the drinking of milk. In this connection, I should like to ask the Minister if drinks concocted——

Concoctions are dreadful things.

A mixture of milk and light beer.

I have in mind milk blended with fruit juice, or with something else. If such a drink is sold, will it be liable to this tax? I am just trying to make the point that it would be very undesirable, if it were. Perhaps the Minister would tell us if that is so. We are faced with a surplus of milk. It might be desirable to promote a campaign to drink more milk by blending it with fruit juice or flavouring it in some way. If that were to be subject to tax, it would be undesirable, but if it were not, then I am quite happy.

I am afraid the Senator has thought up a form of beverage of which I have no experience. I have heard of minerals being advocated, not merely from the temperance point of view but for their own virtues. I have heard of milk being advocated as an excellent drink of itself, but I have always thought that when milk was diluted with minerals or with waters, it was a technique on which the law did not look with favour.

There is a point in the argument. I think there is a future for that type of drink here—milk or milk cocktails. We want to increase the consumption of milk and there are people who do not like to face milk in its pure condition.

You would not have bottled milk in that way.

No, but it is a drink that could be sold.

This section deals with bottled minerals.

Question put and agreed to.
Question proposed: "That Section 15 stand part of the Bill."

I mentioned on the Second Stage something which seemed to affect this section. I mentioned then that as the section is drawn it could not be interpreted by anybody except a legal expert. As I understand it, it seems to me that dances held outside a certain limit—three miles outside certain centres of population—are exempt from tax. The effect of that is that expensive dances which are usually held outside these centres of population, which are not held in towns but which attract a certain clientele and for which there is a charge of anything from one to two guineas, such as hunt balls, will be exempt from the tax. These dances are usually held in hotels in the country, or, as they are now more commonly called country clubs. I think it is wrong that these entertainments should be exempt from the taxes. It is wrong that the proprietors of these country clubs should be placed in a more advantageous position than the dance-hall proprietors in the towns or those within the three mile limit. It might be desirable or understandable if the dances were cheap dances, but it is neither desirable nor understandable when it comes to expensive dances. I submit that it is undesirable that these dances should be exempt from tax and I hope the Minister will deal with the matter.

I agree with what Senator Murphy has stated and what he has pointed out is to a large extent the reason why this dance tax was discontinued some years ago. It is right and proper, I think, that dances in rural areas should be exempt from taxation, but the question of defining a rural area is somewhat difficult. I think it has been defined in the Bill as being three miles from areas with certain populations. The exemption from taxation some years ago led to the establishment of large commercial dance-halls outside the three miles limit prescribed and that, in itself, was an evil. It was very undesirable that these dance-halls should have been able to compete unfairly with the halls in the towns.

As we all know, present-day transport even with the increase in petrol tax, makes three miles a very short distance. I think the whole effect of this tax is vexatious and Senator Murphy is right in stressing that point, but the Minister, I suppose, and the Government to a certain extent, are committed to the tax by reason of the song and dance they made about it when it was withdrawn some years ago. I do not think the tax will be any real benefit to the National Exchequer, or that it will be easily administered in a fair and equitable way.

I should like to support Senator Murphy's plea for a revision of this duty on dance-halls, or rather an extension of it. The recommendation which I had tabled and which was ruled out of order was intended to equalise the application of the entertainments duty in so far as it applies to dances. Senator Murphy has already stated that a large number of dances are held with high admission fees in areas where they would be exempt from the tax, areas which might be described as "free areas", to which the tax does not apply. I think it is only reasonable that the people who can attend these expensive functions should contribute to the revenue of the country. I would ask the Minister to keep the matter in mind and in future legislation to apply the higher rate of tax where the cost of admission, excluding duty, exceeds 5/-.

I must say that I am very much in sympathy with the point of view expressed by Senators Murphy and Miss Davidson, because I do realise that these expensive dances are held on a large scale outside the territorial limit and the people attending those dances are being put in a much more advantageous position than the poorer people living within the territorial limits described in the Bill. If there is to be any legislation in connection with this now or in the future, it should be applicable to all sections of the community in the same way.

I submit that if there is to be any exception or any discrimination, it should be in favour of those people who hold what they call ceilidhes because the people who organise these ceilidhes are promoting the cultural interests of the country. For that reason alone, they should be entitled to some concession in the matter of this entertainment duty. So many questions have been raised here and elsewhere in connection with this section which purports to reimpose the entertainments duty on dances that I think the Minister should reconsider it and see whether it is worth his while having the section there at all.

I should just like to enter a word of protest against the idea that there should be some class discrimination made outside the three-mile limit as between, say, those who attend balls, as they are called, that is, big dances, and what are called the ordinary people. That is a wrong way of looking at things here. If there are hunt balls, big balls, and big dances, outside the three-mile limit, the people who attend them pay their own tax in their own way. We have just been talking about the motor tax. Are not the people going in cars to these big dances paying motor tax? Is there not a certain amount of wines and spirits—in fact, quite a large amount —and minerals as well consumed at these dances, on which they pay a very fine tax?

There is too much talk about luxury in a broad way. A lot of things that are called luxuries are employment-giving things. If you take all the luxuries out of the life of this country, there will be far more people going to England. At these dances, expensive dresses are worn. Ladies' hair-styles have to be made up. At the so-called ordinary man's dance, they walk in as they are and pay whatever little tax they have to pay. Give credit where it is due. There should not be any discrimination between rich and poor, especially when the rich are paying in every form their share of taxation in this country.

I am very pleased at the courage of Senator McGuire who expressed what would be to-day a revolutionary line of thought, because he seems to think that it is wrong that there should be any differentiation between the rich and the poor in rural areas. That is what he said.

As regards dance tax.

With regard to dance tax—that is what he said—between the rich and the poor. So far as I know, what the section was meant to do was to acquire money for the country, in the first instance, by taxing the dance-halls and the dance-hall proprietors, but it was recognised that it was necessarily a little difficult to keep dance-halls going in rural areas where the population would be largely poorer and scarcer. For that reason, the Minister made an exception of rural dance-halls, which I think was quite justified.

I support Senator Murphy and Senator Miss Davidson in this point of view, that when the people from the towns have sufficient money to go out into the very pleasant surroundings of the big hotels and hold their hunt balls and dances, they are in a position to contribute more to the revenue of this country which needs it so badly.

Senator McGuire points out and with truth, that such dances do give employment in various ways. The people who manufacture the dresses do give employment and the people who go there with the very nice hair styles do give employment; but employmentgiving is no justification. The man who drives recklessly down O'Connell Street gives plenty of employment. The fact that a person gives employment does not justify the things he does.

Senator McGuire points out that people who go to dances drink wines and have a very high time. If I have not been understanding incorrectly the Taoiseach, the Tánaiste and the other leaders of the Government, what we need at the moment is a little less luxury spending and a little more spending on production.

I could not agree with Senator McGuire's point of view. I do agree with the other point of view. I think the Minister ought to make it a collectable tax by making these people who are well off and who live in the towns pay just the same tax as the people who are a little less rich and who pay the full dance tax at their local dance-halls. It is not a difference in taxation between rich and poor. No matter how rich or how poor the person may be who lives in the town, he will pay the full dance tax when he goes to the dance-hall and the man with a car and a lady friend with an expensive hair style, a man who can buy expensive wines at the dance, ought to pay the full dance tax.

The origin of the exemption for the rural areas in this dance tax is quite simple. First of all, it was because we all felt that it was desirable to do what we can to increase the amenities in rural Ireland so as to prevent the drift to the towns and cities. I think every Party on every side of the House is agreed that it is essential that we should do what we can to stop that drift and to reverse it, if humanly possible. We can only do something in that way by facilitating the amenities that there are in the rural areas. That was the first point.

The second point is that the administration of the dance tax, if we are to go out into the rural areas, becomes much more expensive than it is in the cities and in the towns. In the cities and towns, it is not an expensive tax to collect. The cost of administration is not out of the way in relation to the revenue it brings in, no matter what anybody may say to the contrary.

I do think, however, that I must say this—I should look with disfavour on any move to try to transfer entertainments from towns or cities just outside what Senator Kissane referred to as the territorial limit. I always had the intention, when I was introducing this section again, that I would allow the year to run, to see how it was working and, if there was any type of deliberate transfer such as has been indicated, arising in particular areas, then I would have to consider the exemption limit—not reconsider the imposition of the tax, because I think the tax is a good one and, when money has to be obtained, should be retained. I should then have to reconsider the exemption limit and, if that situation does arrive, that I have to reconsider it, I shall bear in mind what has been said by Senators on all sides of the House, without permitting myself to make any comment on the manner in which ladies might dress their hair.

Question put and agreed to.
Question proposed: "That Section 16 stand part of the Bill."

Alt 'seadh é seo go bhfuil suim mhór againn ann mar baineann sé le ceist na Gaeilge, agus, mar gheall air sin, tá beartuithe agamsa tagairt a dhéanamh dó.

This is a section which is, I take it, designed to encourage the use of the Irish language in films in this country. That, of course, is a very desirable step to take because a good many of us who are interested in the revival of the Irish language always held that, until such time as we would bring it before the people through the medium of the film and in other attractive ways, it would be difficult for the language movement to achieve the success that we would all like it to achieve.

I should like to ask the Minister, in connection with this section, whether it is necessary to have the sound track in connection with the film entirely in the Irish language or whether, say, in the case of a film where Irish is used in part of it and English in the other part, that would qualify for the concession being given. Will it be enough to prove that the Irish language was used.

Does it not use the phrase "continuous accompaniment"?

It must be altogether in Irish. This section is brought in specifically for an enterprising scheme that I hope will come to fruition for certain Irish films, and it is specifically to aid that worthy object that the section is introduced. I understand from those associated with that enterprise that they are satisfied the section will cover their intentions in that respect, but the film must be continuously in Irish. They feel that, if it was partly an Irish and partly an English film, it would not achieve the objects they have in mind.

Question put and agreed to.
Question proposed: "That Section 17 stand part of the Bill."

Some time ago, we passed a Gaming and Lotteries Act and this section of the Finance Bill now proposes to empower the Revenue Commissioners to issue licences. It is in that connection that I should like to have from the Minister some more definite information. In Section 15, upon which we have just had a discussion in relation to dance-halls, and the tax on dance-halls, there is a provision which, I think, should also be incorporated in this section. I am referring to the population provision.

The Minister suggests that the cost of the licence, if the period does not exceed three months, should be £10. The issue of that licence for a period of three months at £10 might be in respect of an area where the population is 20,000, whereas, in relation to another applicant, it could be applicable to a population of 500, 600 or something under 1,000. Some levelling up is necessary here. It should be related to density of population, as otherwise we would be treating some applicants unjustly, and the cost of the licence would be rather high.

What the Senator suggests is that we should have one licence fee for one centre of population and another for another centre. I think that would cause more heart burnings than benefits. So far as I can ascertain in relation to the Gaming Act and its operations, the person who is running the type of gaming visualised here in any area does not consider the charge excessive.

Question put and agreed to.
Sections 18 and 19, inclusive, agreed to.
Question proposed: "That Section 20 stand part of the Bill."

This section deals with the import levies. I think that the Minister should at this stage review the effects of those levies and see how far they are achieving the purpose he stated he had in mind when they were imposed. The Minister indicated, when imposing these levies, that the purpose was to restrict unnecessary imports. He must now be in a position to indicate whether that result has been achieved. Has there been any substantial reduction in imports, or has the adverse trade position improved as a result of those levies, or are they merely bringing in additional revenue to the Exchequer?

It would be highly undesirable that they should have only the effect of bringing in additional revenue. It would be more desirable to ensure that our external trade position was improved. The Minister should also be now in a position to state whether those taxes have resulted in unemployment in any sectors of our economic life and, if so, to what extent. This is his opportunity, now when they are being confirmed, to take the House into his confidence and tell us how they have operated so far.

I know the period has not been very long, but in matters of this kind action taken can have fairly substantial results, either beneficial or otherwise, and the Minister must have gathered a considerable amount of information from the trend of events. I know that some of the duties imposed have led to very strong protests. In particular, the duties on newsprint have very adversely affected some publications and have led to very strong protests. How far the effect generally has been detrimental to the printing and publishing business, I am not in a position to know, but I think it is true to say that some publications have suffered severely.

The Minister should tell the House how those measures are operating. There was general agreement that some action should be taken at the time it was taken; there was general agreement that something should be done to rectify the adverse trade balance which had assumed somewhat alarming proportions; but whether that should have been done by a levy on imports or by physical control in the nature of an embargo on certain commodities is a question which should be considered. The Minister ought now to be in a position to express some opinion as to how those duties have operated.

The special import duty, as Senators are aware, was imposed only on 13th March and, frankly, in the circumstances, having regard to the time-lag in the publication of detailed import and export figures, I am not in a position at the moment to state whether or not it is working out exactly as anticipated, whether it is sufficient, or whether, as I have already indicated, if it is not sufficient, I should have to consider further measures.

I want the House to understand that I keep the matter under constant review, but, as I say, there is a very big time-lag between the conclusion of the month's trading and the detailed figures being available, apart from the total figures. I can, however, say that, so far as the duty content is concerned, Senators will remember that I estimated that the special import levy would yield in a full year £3,000,000. In the first three months of the year, the yield was approximately £750,000, which is a rate of £3,000,000 per annum. But one could argue two ways in respect of that figure. One could very well argue that, during the first three months, you would expect to receive more than the appropriate rate, because of goods that were on flow, on order. Equally, you could argue that, in respect of the first three months, you could expect to receive less than the annual rate, because people were using up their stocks. Frankly, until I have got some further figures, which I hope to receive soon, I would not like to offer a final opinion as to whether it has worked exactly according to plan or not.

I want to say, as it has been mentioned, however, that I fully realise that it must cause some inconvenience. The fact is that it is not possible to cut back on imports and so redress the adverse balance of trade, without causing some inconvenience. Like other things we have been discussing to-day, it is a question of where the balance lies, and the Government is clear that the balance must be weighted in favour of taking appropriate steps to redress the adverse balance of trade.

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