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.