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Seanad Éireann debate -
Wednesday, 18 Jul 1962

Vol. 55 No. 9

Finance Bill, 1962 (Certified Money Bill) — Committee and Final Stages.

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

This section sets the income tax level at the same rate at which it was last year, there having been a reduction of 8d. in the £ in the previous year. It is a great pity that in a year in which an eighth round of wage increases was thrust upon the country, and when, in the judgment of the economists, the amount of added purchasing power created by the increase is not matched by an increase in productivity, the surplus was not taken up by an increase in the rate of income tax. There are many very worthwhile projects that would have benefited.

Subsection (3) says that the several statutory and other provisions are as they were in previous years, in a period in which we are in transition and preparing, we hope, to take our place in the European Economic Community. The time is overdue to have a look at those provisions which are being continued next year. For instance, I suggest to the Minister that under this subsection it is time the allowance for wives and families was considerably increased. It is time that part of the burden was shifted from married people who are working hard and endeavouring to raise families and educate them to some of the unmarried section of the community, who in many ways are spending far too much on luxuries and who could afford to carry more of the burden. That can be done by increasing the allowances.

Again, under this subhead, we have statutory allowances. We have the position where many people in this country are entitled to help from the State under a number of headings. For instance, under the Health Act, help is available to those whose income is below £800 per annum and to farmers with a valuation of not more than £50. That makes provision for free health treatment. Those in the income brackets above that, who are excluded from the free health services and who have, in large measure, to foot the taxation bill for those services, at the very minimum, should be entitled to an income tax deduction for the amount they spend on any medical costs during the year in question. That is the very minimum they can expect to get, unless it is paid three ways.

One other point, of which I am acutely conscious, is that within the past few weeks we brought in another Bill which was to provide another State aid, that is, free legal aid in various cases. The burden of that will have to be carried by those who do not qualify for legal aid. I feel that this legitimately is a charge that could very well be allowed at least free of income tax. I speak from knowledge on this subject. Without any reason given, a case of mine was transferred from the circuit court in Thurles right up to the Central Criminal Court and the costs——

The Senator may not discuss that matter.

I mentioned it as an added reason. I think legal expenses should qualify for relief of income tax. We are moving in the direction of more scholarships, the funds again being provided by the better-off sections in the community. Admittedly, there is a tendency to provide scholarships for those outside the limit. The Minister might give consideration to making some income tax adjustment for those who are footing the education bill, especially for their children.

I should like to make one remark on this section in connection with taxation. At present, the Government have a policy of subsidising new industries, with which we all agree. I should like to direct the Minister's mind, perhaps, in another direction, that is, to the greater encouragement of the building up of capital in existing industries by making tax concessions that would allow more capital to be ploughed back into industry and commercial operations in this country.

It is admitted by everybody that we have more capital here than we can find projects in which to invest — at least viable projects, projects that will be successful. We should look to the industries and commercial undertakings that are already viable. If money were allowed to be ploughed back into them, they would be able to expand. Why not work on the successful industries we already have and help them, as well as trying to find completely new operations and places in which to invest our money? I should like to direct the Minister's attention to that when next he comes to deal with taxation.

I feel that the Minister in this Budget should have adjusted the personal allowance in relation to income tax. By failing to do so, the Minister has, in effect, greatly increased the burden of direct taxation on wage and salary earners who pay income tax through P.A.Y.E. This Government have, I think, declared that it is their policy to ease the burden of direct taxation and, in effect, to get more of the necessary revenue by indirect taxation. That is a policy which sounds beautiful when expressed like that, but, when it comes to be applied to the poorer sections of the community and the wage and salary earners, it means, in effect, that their burden is increased. They are asked to pay more out of their resources in order to contribute to the running of the State and the redistribution of income.

I am talking in this context of that section of the wage and salary earners who pay direct taxation, the people who are on P.A.Y.E. It is true, as Senator Quinlan said, that to a large extent these people have benefited by the eighth round increase. By failing to adjust the personal allowances in line with the movement in salaries and wages, in effect the proportion of wages and salaries paid by these people through P.A.Y.E. has been greatly increased. If I may illustrate the point I am making: take the person who, prior to the eighth round, had a salary or wage of £1,000 per annum. If he was single, he was paying, according to my calculations, which may not be quite exact, £163 per annum through P.A.Y.E. If he got the eighth round, and an increase, say, of 15 per cent., he would now be paying £199 per annum. That is an increase in direct taxation, not of 15 per cent. but of 22 per cent. If instead of being single, he were married with no children, his P.A.Y.E. burden has been increased by 30 per cent. If he is married with one child, his P.A.Y.E. contribution has been increased by 47 per cent. If he is married with two children, then previously, according to my calculation, he paid no income tax but now he will have to pay £36. I do not know what percentage increase you would call that.

The point is that a wage or salary earner around that income limit has had his P.A.Y.E. burden greatly increased by the Minister's failure to adjust the personal allowances. Nobody can say that such a person has moved, by reason of the eighth-round increase, into a much higher income group, or that he is much better off this year than he was last year, but still the amount the State is collecting currently from him under P.A.Y.E. has been substantially increased. The Minister in his budget is unfair to that section of income tax payers who pay directly, and, if I may say so, through the nose, before they get their money at all. The personal allowance to those people should have been adjusted. I regret that the Minister has failed to do so. I do not know whether it would be in order to suggest that when he comes to look at the next Budget, he should have regard to that point. Justice should be done to the people under P.A.Y.E. whose burden of income tax has been greatly increased and their personal allowances should be properly adjusted.

We have had some interesting suggestions, some of which I would have sympathy with, if we were in a position to meet them. Senator Quinlan thought that on account of the amount of money being paid out, we could have afforded an increase in income tax. In answer to that, I announced in 1957, in the first Budget after I became Minister for Finance, that as far as possible we should take as little as possible from a person's earnings, and from his spendings rather than from his earnings. It is better to have indirect taxation rather than direct taxation. That of course may not meet with general agreement but on the whole it is a sound policy.

Then the Senator made a point, and Senator Murphy supports him, that we should give a better allowance for married people. I mentioned the previous day that I have a list of very desirable concessions that could be made in income tax and estate duty as soon as the money is there to meet them, and I should like to say that this question of better allowances for married people, to use a bit of economic jargon, holds a high priority. When we may be able to do it, I do not know. I do not agree with Senator Quinlan that we should try to compensate people in their income tax payments for what they have to pay on health charges, legal charges and even on education, although we do to some extent meet them on the educational side by giving children's allowances.

I have expressed the opinion before, if not in this House, then in the Dáil, that health difficulties should be met by means of a health scheme and as the House is aware, there is a Committee of the Dáil sitting on this matter at the moment. I hope they will be able to produce something worthwhile.

Senator McGuire spoke about allowing industry to build up its reserves by taking less income tax from them and in that way to provide more capital for themselves. That is one way of looking at the matter but in a country like this which is trying to build up its industries, we should really encourage them the other way. We are of course taking only 40 per cent. and the industry has 60 per cent. of its profits with which to do what it likes. With corporation profits tax and income tax, we take 40 per cent.

One of our difficulties is that we are not getting enough savings; we are not getting enough investment in industry and in public issues generally. The best way to encourage this is that shareholders in existing industries should get their full dividend and have the money available to put into other industries, or build up new industries, as well as supporting extra issues for any existing industries. The system of a different rate of tax on distributed and undistributed profits has been tried in other countries and generally it has not proved to be very successful. We have not tried it here and in the circumstances I do not think that we should try it at the moment.

Finally, with regard to Senator Murphy's point, it is true of course that if a worker, whether a wage or a salary earner, gets more money, he will pay more, in proportion, in income tax than he was paying before. The whole system is graded in that way. The person who gets a small salary pays a small percentage of income tax and the person who gets a large salary pays a higher percentage and it is quite right that it should be so.

I do not quite follow the Minister's point in regard to unearned or earned income. Savings only come out of earned money and sometimes a very big sacrifice has to be made to build up savings which, when invested, will bring in an income. Money earned in that way is just as much income as a weekly income. I can never see the differential. We all want to encourage savings and investment. It seems to me that people with unearned income of that kind should pay less than people who take their money every week and never put anything away. I do not see the force of the differential.

I may have been mistaken. I thought the Senator had in mind the differential between distributed and undistributed.

That was one point; the other was earned and unearned.

Two points were raised by the Minister in his reply. He seemed to misunderstand my purpose in speaking about compensating people through income tax for what they spent on medical or legal fees. If a person has to pay 200 guineas to a surgeon for an operation, he will, first of all, save to pay income tax on, say, a notional sum of 300 guineas. He will have to pay about 100 guineas in income tax and then pay the other 200 guineas to the surgeon who has to pay income tax on the 200 guineas. Perhaps he pays 70 guineas and he has 130 guineas left. The surgeon perhaps gets into legal difficulties and calls in legal aid. He pays that 130 guineas and the lawyer returns it and pays about 50 guineas income tax, so there are 80 guineas left. That is a case not of single or double taxation, but, in many cases, treble or quadruple taxation. Already this country is moving into line with other countries with double taxation agreements, so that when you earn an income in one country, you do not pay double taxation because you pay tax in the country in which you earn it and not in your home country. That was one point.

The other point is that the Minister says that increasing the personal allowance has a high priority and is something very desirable. I would suggest to the Minister that had he increased the standard rate of income tax from 6/4 to 6/6 or 6/7, with the extra 2d. or 3d., he could have given a very substantial boost to the personal allowance. That would have achieved a very desirable shift in real income from the single classes to the married and family classes. The figures which Senator Murphy gave were very compelling. They showed a failure to adjust his allowance into line with the recent income increase which actually gave much more of an increase to the single person than to the married people with families. I do not think that is right. It is something that should be corrected at the first possible opportunity.

Question put and agreed to.
Sections 2 to 4, inclusive, agreed to.
SECTION 5.
Question proposed: "That Section 5 stand part of the Bill."

In connection with the duty on tobacco, the Minister has created a precedent this year which I think is unparalleled. He is designating 1d. of the increase towards a specific purpose, that specific purpose being to provide for the levy that has been imposed on the dairy farmers for the marketing of their dairy produce. It does not require any knowledge of economics or finance to know that that levy was absolutely inevitable. Its inevitability was known well ahead of the Budget, and consequently I am at a loss to know why provision was not made for it in the Budget proper. Be that as it may, a headline has been set in that a precedent has been created for designating a certain increase for a specific purpose.

Perhaps some of us who pay high taxation would feel happier if we knew that some of the increase was specifically marked for some very laudable purpose. I think none of us would have objected to 2d. or 3d. on the standard rate of income tax this year, if it were designated as being for increasing the allowances of the old age pensioners or the other suffering sections of the community, or perhaps if it were used to make the payments to the old age pensioners go back to 1st November rather than 1st August next. However, I shall have an opportunity of raising that again at a later stage.

In regard to this section, I fail to see how it can be pointed out that the total taxation now on tobacco is in two parts. The Minister brought in what might be termed a supplementary Budget for the purpose of giving an increase of 1d. to the milk producers. Of course the milk producers do not get any increase in the price of milk. That needs to be corrected and the milk producers have corrected it. A penny was taken by the Government from the milk producers to finance Bord Bainne and there was a revolt against it, and rightly so. The Government put 1d. on tobacco and cigarettes and termed it an increase for the milk producers. Actually, what happened is that they got back 1d. and milk is still the same price to the producers. I would not like to use the word "juggling" but the method adopted and the colour given to it taste of it.

It can be contended that the milk producers got an increase of 1d. per gallon but actually they are getting the same price they got last year. Of course it could be explained that they are asked to pay 1d. levy to finance Bord Bainne. Other bodies have been set up by the Government and financed out of general taxation. It can be contended that various bodies were set up from time to time to deal with special problems. This body was set up to deal with the special problems of the dairying industry and it may be asked who other should pay for it than the section of the community who were benefiting by the setting up of the Board.

That could be contended but that is not generally done. In general, Government policy is that various sections of the community benefit from time to time through some particular organisation which is set up for them but they are not specially levied. In this case, those who enjoy the pleasure of taking a smoke were levied again to give back the penny. It was called an increase but I think that was a wrong interpretation. It cannot be disputed that they are still in receipt of the same income for their milk as they had previously. It might be said we are putting a special levy on tobacco and cigarettes in general so as to finance the new board. That could be contended. It would be a fair way of describing it and it would be easier to understand it as against the method adopted by the Minister — and of course, it has imposed definite hardship.

The poor man is entitled to smoke if he likes. To smoke is part of what he desires. Whilst tobacco and cigarettes in general may be taken as a luxury — some people say it is a type of practice that should be curtailed from a medical point of view, and so on — it could equally be contended that it is part of the poor man's way of living. It is a form of entertainment. He enjoys his smoke and he should have it. He is certainly taxed very heavily already, and was previous to the Supplementary Budget which the Minister brought in. His income did not change.

The unemployed man is in receipt of the same social welfare benefits which means that his standard has reduced as a result of the increase in the price of cigarettes. Reading the Government's version of it, some people may think that the milk producer did receive an increase in the price. Some people seem to think that. Actually, the price has remained the same because he is paying one penny towards an organisation, which he did not have to pay before. The result is that his total income, after paying the penny still remains the same for the milk. If it were dealt with by way of general taxation and dealt with in the first Budget, then none of this confusion would have arisen.

I agree that this section, as amended since the Bill was first introduced, discloses a rather undesirable trend in Government policy or in lack of Government policy. As I understand it, the Budget, implemented by the Finance Act, makes provision for general Government spending and policy during the following 12 months. Now, when the Budget was introduced, it must have been apparent to the Minister and his advisers that the Government-sponsored board, An Bord Bainne, proposed to levy 1d. per gallon on milk supplied to the creameries. Yet, apparently, the Minister made no provision for that levy in his Budget. He did increase the tax on tobacco and cigarettes, for general Government expenditure. A very short time after the introduction of the Budget, An Bord Bainne came along with this levy of 1d. per gallon on milk. There were protests all over the country but the Government stood firm for a few days at any rate. They said they did not propose to compensate the farmer for that levy by An Bord Bainne.

They did not do it. The Minister for Agriculture, I understand, took the firm stand that the levy would remain; that it was not any Government business, and that they did not propose to do anything about it.

That is right.

Yet the pressure apparently from the farming community became so strong that the Government had to yield. Then the most extraordinary thing happened. The Government decided to restore — not increase the price of milk, for that did not happen — the 1d. levy. In order to do that, they increased the price of 20 cigarettes by a further 1d. But they did it in an extraordinary way; they did it by a Government Order. They introduced a Supplementary Budget a very short time after the annual Budget, through the instrumentality of a Government Order, which, indeed, was never intended for that sort of thing.

That Government Order, as I understand it, was provided so that the Government and the Minister could impose a tax or a customs duty at very short notice and thus prevent the dumping of goods here, or that sort of thing. It certainly was never intended as machinery to be used to provide finance for the Government or to raise taxation. I say that that was very undesirable. It sets a bad precedent. It shows that the Government and the Minister, really, do not know their own minds on taxation from one week to another. It is undesirable in another respect. It designates the purpose for which this 1d. on 20 cigarettes is to be used. It is calculated to make one section of the community resentful of a benefit given to another section.

Within days of the price of cigarettes being raised by 1d. for 20, I heard — and I believe it — of a man who went into a shop, asked for 20 cigarettes and gave 3/6d. and 1d. and said: "That is for the cigarettes and here is a penny for the milk." I say that that is bad. It is calculated to create resentment in the minds of the town dwellers and the masses of the people on a weekly income against the farmers who are the real producers of wealth in this country. I certainly think that is an undesirable precedent which should not be followed by this or any Government in the future.

It is very difficult to follow the line of reasoning of some of the speakers on the opposite side of the House. They talk about the restoration of the 1d. per gallon on the price of milk. At the same time, we have not heard from them whether they are in favour of that or not. If they are not, then where would the money be got?

According to the last speaker, this restoration of 1d. in the price of the gallon of milk delivered at the creameries has been done by Government decree. That is not the case. It is enshrined in the Second Schedule to the Bill and this attempt to try to persuade the people that the Government are doing something behind their backs is deplorable.

Reference was made to pressure having been brought to bear on the Government to restore the penny on the price of the gallon of milk. Is there anything wrong with the Government always being ready to listen to representations from various sections of the people, whether the farming class or other classes of the community? Instead of the Government being condemned, as some of the people try to condemn them for this action, they should be applauded. As regards the penny on the gallon of milk, everybody knows it was envisaged in legislation which we had before us some time ago. It was pointed out that the expenses of An Bord Bainne would have to be borne by the industry itself. There is nothing wrong with that. From my knowledge of the country and the operations of the agricultural community, any reasonable member of that section will admit that this Government have not done badly with the farming community, especially the dairying section of the farming community. Senator Quinlan pointed out that this earmarking of a certain amount of money for a certain purpose was unprecedented. It certainly is not. In other budgets Ministers for Finance have told the people what certain moneys were being devoted to. Even the Book of Estimates, which is published long before the Financial Statement is made, sets out various heads of expenditure. Therefore, I can see nothing wrong with that.

One Senator said he did not want to use the word "juggling." I should like to deal with the juggling that is going on here on this issue. Two years ago there was a very general desire amongst all Parties to set up marketing boards, and in the case of milk a Committee was set up representative principally of milk producers and a few others. They put up heads of a Bill to bring this Milk Marketing Board into operation. The Minister brought that Bill before the Dáil and the Seanad and every Party approved of it. There was not one single vote against it at any Stage in either House. In that Bill it was laid down that the Milk Marketing Board would have to provide one-third of the cost of export subsidy by way of levy. There is no doubt about that. That was done by every Party and there was no dissentient. When it came to the point where the Milk Marketing Board imposed a levy of one penny, then at that stage certain parties just "ratted" and began finding fault. The Minister for Agriculture, as a decent, honest man, stood by the Board.

For a few days.

He stood by them all the time on the levy and he never departed from that. Now he is being attacked by certain people for standing by the Board in doing what was their duty and what they had to do according to law. The parties who ratted on that have not got very much to be proud of and they can juggle with words as much as they like. I did not know that would be done in that way or for that amount. I may have had my opinion that this Board would have to impose a levy but if I had come before the Dáil and Seanad before they had made a decision and said "I am providing £1,000,000 to put 1d. levy on the milk," I know what I would have been told. I would have been told that they were merely a rubber stamp and that they had come along after I had taken a decision. I could not say beforehand what they would do when the Budget was brought in. Then, when they did take that decision, the argument at that time in the Dáil and Seanad was that the Board should not have done that but the Minister for Agriculture said they were in the right in doing it. As a matter of fact, they could do nothing else under the law.

Then, of course, the matter arose that the Government had to consider whether it was fair to ask the dairy farmers to suffer a loss of 1d. per gallon or not. I should like to say this: I do not know if any member of the Government ever said that the milk producer was getting 1d. more as a result of what we were doing. I made it plain that I wanted to bring them back to where they were before the reduction was made. I never claimed they were getting 1d. more and I do not know that anybody on my side claimed that either. The Government thought it unfair, when most classes in the community were getting more by way of remuneration or whatever it may be, to ask the farmers to suffer a loss compared with last year and we decided to give them a subsidy of 1d. per gallon.

Having decided that, I said to the Government that the Budget was tightly drawn in my opinion and that we had not provided for anything like this and that I thought that this was going to unbalance our Budget — I was not objecting to it being done — and that we would have to increase taxation to meet it. They agreed to that. How could I come before the Dáil with extra taxation without being accused of designating certain tax for the increase in the price of milk? I do not see how I could avoid it. I did not say it was going to be designated. I said the Budget would be unbalanced and that I would like more taxation to balance it again.

As every Senator knows, if I buy a packet of cigarettes, as I did to-day, and pay an extra penny for them, that penny is not traced the whole way back to the farmer. It goes into the Exchequer and the farmer gets the penny from the Exchequer. There was no designation except in so far as this propaganda refers to designation. The next point is that I was told by some Senators, as I was told in the Dáil, that it was done in an irregular fashion. Well, you could argue that. That is of no consequence whatever. It is a very small point. It was done on a certain day and two days afterwards, it came to the Dáil for discussion. It was done because, as I explained in the Dáil, it was very convenient. Maybe that is not a sufficient defence for what we did, but I cannot see that it is a very important matter in what way the 1d. was put on, when it was brought before the Dáil within two days for discussion, was discussed both on Second Stage and Committee Stage, and has now come for discussion here.

The Minister has stated that not a single vote was cast against Bord Bainne in this House and that, therefore, anyone who says anything now is in the wrong. That is not a fact. There was a general vote, a unanimous vote both in this House and the other, approving the principle of a dairy marketing board, but when it came down to details, we voted very strongly on amendments, pressed them through the Division Lobby and were beaten. One of the amendments I personally proposed was for the removal of a fixed limit on the amount the board could raise by levy.

Secondly, we challenged very strongly the composition of Bord Bainne. We named many persons who should have been ex officio members, including members of the co-operative movement. We were again beaten. I do not think the Minister is quite right in chiding us if we dare to voice our opinion on this. We have not much to be proud of. In fact, when the record of the Committee Stage of the debate on Bord Bainne is gone back on in four or five years' time, I think it will be found to be a case of seeing that the minority were right, as they very often are.

We should all be imbued with a deep sense of social justice in this country and elsewhere. Social justice surely calls for giving some of the benefits of the eighth round of wage increases to the most underpaid and hardest working section of our community, the agricultural community.

The Minister failed to face up to his responsibilities in the Budget when he left the price of milk static and as it was before the eighth round of wage increases. I do not know whether I am exceptional, but if I had £8 a week and got £9 a week, I would expect that I would have to pay some of the increase to every one I have to pay. I would not expect my dairy produce to come in at the same price as it did before. If the Minister had made the proper adjustment in the price of milk and milk products, there would not be any necessity whatsoever to have to deal with them at this stage.

I know the Minister has no control over the Irish Press but he may have seen the heading across the front page which said: “Highest Milk Price Ever.” Perhaps when they come to deal with increases under another Bill the heading will be: “Highest Pay Ever for Judges.”

I cannot follow part of the Minister's reply to the points raised. Apparently he resents the points which have been made. He said that certain people in the Dáil ratted on the decision to stand over Bord Bainne. Certain people in the Dáil protested and protested loudly against the decision to reduce the price of milk supplied to the creameries by the farmers by 1d. per gallon. Call it what you like, that is what happened. Apparently the Minister thinks that was wrong and that they should not have protested. He calls it by the objectionable name of "ratting."

If the Opposition ratted on Bord Bainne, the Government Party in the Dáil ratted on the same decision within a matter of weeks because they accepted the arguments and the protests in the Dáil and restored the 1d. a gallon. I do not know about juggling with figures, but certainly it is juggling with words if the Minister tries to draw a distinction between the protests made by the Opposition in the Dáil when the price of milk was reduced by 1d. a gallon and the acceptance of that argument by the Government a very short time later.

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

This section removes completely the entertainments duty on cinemas and dance halls. To my mind, this is by far the worst provision in the Finance Bill. It is generally admitted that, by and large, the young people today have far more spending money than ever before. We see dance halls all over the country from Ballyshannon to Cork with cars parked for 100 yards on both sides, employing bands which are generally assessed by the number of miles they had to come to the dance hall. A band may be playing in Mitchelstown one night, in Dublin another night, in Ballyshannon another night, and in Skibbereen another night. They are continually on the go.

When we see such a situation, surely we must recognise that far too much money is being spent by the teenage and unmarried groups on entertainment. It is unbelievable that the Government would at this juncture remove the tax on the dance halls. I should have thought that they could have trebled it without doing an injustice to anyone. If the proceeds were given as an extra 2/6 to the old age pensioners or some of our other deserving classes, it would have been very much a step in the right direction. The Government have gone in the opposite direction to the British Government who in their last Budget got an increase in taxation solely by taxing those sources. I may say that the younger section of the community never had so much money and the young married classes never had it so tough.

Consequently, I think this section is in every way a very bad section. Admittedly, there may have been some case for the cinemas, due to the advent of television, which we were assured would not cost anything, but here we are paying the first instalment by a remission of the tax on cinemas. In any case, that should have been dealt with separately. I wish to be recorded as dissenting very strongly from this section.

I should like to correct a few of the points made by the Senator. The British removed the entertainment tax on cinemas a couple of years ago and we are removing it from October next. A number of cinemas have already closed. I received deputations not only from the people concerned but from their trade unions who told me a very pitiful story of the number of people who were losing their employment with the cinemas. It was a dwindling tax and it will be very difficult for the cinemas to survive. I think we should not have to take the blame if they have to close and, as I say, some of them have closed already. I decided that I should ask the Government to agree to take this tax off which they did.

So far as I know, the British never had a dancehall tax. They certainly have not got one now. We forfeited £40,000 by the remission of the dancehall tax. I know that Senators and Deputies are making the argument that we could have given another 2/6 to the old age pensioners. If we got £1,000,000 from the dancehall tax, I would agree and I would not have taken it off. With £40,000, we could only have given a couple of pence to the old age pensioners. It would take £1,000,000 to give them 2/6 and £40,000 would not go very far. It would not pay. It would be the only entertainment tax levied now, if we took off the cinema tax. It certainly would not pay to keep the organisation run by the Revenue Commissioners for this purpose of entertainment tax to look after dances alone. There will be a fairly substantial saving in tax. I always thought it a very demoralising tax for officials. They come to a dance. They often feel they are not told the truth about the numbers there. They count the people. I need not tell you that they are offered entertainment. To give them their due, they resist it. But it is a very demoralising thing. I always think it a very demoralising tax that is not worth collecting. That is the point.

Could the Minister not have raised the same amount by a tax on soft drinks?

Such a grumpy old fellow.

Question put and agreed to.
Sections 7 and 8 agreed to.
SECTION 9.
Question proposed: "That Section 9 stand part of the Bill."

I want to say a few words in a general way on this section. The provision to reduce the tax on tractors from £8 to £2 10s. is a move in the right direction and is welcomed by all concerned. However, the regulations restricting the use of these tractors by farmers should be looked into. I am not in a position to discuss it in detail here and my remarks will be only general.

If the regulations are strictly enforced, as they stand at the moment, there are very many things which an ordinary individual would regard as agriculture for which the farmer cannot use his tractor. For example, I do not think he can cut down a tree on his farm, cut it into logs and bring those logs into town and sell them on a £2 10s. licence. I say, subject to correction, that, if he does that, he will be guilty of an offence and leave himself open to a prosecution and a licence tax at the rate of £31 10s. These regulations should be looked into with a view to relaxing them and bringing them into line with the requirements of a farmer so that he will now be enabled to use his tractor for the purpose for which he previously used his horse and cart.

I agree with Senator Fitzpatrick. As well as that, some of these restrictions are quite ridiculous. Senator Fitzpatrick mentioned logs. As I see it, the farmer can cut down a tree and take it to the sawmill to be cut into boards but he cannot bring home the boards. Subsection (3) of Section 9 reads:

The appropriate repayments shall be made having regard to the foregoing provisions of this section and repayment shall be made in accordance with such directions as shall be made by the Minister for Local Government.

Will the Minister say when these repayments are likely to be made or what form they will take? The majority of farmers using an £8 tax tractor have paid their tax since January last. They will now expect a repayment before the end of this year.

Let me deal with the last point first. No repayment, of course, could be made until the Bill is passed but then the repayment will be made on making application to the licensing authority, the county council concerned, which will be authorised to make the repayment. There will not be any difficulty about that.

The case raised by Senator Fitzpatrick is rather a borderline one, but I am inclined to agree with him that it would not be allowed. If the person concerned felled the tree, cut it into logs and brought the logs into town to sell them there, I think that would be outside the Bill. On the other hand, to bring back the boards from a sawmill for his own use would be all right but if they were for sale it would be a different matter. The Minister for Local Government has more to do with this. I do not know much about the details or what is behind them. I shall certainly mention this to him. He has excluded fuel from what can be done: I do not know why. Perhaps there is some idea there that the tractor might be used more by a man in business than in farming, if fuel haulage were allowed. I do not know, but that might be the idea. I shall mention that point to him.

Quite a lot of things are allowed. As a matter of fact, it was brought in that a farmer could bring in milk for his neighbour to the creamery, even if paid. Also, he could bring cattle to the market—within certain limits— even if paid. Of course, he can do everything for his own farm. I am told that our conditions are more liberal than those in Northern Ireland and in Britain. There is no reason why they should not be more liberal still, so I shall bring the point to the Minister's attention.

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

Does this section cover the imposition of duties on tobacco—really, excise duties?

Yes, omnibus and tobacco.

Do the State bodies contribute much in the form of revenue to the Exchequer as compared, for instance, with people like the whiskey distillers and other private enterprise people such as the tobacco people, and so on? It is an interesting point. Very often it is said that private enterprise is not making its contribution to the State and that the State bodies are really carrying the burden. It seems to me that very often these private enterprises, Guinness, and so on, are overlooked in that context.

We would have to make a distinction between revenue itself and protective duties. Revenue duties are in a special class, like intoxicating liquor, tobacco, petrol and so on. The duties there are much heavier than if put on for protective purposes. When you come to the protective duties, where you might make a better comparison between private enterprise and the State bodies, I am afraid I could not answer the Senator's question straight off except to say that, generally speaking, the State companies are not making very big profits.

And, therefore, private enterprise is making a big contribution.

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

Section 11 increases the allowance from one-fifth to two-fifths for capital expenditure incurred in an effort to prepare for the Common Market conditions and for the investment that would be required in that. As the Minister is thinking along those lines, and quite rightly so, perhaps I might suggest to him that there are other types of capital expenditure required, that is, expenditure by individuals in equipping themselves to play a better part in the future. I have in mind, specifically, many cases of young men who have borrowed very substantial sums for the purpose of having themselves trained in the university or elsewhere, and then paying the capital and the interest back over a number of years after qualifying. Would it be possible to exempt such payments in any way for income tax purposes and give some inducement to such people who are so willing and anxious to provide for themselves?

That of course is a very big question. I had that experience myself, of borrowing money to see me through and then paying it back. It would be a very big question to tackle and administratively, it would be nearly impossible to do it, I am sure. Certainly I never even considered it. As far as I can see, it is a new idea.

Question put and agreed to.
Sections 12 and 13 agreed to.
SECTION 14.
Question proposed: "That Section 14 stand part of the Bill."

I do not like this idea of charging interest on unpaid income tax because the only people who can be caught are the employers. You could say the employer had to deduct it from his employees but it does not work out that way in all cases. It often works out differently where a firm is not doing well. The firm might be finding it hard to pay its way and to pay its employees and they might overlook stopping income tax, or collecting it after three months to send it away. Greater concessions should be given where tax is due.

Before the introduction of P.A.Y.E., the Government could wait for millions of pounds in the year and yet not charge any interest on what was due. As a matter of fact, all a person had to do, if he owed tax, was to take the boat to England and leave his tax bill behind him. He could come back after a few years and perhaps not be caught at all. An employer cannot do that and I would ask the Minister not to press for interest on tax, especially where a person would have a sufficient reason for delay in payment.

There is one part of this section which, it seems to me, could lead to a certain amount of hardship. There are a number of people living on fixed interest from investments, some of their investments being in British securities. Such people would find in most cases, unless their investments are in British Government stock, British tax deducted from their income at source. The practice always had been that in those cases they pay their tax in this country when they have got back the British tax. They return the British tax on the K.1. form. It could be that in such cases widows living on fixed incomes, children living on trust funds, and people of that kind, would for a year be unable to claim the British tax from British investments and be liable for Irish tax. If Irish tax were charged on the amount outstanding, it would lead to a certain hardship, particularly where there is a small income for comparatively poor people. I should like to ask the Minister to give some undertaking to the House that in cases of that kind the interest will not in practice be charged by the Revenue Commissioners.

As far as Senator McAuliffe's point is concerned, I just want to explain that employees are now covered by P.A.Y.E. and they give us no trouble in regard to arrears. The arrears are deducted from the wage or salary and returned by the employer by the middle of the following month. The employer is subject, if he does not return it, but I do not think any employer can complain about that because the money is in his hands and he has only to write a cheque. This would only apply to Schedule D payers, those who are working for themselves, who are not employed by another person or who are receiving an income from some other source. They, of course, could delay in paying up and it is very unfair to Schedule E payers because not only are they paying promptly but in advance from 1st of January to the end of December. It is unfair, then, that other people should be allowed to delay.

In any case, the commission is not very severe. There is no interest charged until it is three months overdue. Also, no interest is charged so long as there are appeals or anything of that nature pending. It is only when the matter is settled, when the Revenue Commissioners have made the final assessment and say that a particular amount is due, then three months from that date, and from 1st of January, if there is no argument about it, it is payable. If they do not pay, six per cent. is charged on the amount outstanding.

With regard to Senator Ross's point, I do not think there is any great hardship there because if a certain amount of tax has been deducted from income received from British investments, if the person concerned gives verified particulars to the Revenue Commissioners they will allow that as a credit in his payment of income tax here, even though he has not got it and it takes some little time to come. He does not suffer in that regard.

That is absolutely correct now — that if a person such as Senator Ross mentioned has filled up the K.1 form, then once that goes to the inspector and he knows that there is a claim against the British, this section will not arise; that is to say, he cannot be mulcted in Irish tax before he gets the British refund? That is Senator Ross's point, is it not?

As I say, if the Revenue Commissioners were satisfied, as they would be in the Senator's case, that a refund would be coming from the British, and provided the person makes it payable to the Revenue Commissioners, then he will get credit.

He cannot make an application for a British refund without the knowledge of the Revenue Commissioners because he must fill in the form——

——which they O.K., that the tax will be paid to them, before he gets the refund. The case by Senator Ross would not then arise——

I would not think so.

——until the payment had been made or claimed.

Do I understand the position to be that if someone who is reclaiming British tax on the K.1. form certifies that the payment is to be made to the Revenue Commissioners here, no question of interest will arise in regard to that income?

No, because they will accept them as payments.

As this is the section which deals with interest on unpaid income tax and surtax, perhaps I might suggest to the Minister that he would at some stage consider giving a commission to the people who collect the taxes. I am one of those people, and I think we should be given some commission under the Finance Bill to allow for the cost of collection, the extra staff employed and so on, to carry out this operation.

P.A.Y.E.?

No. The collectors are business people and employers and, if they do not pay, there is extra interest. I am suggesting—and I think it was suggested by the chamber of commerce—that some commission should be allowed to people who have to go to the trouble of collecting money for the Revenue. I am not saying this in fun. It is a sensible suggestion.

When we were setting up the P.A.Y.E. system, I learned a bit about the British system and I learned that the employers in Britain refused to accept any commission for collecting.

I do not think we would.

I thought it might be invidious to offer it to the employers here.

We would not suffer any pain.

Question put and agreed to.
Sections 15 to 22, inclusive, agreed to.
SECTION 23.
Question proposed: "That Section 23 stand part of the Bill."

This section repeals the duty on certain estates over five acres bought by non-citizens. This raises the question of the considerable amount of uneasiness felt throughout the country at the amount of land being bought by non-nationals. The figures given in Dáil Éireann by the Minister for Lands in reply to Deputy Lynch of Waterford are really frightening. The statistics show that, during the nine-month period from August 1st, 1961, until May 9th, 1962, a total of 48 transactions took place involving 3,800 acres on which stamp duty of 25 per cent. was paid. A further 43 transactions involving 531 acres were exempt from the 25 per cent. stamp duty, and a further 12 were also exempt. There were other transactions involving 1,100 acres. In all about 5,500 acres, of which the Minister is aware, were brought in that period.

We all know of the many subterfuges, such as non-existent companies, etc., which are employed to transfer land to foreign ownership and to evade taxation under this section. A figure of 5,500 acres in nine months represents 7,500 acres per annum. What does that mean? It means 200 fewer congests settled. That is one way of looking at it. Another way of looking at it is from the point of view of how much land comes on the market each year. The best estimate we can make is, I think, somewhere around 50,000 acres to 75,000 acres. At present between 10 per cent. and 15 per cent. is bought by non-nationals. That is clearly a danger signal to us especially as such purchases are gaining momentum.

I have been very distressed by the complacency with which the leader writers in some of our national newspapers accept the fact that, when the Common Market prevails, anyone can buy anything he wishes here. Those of us who raise a query, or who try to caution against that, are held out as being so stupid that we cannot read the provisions of the Treaty of Rome. Our European colleagues, whom we hope to join, are not stupid either; it looks now as if there are sound provisions coming in which will require that, before any non-national can buy land in any region, he will have to have worked in that region for at least two years. I hope that provision comes. It will alleviate and allay some of the anxiety some of us feel.

I ask the Minister to regard this matter seriously and to take steps to ensure that the subterfuges in relation to transfers are tracked down and prevented from operating.

We must realise that 25 per cent. on the cost of Irish land at present is a mere bagatelle when compared with the price prevailing in Europe. Land there is at least double the price it is here and a 25 per cent. duty here means very little. I appeal to the Minister to consider seriously either a complete embargo, such as prevails in Denmark and other places, or the raising of this figure to a level which will bring the price of land here, that is, the price of land plus tax, to a level which will make it comparable with the price prevailing in Europe. Otherwise we shall not have any protection.

I am afraid the Senator misunderstands this section. It is related really to the local taxation account and not to the buying of land by foreigners. However, that does not matter. I am not finding fault with the Senator for raising the issue because it has given many of us food for thought. This whole question of buying land is an extremely difficult one with which to deal. We were working under the impression for the past few years that if we entered the Common Market there would be no restrictions at all. If, however, the Senator is right in what he says it will be easier to deal with the matter.

I do not want to minimise the importance of this issue at all and I should like to say that, under the Act passed last year, wherever an application is made for mitigation of the duty and the amount of land involved is over five acres, the application is sent to the Land Commission for recommendation, and it then comes to me. I do not know if I have seen a fair sample because I see only the ones where the application for mitigation applies. If it does not apply, I have no record. But in the cases where mitigation applied, for the most part the land was not what one one would call good agricultural land. It was more suitable for forestry, shooting rights and that type of thing. I think a good part of the acreage could be classed as that type of land. As I say, I do not want to minimise the problem. There is a problem and we must at least keep an eye on the situation until we see what we can do about it.

I am glad to have the Minister's assurance confirming the fact that there will not be absolute free sale of land within the Common Market and that the two years' residence requirement, or some other requirement, will prevail. The Minister suggested that the cases which came before him were only cases of snipe land or bad land. Quite obviously, this would be one of the main grounds on which the Minister would be approached for a mitigation of the tax. I should like if the Minister could comment on the adequacy of the 25 per cent. tax as a deterrent in those cases which have not come before him.

I have known of some cases where the sale was off when the mitigation was not granted.

Question put and agreed to.
Sections 24 and 25 agreed to.
First, Second and Third Schedules and Title agreed to.
Bill reported without recommendation.
Agreed to take remaining Stages today.
Bill received for final consideration and ordered to be returned to the Dáil.
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