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Seanad Éireann debate -
Thursday, 18 Jul 1963

Vol. 56 No. 17

Waterford Harbour Commissioners (Acquisition of Property) Bill, 1963. - Finance Bill, 1963 (Certified Money Bill) —Second Stage.

Question proposed: "That the Bill be now read a Second Time."

The basic purpose of the Finance Bill is to provide revenue to meet the year's expenditure and, for that reason, the Bill is mainly concerned with giving legislative effect to the Budget proposals and Financial Resolutions. As usual, however, it also deals with some miscellaneous matters relating to finance.

Five major items account for the unusual length of the Bill this year. These are the turnover tax, the implementation of the principle "one taxpayer, one charge", the revision of the basis for the tax exemption in favour of co-operative societies, the taxation of rents and the new penalties provisions. Except for the turnover tax, all these matters arise out of recommendations made by the Commission on Income Taxation. In fact, nearly all the sections in Part I of the Bill and the whole of Parts VII, VIII and IX relate to such recommendations. The Commission's other recommendations which were accepted by the Government in the Second White Paper on Direct Taxation will be dealt with as opportunity offers.

When introducing the Bill in Dáil Éireann, I thought it desirable to deal at length with the proposals in regard to the turnover tax and corporation profits tax. They had already been explained in the Financial Statement and in the memorandum circulated with the text of the Bill. A special booklet on the turnover tax was published for public information. There has also been a prolonged debate in the Dáil on these two proposals. Perhaps it is preferable in the circumstances, that instead of taking up the time of the Seanad by traversing the same ground yet again, I should summarise the changes made by the Dáil.

The turnover tax proposals have been amended in the following noteworthy respects.

Retail traders whose monthly turnover from the sale of goods would not exceed £500 were not accountable for tax under the Bill as introduced, unless they opted to be accountable. This limit has been raised from £500 to £750 with the result that up to 30,000 traders may, if they wish, obtain their stock-in-trade at tax-paid prices and save themselves the trouble of recovering and accounting for the tax. The option limit for traders who obtain their stock-in-trade from tax-free sources, has been fixed at £250 a month in order to avoid giving them an undue competitive advantage.

Another important alteration has been the granting of relief for contracts and credit transactions. Tax will now be refundable where it arises in relation to a contract made before 1 August, 1963 or where moneys are received between 1 November, 1963 and 31 March, 1964 on foot of ordinary credit transactions which took place before 1 August.

Another significant change was the exemption of monies received from admissions to sporting events or in respect of the hire of premises for sporting events.

The proposal to increase corporation profits tax has not been amended in the Dáil but, as Senators are aware, a concession in favour of smaller companies has been made since the Budget was introduced. For the first two years of its operation, the increase of 5 per cent will be reduced to 2½ per cent for companies whose profits do not exceed £2,500.

The only other change of note made in the Bill was to put the tax exemption for agricultural and fishery co-operative societies on a more flexible basis. As the Bill now stands, exemption will be granted to agricultural and fishery co-operative societies as defined in Section 70, but it may be given to other agricultural and fishery societies also if the Minister for Finance so certifies on the recommendation of the Ministers for Agriculture and Lands respectively. There is a similar provision for extending the list of exempted trading transactions.

There are ten parts in the Finance Bill as passed by the Dáil. The corporation profits tax increase is dealt with in Part IV, the turnover tax in Part VI and the tax exemption for agricultural and fishery co-operative societies in Part VII.

Part I is the most extensive of the remaining seven. It contains the usual charging provision in relation to income tax and surtax. It gives effect to a number of the recommendations of the Commission on Income Taxation, including concessions by way of amendment of the "loss" provisions, extension of certain time-limits and tax exemption for bodies catering for athletic games or sports. The amended tax exemption for sports bodies covers all amateur as well as athletic games or sports. The income limit for the dependent relative allowance is being increased to £120 and, with effect from next year, there will be modified relief where that limit is exceeded. A similar kind of relief will be provided where the income limit for the child allowance is exceeded. The flat 25 per cent exports tax relief is being continued for a further five years at reducing rates. Income tax and surtax assessment procedure is being altered to give effect to the principle of "one taxpayer, one charge". Various anti-evasion measures on lines recommended by the Commission on Income Taxation are included in Part I of the Bill and elsewhere.

Part II contains a small number of customs and excise provisions, none of which involves increased taxation. They have been adequately dealt with in the Explanatory Memorandum. That Memorandum also outlines the effect of Part III, which relates to death duties.

I have referred already to the increase in corporation profits tax under Part IV of the Bill. There are two other sections in this part. One of them extends an income tax penalty provision to corporation profits tax and the other applies the proposed extension of the 25 per cent exports tax relief to corporation profits tax.

Part V relates to Stamp Duties. I might draw attention to the Committee Stage amendment in the Dáil which extends the Budget proposal to reduce the duty on transfers of external stocks and shares from 2 per cent to 1 per cent. The lower specific rates of duty which applied to small amounts have been further reduced in line with the corresponding British rates.

I have already referred to the subject matter of Parts VI and VII, namely, the turnover tax and the tax exemption for co-operative societies.

The Government accepted in principle the recommendations on tax evasion made by the Commission on Income Taxation in their Seventh Report. Part VIII of the Bill contains new penalty provisions for income tax, surtax and corporation profits tax which are designed to implement these recommendations. I have stated in the Dáil that tax evasion will be attended in future by a greater risk of detection as a result of the anti-evasion measures now proposed. As an interim measure, however, persons who may have been concealing or understating their incomes may avail up to 31 March, 1964, of the offer of putting themselves right with the Revenue Commissioners without incurring any penalty.

The Budget proposal to tax income from the letting of houses and lands by reference to actual receipts is implemented in Part IX of the Bill. Provision is made for mitigating the new charge on rent-controlled dwellings by allowing a special deduction of 40 per cent of the profit rent subject to a maximum of £200. Houses let at a rent not exceeding £52 a year will be excluded in calculating this limit. For non-controlled residential property the charge will be abated by 20 per cent for three years subject to a maximum abatement of £100 per annum.

Part X of the Bill relates to miscellaneous matters which are dealt with, section by section, in the Explanatory Memorandum. The new turnover tax and the other fiscal proposals in the Budget, are needed to raise the revenue required to finance the various public services. Expenditure was carefully reviewed prior to the publication of the Supply Services estimates and, again, in the Budget. All unnecessary expenditure has been excluded and, unless the Government's policy of social and economic development is to be seriously disrupted, no further reduction is possible.

The Government have endeavoured to apportion the additional taxation fairly between the various sections of the community. Provision has been made by way of increased social services payments and children's allowances to compensate those sections of the community who are less able to bear the effects of the turnover tax. The rate of tax is so low that it should not create hardship for anyone outside the scope of the alleviation provisions.

As regards the additional taxation which is being imposed on profits, I should like to repeat what I said in the Financial Statement. The increase, in the special circumstances of the current year, is a limited departure from the policy in regard to direct taxation which has otherwise been consistently followed in recent years, namely, the reduction of direct taxation in order to encourage earning and saving. I might have proposed an increase in income tax to yield the required revenue but it was obvious that this would have unduly affected wage and salary earners. It would also have discouraged personal initiative and enterprise which the tax reductions of recent years were designed to promote. I must, however, point out that an increase in income tax would have had much the same effect on companies as the increase in corporation profits tax. Finally, I may say that Irish taxation of home profits, at the combined rates of income tax and the corporation profits tax, does not compare unfavourably with that of most European countries and export profits can, of course, still benefit from complete tax exemption.

Those, briefly, are the proposals in this year's Finance Bill. As the Seanad is aware, detailed explanation and discussion are more appropriate to Committee Stage.

We are opposing this Bill, and we are opposing the attitude which has been adopted by the Government towards the Bill, and towards criticism of the Bill, both in principle and in detail. We think the Bill in many respects is very bad indeed. I am an Irishman. I hope I am a good citizen. I make a reasonable attempt to be a good Christian. I have read the Papal encyclicals. I am in favour of economic development, employment and good wages; I am in favour of social services; but I am against this Bill. It has been suggested in the other House on behalf of the Government, that you cannot be a good Irishman, or a good Christian, if you do not adopt the curious attitude that was adopted by the Government towards this Bill. Objection has been taken to the fact that one important Stage of the Bill was affirmed by one vote. I agree entirely that one vote is a majority. That is constitutional. The Government have a right to govern with one vote. I have no objection to that at all, but when I read what the Tánaiste had to say in the newspapers explaining at great length the value of one vote, I was obliged to remember that a majority of seven votes in the Dáil on a very important occasion was not sufficient to prevent a civil war.

Similarly we have heard praise and blame of the Independents in regard to this Bill. If I were an Independent, no matter what way I voted, I would not be sure whether I would prefer to be blamed as the Independents are blamed, or praised as they are praised. I think both are pretty bad. Pressure has been objected to and the word "bloody" has been brought into the debate on this Finance Bill. Of course, the Minister did not do that. He is a very smooth handler. He introduced the Bill here in such a way as to lull us into a sense of security that we were doing nothing at all except passing a few figures which were of no great importance. Who, in the name of commonsense are the Fianna Fáil people to object to pressure on Deputies and Senators? Were they not experts in the exercise of pressure of a most relentless kind, where no holds were barred, and no laws, either of State or common decency, were allowed to interfere with the pressure they wanted to exercise. Now they protest against a few grocers and shopkeepers marching to Merrion Street to protest against what they think is interfering with their way of life. The whole attitude of Fianna Fáil on this Bill is worse than their worst enemies could have expected.

The Bill, as a Bill, is to provide money to pay for the State services. It must be remembered that when the State services are combined with the local services they take one-quarter— 25 per cent—of the people's income. The expenditure which this measure is intended to meet is up since Fianna Fáil took office in 1957 by more than £60 million—50 per cent more than what it was in 1957. We are asked to accept the view that if we do not agree with this measure we are opposed to progress, economic progress, and progress of any kind in the State. Are we to understand that what Fianna Fáil call progress is that in six years they increase their expenditure by 50 per cent?

I have seen Fianna Fáil declarations of policy. The Taoiseach himself said on one occasion that the Government, having considered the matter, had come to the firm conclusion that there could be no more taxation, as it was bad for business. Views were also expressed in the course of the debate in the other House that, when a bill for expenditure has been presented, it must be met, and that anyone who says he does not want to meet it in this way has an obligation to say what is the alternative method of providing the money. We have heard a great deal of talk about parliamentary democracy. Surely that is not parliamentary democracy. No one knows that better than the Minister and the Taoiseach, and no one exercised their rights more in opposing measures when they were in Opposition, by steadily refusing to disclose what they would do if they were the Government on the grounds—and in my judgement the proper grounds—that they were not the Government. That is what the Taoiseach said in 1954 when moving an amendment to the Second Stage of the Finance Bill in the Dáil when Deputy Costello was the Taoiseach.

Government expenditure is fixed by the Government. Taxation schemes are fixed by the Government after consultation with officials of the Department of Finance and the Revenue Commissioners. Every scrap of official information that can be got is made available to them. The Revenue Commissioners are frequently represented as being taxgatherers and hard-faced people. Of course they are no such thing. They are highly intelligent, highly skilled, and very experienced people with flexible minds. They are prepared to meet the view of any Government in office, and give them all the information they can. I do not mean that the Revenue Commissioners are prepared to agree with every Government, but they are prepared to give them every possible piece of information.

The Budget itself which is embodied in this Bill, even if it has been agreed upon and when the Minister has reached a conclusion, is not revealed to the Government themselves until very close to the day when it is presented to the Dáil. In spite of that fact and in spite of the procedures in the other House, and which will in due course be put up in this House, there is the fact that whenever a Finance Bill is being discussed, there must be two Budgets: one, that embodied in the Finance Bill by the Minister for Finance, and the other the Bill proposed by the Opposition for meeting the charges. There is no such thing.

There are other things which are true. When the Government got into office, they did not say they were going to impose new taxes or what the taxes would be but they did indignantly deny a charge by Fine Gael that they would remove the food subsidies. They gave the most explicit guarantee that they would not, but then they got into office and they removed the food subsidies. Not alone have they done all that kind of thing but they wanted to remove criticism of the system from the Opposition.

I can remember one of the slogans in 1957. It was—wives send your husbands out to work. The slogan before the last election could have been different but it was not. There was no slogan in 1961. Husbands, send your wives into the shops to pay more for your bread, butter, tea, sugar, fuel and clothing and for all the necessaries of life—that was not said. So much for the general principles of the Bill and the right of the Opposition to criticise the Government for putting up a Bill which nobody but the Government could put up and which the Government only put up at the last moment in public.

With regard to the turnover tax about which there has been so much talk, I do not want to keep the House too long on that. It includes not only goods, but also a great many services, a point which I think has been missed somewhat. It is the recommendation of a bare majority of one in the Income Tax Commission, and that majority contemplated—I may say in their innocence—that the tax should be imposed and accompanied by a reduction of 2/- in the £ in income tax. That proposal was rejected by the Government. It is now brought forward together with an increase in other taxes and an increase of social welfare contributions. The tax seems to me very capable of expansion. It is an easily handled tax which brings in now 2½ per cent. I hope some of us will live long enough—and that will not be very long I think—to see it become much more than 2½ per cent. It can easily be raised by the same kind of false argument which is being used now for its introduction. It means also, as anybody in business is bound to know, and by wholesalers and retailers, that when the charge finally reaches the customer it will be much more than 2½ per cent. It is much more likely to be 5 per cent. It is true that the man who buys a fur coat for his wife will pay more tax than the woman who buys bread. But it must be remembered that the man who buys a fur coat for his wife has a margin and a great many of the people who buy the necessaries of life have no margin and are to be taxed, which means a new rise in the cost of living.

The yield of the tax amounts to almost £11 million, the bulk of which will be got from the necessaries of life. Sometimes it is said that it will be used to pay for higher social services. I think the reverse is the case. I think this tax is introduced and social services have been increased for the purpose of softening the blow and making it possible for the Government to argue that although they are putting on a tax they are also increasing the payments for social services.

Those of us living in Dublin know that those who buy in the smallest quantities pay the highest prices. With this tax who will pay more? The people will buy less but will pay more relative to their income.

The tax similarly is a blow against small traders. We were told in the other House that the retailers had increased their turnover and increased their incomes and should be grateful to the Government. It is typical of Fianna Fáil that they understand what people want better than anybody else. It is a great blow to the small trader who is struggling against the big multiple shop and the supermarket, and now this is another blow.

The Government have a good policy of linking incomes with production, a policy of endeavouring to make people content to wait for certain periods before they look for an increase in wages. Surely this particular tax will cut across that policy altogether. It will increase the cost of living and increase the demand for wages and make it still more difficult to have anything like a satisfactory linking of that particular kind. There are other things in the Bill. There are provisions with regard to corporation profits tax, but we can deal with this and, indeed, with the turnover tax on the Committee Stage.

I do not think this Bill should be divided upon on the Second Stage because it is a Money Bill, because it will become law in 21 days in particular and because, in any event, there is a substantial majority in this House, in the Fianna Fáil Party and in the people whom the Taoiseach is able to nominate, against this Bill.

Did the Senator say there is a majority against the Bill?

I did not mean to say that. I am sorry; I find it hard to recover myself after that. Perhaps I might be allowed to correct myself. I could go on further only that my throat is not so good now. What I should say is there is a majority for the Bill because this House has been so arranged, not only in the Act but in the Constitution, that there is bound to be a majority in this House for Government proposals nearly always, although Senators will remember that on one particular occasion we succeeded in reversing that position.

While I do not propose to divide against this Bill, I am against it. I am particularly against the kind of argument that has been made for it and the kind of principle that has been laid down about it. I think it is a bad Bill in its principles because it shows the wrong attitude of the Government in this measure and, therefore, I am against it.

The Finance Bill deals with raising the taxation for the proposed expenditure of public money dealt with on the Appropriation Bill and the Vote on Account. I remember last year I strayed somewhat from the straight and narrow path in dealing with taxation and was called to order on that account, but I would ask for a slight indulgence on this occasion. The amount of taxation to be raised depends on the amount of expenditure and, therefore, a word about expenditure will be tolerated as a preliminary to what is to be said on how that expenditure is to be raised. I promise not to be lengthy. In view of recent developments, a few words about the general economic background against which this Budget is introduced are not irrelevant.

In modern times the Budget and the Finance Bill fill two functions in the community. The first, of course, is to balance the public accounts, to raise whatever money is necessary for the expenditure by the Government and by the public authorities for which it is responsible. But in modern times the Budget in any country fills a second and very important function, that is to regulate the pace and tempo of the economic life of the country.

If the economy is flagging, by means of putting more purchasing power into the system and remission of taxation, it is possible by a Budget deficit to encourage expenditure and to try to get the flagging economy to move ahead. If, on the other hand, the economy is too buoyant, and there is too much being spent, an increase in taxation and a surplus or over-balanced Budget may have a very salutary effect in reducing purchasing power and keeping some balance in the system.

Having read the debates in the Dáil recently not only on the Finance Bill but on other matters, I have no doubt at all that the aim of the present Finance Bill and the present Government is not to reduce the rate of growth in this country but to increase it. The Government are following an expansionist policy and, therefore, the Budget must be judged from the criterion "is it calculated to increase the growth of the economy and the national income?". There is nothing in the present situation here to justify anything in the nature of a budget surplus that would be a brake on progress. It is the declared policy of the Government to increase national income by 50 per cent between 1960 and 1970, and that requires an annual growth of over 4 per cent. In 1962 the annual income grew by only 2½ per cent. Therefore, if the declared aim of the Government is to be achieved the annual rate of growth must be expanded from what it was last year.

Again, I beg leave to refer in one sentence, to something which I was told was irrelevant last year, that in any attempt to achieve that rate of growth of course inflationary measures must not be adopted. It is quite easy to expand national income by inflationary measures, but, nevertheless, while the aim of the Government is to increase the rate of growth in the national income it must be done in a noninflationary way. It must be done in such a way as to avoid inflation and not impose a burden on the balance of payments, in other words, to stimulate exports as far as possible.

I want to say a very few words about the economic background to the Budget, and on this I would like to pay a compliment to the admirable publications issued by the Department of Finance prior the introduction of the Bill in the Dáil. Nobody has any reason nowadays really for ignorance in regard to these matters when the Government and the Central Statistics Office have given us a great deal of information and we have no excuse for not making an intelligent appraisal of the situation. I would also like to pay a compliment to a document which appeared since the Budget was debated earlier in the Dáil, and that is the annual Report of the Central Bank, which throws a flood of light on the whole situation of the country. I certainly have been helped in preparing these few remarks that I am going to make on the Budget by a study of the Report of the Central Bank. The Central Bank issues not merely quarterly bulletins of the greatest value but an annual Report which should be read by everybody who pretends to take an intelligent interest in public life.

The most outstanding feature of the economy at the moment is that the rate of growth in 1962 was less than was desired, and on that I would like to refer to the report on Ireland published by the Organisation for Economic Co-operation and Development. I am quoting this from the Irish Banking Review, June, 1963, where the quotation appears. The Organisation for Economic Co-operation and Development states:

A relatively ambitious growth target for the 1960s will imply a substantial increase in the ratio of gross fixed capital formation to gross national product which at present is only 15 per cent.

The Banking Review commenting on that remarks:

This increase in investment will require either more domestic savings or the introduction of more foreign capital or the realisation of some of the country's present external investments. At present the rates of savings and investment is well below the average in European countries.

These are matters which ought to be borne in mind by the Seanad— that the rate of investment in this country is not sufficiently large to sustain the Government's declared aim of economic growth, and that, therefore, we must make it our primary aim of financial policy—and this is coming very close to the Budget—to ensure that whatever taxation is imposed should encourage savings and investment rather than discourage or be a brake upon them.

I have already referred shortly to the necessity for keeping an eye on the balance of payments. All I wish to say about that is that in 1962 the balance of payments was slightly unsatisfactory, but it is only fair to say that the increase in imports was very largely the result of the importation of capital goods which will produce some revenue in the future and that the fall in exports was to some extent caused by a fall in exports of cattle and beef which is not likely to be repeated. At the same time, it was also caused— here again I am trespassing on almost forbidden territory—by rising costs, an inflationary situation in the country which we must try to avoid.

We were lucky last year to be able to tolerate this deficit in the balance of payments without a deflationary corrective, because the fact is that the external reserves of the country substantially increased. It is a matter of some mystery even to the most well-informed people as to where some of those external assets came from, but there is no question at all about their existence. They arise partly from foreign investment in Irish land and industry, partly from foreign purchases of Irish stock exchange securities, and partly from foreign investment in Irish Exchequer Bills and in bank deposits. The fact of the matter is that, luckily for us as a nation, the increase in external investment was sufficient to allow us to tolerate the deficit in the balance of payments without a very painful deflationary correction which might cause unemployment and great distress.

Again I quote from the report of the Organisation for Economic Cooperation and Development as follows:

Ireland's exchange reserves are high enough to enable moderate overall deficits to be faced in support of the economic development of the country. A deterioration of the balance which, largely the result of exceptional factors, was expected to correct itself in a reasonable period of time, should justify drawings on the country's reserves. The unfavourable consequences of a premature check to growth on the confidence of the business community would outweigh any short-term considerations stemming from the reserve position. The willingness and ability of the private sector to adjust its methods to freer trading conditions during the years ahead can only be maintained in a climate of continued expansion.

What I am really working up to is this, that the primary aim of the Government as frequently declared is to expand national income and that that must be done without a deflationary correction of the balance of payments. Otherwise the continued deficit in the balance of payments would need to be corrected, and, therefore, it is the clear duty of the Government in framing the Budget to do everything they can to discourage inflation—either cost inflation caused by rising wages and prices or demand inflation caused by incurring an undue rise in public expenditure.

Before coming strictly to the Budget itself, I wish to refer once more to the Report of the Central Bank. If I were asked to say in one sentence what was the dominant theme in this excellent report it is the rather alarming growth in public expenditure. The Central Bank attaches great importance to the fact that the public expenditure in this country has risen more than the national income. Now that is all I propose to say about the economic background to the Budget. I now come to the more strictly financial field which is what we are debating this afternoon.

The outcome of the last financial year was not unduly unsatisfactory. There was a deficit of £4.85 million incurred on revenue and expenditure. Again, I quote from the Report of the Irish Banking Review, June, 1963, page 5. It said:

This was partly the result of large supplementary estimates and an inevitable rise in the cost of public services. On the revenue side the yield of customs and excise duties was disappointing and from this—

I want the House to listen to this because it has a bearing on what comes later—

the Minister drew the conclusion that it would be unwise to depend this year on traditional taxes on expenditure for any substantial increases in revenue.

The Minister for Finance has stated that at the existing rates of taxation the outcome of the current financial year would be a deficit of £8½ million, but that, in fact, the deficit would be much greater than that because there are certain additions in expenditure which are either inevitable or so desirable as to be almost necessary.

We are not discussing expenditure on this debate and I do not propose to enter into this matter. I simply mention three heads on which the Minister justifies additional expenditure. One is agriculture, the second is social services, the just distribution of the national income and the third is pensions. I think everybody in the Seanad will agree that these are proper subjects for expenditure but the fact of the matter is that even though it is agreed that they should be incurred it means that the Minister has to find £184 million revenue in the coming year and that the deficit of £8½ million to which I referred will be increased to a deficit of £11 million. The Minister has made an heroic effort to reduce this yawning gap by certain measures which I mention without criticising him. We hope that his optimism is justified—whether it is or not remains to be seen.

One thing which he has done which I think we are all agreed is justified is that he has spread a certain amount of expenditure over more than one year and has reduced a certain amount of expenditure, particularly on the Road Fund in the coming year, which has been spread over two or three years. This is only one example.

The second thing which the Minister has done in his optimistic mood is to allow for £2 million over-estimation. Now, this, of course, is quite usual in framing Budgets and last year was exceptional, I think, in the fact that hopes of overestimation were not realised, that this particular calculation was wrong. At the same time, I think the Minister is justified in reverting to traditional practice in allowing for over-estimation and I do not think we should criticise him for doing so. The third thing he has done is that he is to a small degree living on capital. This is one of these things people occasionally do to balance their budgets, one of these once-for-all transactions, in this case, drawing on the Revenue Balance. This is a once-for-all transaction, which, having been exhausted this year, cannot be repeated next year.

The result of these three exercises in optimism is to reduce the deficit which the Minister has to make up to £6¼ million. I for one am perfectly clear that this deficit must be covered by additional taxation, that this country is not in a position to run deficits, that to allow that deficit to stand and cover it as we could, by borrowing, would be very unsound public finance. There is nothing in the situation in the country to justify such a stimulus to private expenditure as the deficit would be. If anything, private expenditure of consumption goods ought to be held down in view of the results of last year's Budget. Secondly, to bridge this gap by borrowing would be using part of the insufficient savings of the country for current rather than capital purposes. It is exactly the same as an individual who is living on his savings, which we are always told is unsound to do in the case of individuals. It is also unsound in the case of Governments. There are occasions, such as I have suggested earlier, where it may be necessary to give a stimulus to consumption in order to prevent the economy going too slow, but this is not such an occasion. Therefore, it seems to me that the Minister, following an entirely sound financial principle, is faced with the disagreeable task of raising £6¼ million taxation either from raising the rate of existing taxes or by the introduction of new taxes.

There are only two ways in which this can be done and I think the Minister has to face up to this disagreeable necessity of raising this £6¼ million in either one of these two ways. Now let us face this quite straightly in the Seanad, that every increase in existing taxes or every new tax does create reaction amongst the people who may be called upon to pay it. I have not said anything, I think, about disagreeing with the Minister, but I am now going to say that I disagree with what he said in the Dáil that taxes do not really impose a burden on the community because the amount of tax is the amount of money spent. I think that is not correct because, in the first place, the people who pay taxes are not the people who benefit from the expenses and the pluses and minuses are in different directions. Certainly, it is no consolation to the people who are called upon to pay additional taxation to be told that some of their neighbours are going to get additional benefits. Secondly, the additional taxation may have a disastrous effect on saving and investment as the Report of the Central Bank and the Report of the OECD have said. Additional taxation can have a bad effect both on the power and the will to save. Therefore, it should be avoided as far as possible, but in this case I think it cannot be avoided.

Additional taxation may reduce the standard of living of some of the people who have to pay it. Therefore, I disagree with the Minister when he said that additional taxation is not a burden on the community. It is. The only way in which it might be made tolerable is by an expansion of the national income. If the national income can expand rapidly, increased taxation can be tolerable.

To come to the two bad effects of additional taxation, the bad effect on saving and investment, and the bad effect on the standard of living, it might perhaps be an over-generalisation to say—but I think I am substantially correct in saying—that the bad effect in regard to saving and investment is usually a result of direct taxation, whereas the bad effect on the standard of living is usually a result of indirect taxation. Direct taxation such as income tax, surtax and death duties reduce the power and will of the community to save and provide for the future. It is increases in indirect taxation, such as tax on commodities, that tend to reduce the standard of living.

In view of the emphasis which has been laid by the authorities to which I have referred on the need for increased investment, I think that if we are faced with a choice between two evils we should choose indirect rather than direct taxation. In the circumstances of this country I think indirect taxation is the lesser evil. There has been a general swing in this country in recent years, and, indeed, in other European countries as well, from direct to indirect taxation. When we were thinking about the Common Market one of the things that engaged the attention of people was the necessity to get more in line with European countries in regard to this matter. Apart from the Common Market, which is not a current issue now, I think that in this country in general indirect taxation is the lesser evil, even though it may slightly reduce the standard of living of certain people who are not otherwise compensated for it. It has not got the bad effect on saving and investment that high direct taxation has.

Having said that, I must also say that for the Minister to attempt to raise the whole of this Budget deficit by indirect taxation would be politically unwise from his point of view and it would be unsound economically. A judicious mixture of the two is necessary. What the Minister has done, in fact, has been to give us a little of each. The people who have to pay the new direct taxation are very annoyed about it, and the people who have to pay the new indirect taxation seem to be even more annoyed.

The additions to the direct taxation are the increases in the corporation profits tax and the tax on rents. At a time when business is being urged to invest and expand and readapt itself to the new situation an increase in corporation profits tax should undoubtedly be avoided if possible. The more that is taken from business by way of taxation, the less there is left for reinvestment. That is obvious. In his speech in the Dáil, the Minister attempted to minimise this by saying that business can avoid additional corporation profits tax, to some extent, by making use of the allowances for modernisation of plant and building which are part of the programme of reorganisation at the moment, and secondly by an expansion of exports which, to a very large extent, escape income tax and corporation profits tax.

That is perfectly true, but at the same time it has not universal application, because there are certain types of businesses which do not qualify for modernisation allowances, and there are also certain types of businesses which do not export and are unable, therefore, to escape taxation through exports. The example I shall give illustrates both points. There are others I could give, but I shall just give one, and that is the banks. The banks do not enjoy these allowances for modernisation, and they are not an export industry. There is no question but that the increase in corporation profits tax will have an adverse effect on savings and investment in business and in industry.

One aspect of the taxation is so objectionable that I shall ask the Minister to reconsider it in the light of the general financial probity of the country. I refer to the retrospective clause. No matter what anyone says, this is a retrospective tax. People will be called upon this year to pay tax in respect of profits earned in previous years. That may have the effect of reducing dividends this year in certain companies, and it will also undermine confidence. The Government have been trying, very successfully, to get outside investors to come in here. I think there is nothing that would deter people from coming to a country more than the thought of a retrospective tax.

People like to know each year what they will have to pay, and they like to know that when they have paid it they will not have to pay any more. This is one matter in the Budget which I criticise and I ask the Minister, if he can, to reconsider it.

A further increase in direct taxation to which no one will object is the change in the tax on the collection of rents. The old method was archaic, obsolete and out of date, and it gave an entirely unjustifiable benefit to a number of people who had done nothing to earn it. Therefore, I think we should applaud the change in the taxation on rents.

Coming now to the other side of the picture, a great deal has been said about the new indirect taxation. I do not propose to say very much about it because it has been very fully debated indeed. The Minister has said in the Dáil—and we must believe him—that to increase the rate of indirect taxation on commodities already taxed would not bring in much revenue. There might be diminishing returns. Therefore, the easy method of increasing the rate of taxation on such things as beer, tobacco, and so on, would not solve the problem. The Minister has said that, and I, for one, am prepared to accept what he said.

Therefore, some new form of indirect taxation had to be worked out. This is a matter which has engaged the attention of financial experts and economists in recent years in view of the different types of indirect taxation in the countries in the Common Market. If this country joined the Common Market there would have been, sooner or later, a certain assimilation in the taxation systems in the Market. There has been a great deal of discussion regarding the different types of taxation which prevail in the Continental countries, apart from the taxation with which we are familiar here and in Great Britain. The Minister had a large variety of choices from which he might have chosen. He might have chosen a purchase tax on the British lines, levied on the manufacturer. He might have adopted an added value tax, which is the principal tax in France, or he might have adopted a sales tax. In fact, he has adopted a variation of the last, a type of sales tax which instead of being based on the taxation of each individual article is based on the turnover of the shopkeeper, and has, therefore, come to be known as the turnover tax.

I shall not say what has been said so much more eloquently in the Dáil and elsewhere—that this tax is unpopular. This tax has created considerable resentment amongst the traders who are called on to collect it. There is no question at all, of course, but that it does involve traders in a certain amount of trouble in bookkeeping and administrative costs which, naturally, they do not like. Secondly, it is unpopular with the consuming public because it is fairly obvious that this tax will be passed on, in some shape or form, by the trader to the customer and that by the time the trader has covered his costs of collection, and various other outgoings, it is quite possible that the customer will pay more than 2½ per cent. That is a possibility that we have to face. Therefore, there is no getting away from the fact that the tax is unpopular. In my experience of public life I think this is the most unpopular thing that has been done in any Budget yet. There has been widespread protest against it and it is rather difficult, in view of that, to preserve a judicial attitude towards something which is so controversial.

There are certain things which may be said, perhaps, not so much in favour of the tax as in mitigation of the sentence on the Minister. One is that a large number of services and goods are already exempted from the tax. In the Finance Bill there is a list of articles exempted from tax. At this stage I would ask the Minister if he could consider adding to that list in two respects. The first is one which has been fully debated in the Dáil and which I know will be debated in the Seanad. Therefore, I merely mention it—the exemption of some of the commoner types of food which enter into the consumption of the poorer section of the community. Other people in the Seanad will deal with that I know. A second matter is one which particularly concerns me as a University representative, and that is books. Over 100 years ago in England there was a tax on newspapers which was stigmatised by Mr. Gladstone as a tax on knowledge. I cannot help feeling that a tax on books is objectionable from the educational point of view. Students at all levels in schools and universities require books. Books are becoming more expensive every year, and I would ask the Minister, merely from the point of view of helping education, if some concession could be made in regard to books, especially books used for educational purposes.

A second claim I might make in mitigation of the sentence on the Minister is that in the course of the debate in the Dáil he did exempt a large number of traders from the full impact of the tax; that by raising the level of the monthly returns he did take the burden of collection off a large number of people who were included in the original proposals.

I might also add, I think, since I am trying to be judicial on this whole controversial matter, that similar taxes operate in other countries. There is no doubt they were resented when they were introduced but they do, in fact, work. A similar sales tax operates in Sweden and in other European countries. I think it is also relevant to say that some additional indirect taxation is necessary. If what I understand by this is correct, it is difficult to think of any alternative that would not be equally objectionable. If the range of goods hit by the tax is as wide as it is in this case, the rate of tax could be kept low. If the number of goods in the tax range is narrowed, the rate must be higher. If it is broadly based it can be at a low rate; if it is narrow it must be at a higher rate.

Finally, I think it is only fair to refer to something which has not been referred to so far and that is, that the additional social services and children's allowances provided in the Finance Bill will to some extent mitigate the burden of the tax on the poorer classes of the community. Children's allowances, in particular, are a useful mitigation of the full burden of this tax. I think I am trying to be judicial in this matter. Some Senators had not perhaps thought about those points I have made and perhaps it will influence parties a little bit towards a more merciful attitude to this tax.

The last matter to which I referred —the increase in children's allowances and in the social services—will reduce the yield of the tax, and will reduce it in the present financial year, because it does not come into operation until late in the year, to a mere £2 million. Here again the Minister has shown ingenuity in trying to get over this difficulty. As I said, he showed ingenuity and optimism, which I referred to in an earlier part of my speech, regarding the way in which the deficit can be reduced. Now he is showing similar ingenuity and optimism in regard to the way in which this reduction in the yield of the tax may to some extent be offset. He is introducing in the Finance Bill measures to prevent, or reduce, the evasion of taxes. The first of these is that the Revenue Commissioners must have fuller powers to insist on the fullest business accounts. Nobody can really object to that. No conscientious citizen can justify any person not paying his fair share of the burden of taxation, and, therefore, I think the Revenue Commissioners should be given this power.

Another matter with which the Minister deals is also perfectly fair and that is that farm profits of people who are not whole-time farmers should be taxed under Schedule D. We all know that there is a certain amount of evasion of taxation by people who are not farmers, who undertake farming in order to get the benefit of the very artificial method of assessment of farming profits. Therefore, I think that this new arrangement that people who are not whole-time farmers should pay on farming profits under Schedule D is quite fair.

The third matter is that of giving people who have been evading tax a chance to make a final settlement with the Revenue Commissioners, and that is also reasonable. It will encourage certain people to pay up certain arrears and will perhaps bring in some revenue and make things easier in the future.

I am afraid I cannot agree with his fourth proposal, which is that the banks and other financial institutions which hold deposits should disclose the interest on those deposits to the Revenue Commissioners when the interest is more than £15 a year. I must say that I think that is a very objectionable proposal. In the first place, it reduces the confidence between the banker and his customer. In this country customers of banks always deal on the basis that their business affairs will not be disclosed by the banker. The banker will now have a duty to make certain disclosures with regard to the deposits of his customers. It might even lead to a withdrawal of deposits. That brings me back to something I mentioned earlier, in talking about the necessity for not depleting our external resources and the necessity of keeping up all the external resources we could in view of the rather weak balance of payments. If people begin to withdraw deposits from the banks and place them elsewhere it will be definitely a reduction in the reserves. It would be something on the wrong side in the country's external capital account.

Furthermore, and this is very important in view of the necessity for investment, the banks' capacity to make advances to their customers bears a relation to their deposits. Everybody knows that there is a maximum ratio of advances to deposits, and if there were anything in the nature of a serious decline in deposits as a result of the removal of deposits caused by fears of this kind, the banks' capacity to make advances to customers would be correspondingly reduced. This would be very undesirable, indeed, at a time when as much capital as possible is necessary both for the private and public sectors. At a time when people are clamouring for capital, to do anything which might reduce the power of the banks to make advances to customers would be a very inconsistent and contradictory step.

That brings me to the last matter practically that I am going to deal with, and that is the capital Budget. The capital Budget forms part nowadays of the Finance Bill and, therefore, we are entitled to refer to it. It is referred to in the debate in the Dáil and it is in the Bill. Again, I refer to something which the Central Bank emphasises repeatedly—the rise in Government expenditure and particularly in Government capital expenditure. In 1962-63 the amount estimated was £66 million and the amount spent was £65 millions. The amount estimated for the present year is £79 million. Of course, when we come to examine the question of whether the expenditure is productive or social we enter an area where there is no basis really for agreement, because a great deal of expenditure which may not appear productive in the short term may be productive in the long run. The best example I can give, of course, is education. It is generally agreed today that the country's best investment is in the education of its citizens, and that that may involve the erection of schools, universities, and technical colleges the returns on which may not occur for many years. Therefore, it must be classed annually from the more technical point of view of the annual finance accounts as social rather than productive investment. A great deal of the investment in the capital Budget—although I quite admit it may be productive in the very long run when the children being educated grow up and begin to earn more —in the short run and from the point of view of the next few years, when the interest on the debt has to be paid, it must be classified as social and unproductive.

One type of expenditure has been criticised in particular, and that is the large amount of building and construction, that there has been something like a boom in the building industry and that it is hard to believe that the amount proposed to be spent on building construction can all be looked on as productive in the narrow sense of the term. The Minister must have had perhaps a slightly guilty conscience or at any rate a realisation of the problem, because he has set up a National Building Advisory Council for the building industry with the object of ensuring that the building work in prospect over the coming years should progress in an orderly fashion and an economic manner and that booms and slumps in the industry should be eliminated. That is a perfectly proper step which the Minister can be congratulated on, but at the same time there is a widespread feeling that some of this expenditure on building construction could be postponed.

I come back again before I wind up to a point that was referred to several times, and that is the insistence in the report of the Organisation for Economic Co-operation and Development on the insufficient investment in this country. Therefore, it becomes a central object of Government and financial policy to encourage savings in every form. One way is to stimulate savings in the narrow sense of the word, trying to make it attractive for people to save rather than spend their income. Another thing, which brings me back to bank deposits, is that we must try to discourage the export of existing savings. If we really want to add to the funds available for the expansion of industry, to do anything to drive bank deposits away is an extremely inconsistent and contradictory thing to do. Finally, we must try to attract foreign capital. We have already attracted a great deal and will attract more but, as I said, such things as retrospective taxation are not calculated to encourage people to invest in this country.

One aspect of the large amount of public capital expenditure provided for in the Budget is the danger that the private investor may be injured in some way. The Report of the Central Bank states that there is no sign that the supply of capital for private investment has been rendered insufficient by the demands of the Government, but it goes on to say that it may be that the price of capital has been raised when the Government are borrowing at the high rates of interest which are universal in the world today and that, if the Government go on borrowing large sums of capital at 5½ per cent or 6 per cent, the difficulties of private business people getting capital may be increased.

Just one aspect in particular to which I should like to refer is that in the last year or two there is evidence that the Government have been borrowing more extensively from the banks than they did. That, I think, is an adverse development. I think that the banks should be regarded as the source of private capital and that for the Government to borrow from the banks, except for short period borrowing like Exchequer Bills, is a development not to be encouraged. There is evidence in the last year or two that the Government have been getting rather more from the banks than they did.

To sum up this rather long speech— I apologise for taking up so much time —the need for all this taxation and borrowing arises, of course, out of the Government expenditure.

It is something which cannot be said too often—I have said it before—that the essential difference between the Government and the private individual is that the private individual has to measure his expenditure against his income, whereas the Government first decide what they are going to spend and then they decide where the revenue is going to come from. The relationship between expenditure and revenue is completely reversed. That is why the Government are different from private individuals because if they spend a great deal more, they can tax or they can borrow. They certainly will not go bankrupt in the way that an individual does. They will not be pulled up short by bankruptcy.

I am not objecting to this increase in Government expenditure in itself but I am objecting to it to the extent that, as the Central Bank Report says, it is outrunning the growth of national income. As long as the total Government current and capital expenditure is in line with the growth of national income it really is not objectionable, but in recent years it has been running ahead. The main aim of all policy here, and the Budget, after all, is the principal instrument of policy in the year, is to increase the national income and wealth in the country. The claims of social justice and cases for redistributive measures may necessitate a certain slowing down in the rate of national expenditure but it must be remembered also, in respect to that, the other side of the picture, the possibility of desirable social expenditure of a kind which we all like to see, depends upon the growth of national income.

The growth of national income is the first essential and there is no use in making elaborate proposals for increased children's allowances, increased benefits for old age pensioners and widows and so on unless the national income is sufficient to meet those calls without having too great an effect on saving or on investment. As I said before in this regard, direct taxation is worse than indirect. The adverse effects of direct taxation are worse than those of indirect. There is a general principle in this country that it is better to tax expenditure than to tax income, but, at the same time, we must remember that there must be a certain amount of direct taxation for two reasons. The first reason is that indirect taxation would not raise enough revenue, and, secondly, because it tends to be regressive. In so far as the principle of progression in taxation is admitted, as it is in every country today, the way in which it is carried out is by direct taxes.

Now, I think, finally, on the whole that this Budget conforms with the aims which I have attempted to stipulate as the aims of public policy at the present moment, that direct taxation has not been raised more than a reasonable amount, that the increase in corporation profits tax, apart from the retrospective element in it, can be endured and that the new indirect taxation has been widely spread. As I said before, certain things might be with advantage taken out of its scope, for example the necessities of the very poor and books. That is a matter which will be referred to by other speakers, but I think, generally speaking, the Finance Bill as a whole does not conflict with the Government's main political aims.

The last thing I would like to say is this. In considering the weight of the burden one has to consider two things. One has to consider the absolute weight of the burden itself but one also has to consider the strength of the shoulders upon which the burden is imposed. A strong man can carry a much heavier burden than a child with far less effort. Similarly, a progressive, wealthy, country can carry a burden of public expenditure much heavier than a country which is either static in national income or progresses at a comparatively small rate. Therefore, if the Government can stimulate expansion, all sorts of social services, all sorts of capital expenditure will become possible which would not become possible in the case of a stagnant economy.

If the Minister would not mind, after listening to the sublime eloquence of Senator O'Brien's very interesting speech, there are just a few queries I should like to ask on the more particular aspects of the Bill. Before I go into that I should like to say, apropos of what has been said by Senator O'Brien in dealing with the opposition to this Bill, that on the whole I am in favour of the idea of taxes in this way; but, there were remarks passed—perhaps there will be more—about the organised opposition to the Bill by shopkeepers and by some members of the public. I would just say this, that it is not always the people who are, perhaps, most aggrieved who make the most noise, shall we say in opposition or anything. I agree with perfect liberty and I should not like to see that right in any way changed in this country or any other country, but, sometimes people who are well organised and who have financial assistance at their back can put up greater opposition to anything they disagree with than people who are perhaps more concerned and suffer more, shall we say, under this Finance Bill or this tax. At the same time, we must listen to all sides of the question. I think we must take that into account.

I really want information on two sections of the Bill. Most of the sections are really Committee sections. Section 47, subsection (1) (7) refers to the issue of tickets or coupons issued for the purpose of a lottery. You apparently pay the tax on the full price of the tickets, whereas a bookmaker, under subsection (2), as far as I read it, pays his tax on the result of the race after he has paid the winner.

Subsection (2) reads:

For the purposes of subsection (1) of this section, the moneys received in respect of the acceptance of bets made or entered into with the holder of a bookmaker's licence under the Betting Act, 1931, shall be the aggregate of the sums of money which by the terms of the bets such holder will be entitled to receive, retain or take credit for if the events which are the subjects of the bets are determined in his favour.

It seems to me that a man who runs a lottery pays tax on all the money he gets from tickets, whereas a bookmaker pays the winners and then pays tax on what is left.

I am afraid not. He pays on the whole lot. I admit it is very involved.

Section 52 deals with a big number of regulations, under some 14 different headings, which the Revenue Commissioners may make. Some are very important regulations such as "disclosure from the Revenue Commissioners of such information as they may require", and "the manner in which tax is to be recovered in cases of default". That is all right so far as it goes, but when we come to subsection (3) we find that "every regulation made under this section shall be laid before Dáil Éireann". I have not been able to find a similar section in any other Act. It has always been "shall be laid before both Houses of the Oireachtas." Even though we may have no power to amend those regulations, surely we could make recommendations on them. Under the Irish Steel Holdings Act, the balance sheet must be laid before both Houses of the Oireachtas. Under the Finance Act, 1941, the Report of the Auditor General must be laid before both Houses of the Oireachtas. If we go back as far as 1924, we find that regulations made by the Executive Council apportioning work to different Ministers had to be laid before both Houses of the Oireachtas.

Article 21, subsection (2) of the Constitution provides:

"Every Money Bill sent to Seanad Éireann for its recommendations ...."

Regulations made under that section are just as important to this House as they are to the Bill, and as the Finance Bill is itself. It seems to me that this House should have power to make recommendations on those regulations. The Constitution says that every Money Bill shall be sent to this House. Surely any regulations thereunder should also be sent to this House. I admit that they can become law in 21 days without this House considering them at all, but this House should at least have the opportunity of making recommendations on the regulations, just as they have power to make recommendations on the Bill itself. I should like the Minister to comment on whether it can be amended.

We of the Labour Party can approve of certain of the proposals in the Finance Bill now before us, and would lend support to the Minister in his efforts to raise revenue where the money can be raised by making the better-off section of the community face their responsibilities, and bear their fair share of the burden of taxation. One of the ways in which the State has been denied its right to receive revenue to which it is entitled is the £600,000 described as evasion of income tax, and referred to by the Revenue Commissioners. This money is due, in the main, by the better-off section of the community, and they should be made to pay it. There are no means by which the ordinary wage earner can avoid paying his income tax dues. His employer returns his earnings and the tax is taken from him by PAYE. In so far as these big tax-dodgers can be brought to book, we in these benches will aid the Government to get their dues.

There is also the proposal to raise some £3 million from corporation profits tax. This proposal is a just one, one which will not cause hardship to those concerned and it must, therefore, commend itself to anyone with any sense of social justice.

Another source where money can be obtained for the use of the Department of Finance is the proposal to increase the tax on profits from rents, again a proposal not likely to cause undue hardship. The policy of the Party to which we give allegiance has never opposed any proposal to raise revenue from any source where the taxes could be levied without causing undue hardship to those from whom it was proposed to collect it.

Where we fall away from the Minister in the matter of raising taxation is where he proposes to collect the bulk of the money he needs from the lower income group, and from the no income group, by means of this indirect taxation—the turnover tax. Others, more competent than I, have spoken against this iniquitous proposal which will lower the standard of living of the wage earner, and cause very serious hardship to large families with low incomes, the wage and salary earners, those living on pensions and small fixed incomes, together with those persons in what we now refer to as the social welfare classes.

The Minister must realise that this turnover tax will function to force those in no way fitted to do so to carry much more than their fair share of the national taxation. It has been shown in the other House that these people will, in many cases, be paying a tax far in excess of the 2½ per cent mentioned, simply because of the fact that they must purchase their requirements in shillings and half-crowns, this being the only way in which such persons can make their meagre incomes stretch between pay days. The Minister may point to the fact that there are compensations in the increased aid to be given under the Social Welfare Acts, but I am sure he will not argue that, bearing the turnover tax in mind, the old age pensioners, the unemployed, and the sick, will be better off than they are at present—and which of us are not ashamed when we are asked questions concerning the rates of old age pensions, blind pensions, and other social welfare categories? The only conclusion to be come to in regard to this tax proposal is that the Government no longer care how the lower income groups may regard it, but I wonder how long it will be before there are increased calls on the health services due to malnutrition among children because their parents cannot give them nutritious food since it has been placed beyond their reach by the imposition of the Government's turnover tax? I fear that the increases to be met under the Health Act will wipe out much of the money which the Minister apparently sees he will get under this unfair and unjust tax. In fact, the overall picture will be much worse than before the Minister decided that the turnover tax would end most of his taxation difficulties. It must be perfectly clear that a worker with a low wage rate—and there are many of them earning about £6 a week—cannot pay taxation on his everyday food and continue to have his present standard of living, however low that may be. The result must be that food will be cut down with disastrous results on the score of health, and we will find that the Minister is losing rather than gaining by the imposition of this unjust turnover tax.

Tá an oiread san ráite ar an mBille seo i nDáil Éireann, agus anso inniu nach mian liomsa mórán a chur leis an méid atá ráite. Ach caithfidh mé é seo a chur ós cóir an tSeanaid, go bhfuil sé de dhualgas ar an Aire Airgeadais airgead a bhailiú, a thabhairt isteach, chun scéimeanna na tíre a chur chun cinn. B'fhéidir gurb í an difríocht atá eadrainn go bhfuilimidne macánta agus go bhfuilimid ag iarraidh a dhéanamh amach cad é an módh is feárr chun an t-airgead sin a thabhairt isteach chun leas na tíre, chun leas eacnamaíoch na tíre a chur chun cinn. Dar ndóigh ní féidir le haon Aire Airgeadais in aon Rialtas airgead d'fháil ón spéir anuas. Ós mar sin atá an scéal caithfimid díospóireacht a bheith againn idtaobh cad é an tslí is fearr chun an t-airgead d'fháil.

Tá eacnamaíocht na tíre seo ag dul chun cinn go maith le blianta beaga anuas, agus is maith linn go léir é sin agus is dóigh liom gur maith leis an muintir sin thall é leis. Dar ndóigh, cuirimíd go léir suim i gcúrsaí na tíre seo a phlé. Cuireann sé áthas orainn má gheibhimíd amach go bhfuil cúrsaí na tíre ag dul ar aghaidh.

I do not intend to say very much on the Finance Bill. So much has been said in the other House, so many points have been raised and so many counter points that I think it would be superfluous to make anything like a lengthy speech on the measure. Of course, the burden of the debate this year on the Budget, and on the Finance Bill that followed the Budget, has centred around the turnover tax, or what is called the turnover tax.

I was interested to hear that Senator O'Brien thought this turnover tax was unpopular. But has anyone yet heard of any tax imposed which was popular? If all of us could avoid this taxation we would be very happy, but there is a job of work to be done in the country. It is the duty of the Government to do their best to expand and improve the economy of the country. How will they do that if they do not get the necessary finance for that purpose? There may be a difference of opinion as to how the necessary finances can be provided. That would be understandable enough. But if this turnover tax is said to be unpopular, what is to take its place? No Minister for Finance— and certainly the present Minister— likes to tax the people of this country unnecessarily. I have read the speeches of those who took part in the debate in the other House and I have followed the activities of certain elements in the country and, in my opinion, this present proposal is a fair and equitable one because it places whatever burden has to be faced on the shoulders of all the people together.

I have listened on former occasions to Senator O'Brien complaining about the incidence of income tax. If my memory serves me rightly, he complained that too few people had to bear the incidence of income tax in this country and that the burden should be spread out more, but somehow today he did not refer very much to that. He just said that this tax was unpopular. I know the people in the country fairly well myself. I have travelled up and down among the people and I know of the state of the country and what degree of prosperity exists in the country today. I must say that the degree of prosperity in the country today is higher than many of us anticipated. One would imagine, when hearing the talk about this 2½ per cent turnover tax, or 6d in the £1, that the people were going to be crushed by it. In my opinion the effect it will have on the business of the country, on the retailers and on the consumer, will be infinitesimal. Of course, it is only natural that there should be a certain amount of controversy about this new tax. It is an innovation here but not in other countries, and from what I know it has worked evenly and well in those countries on the Continent where it has been brought in. We here are sometimes inclined to be conservative about these innovations. We do not take to them too kindly, but before people are too critical of this tax they should see how it will operate. There is the difficulty that certain politicians and certain elements have created a certain amount of confusion in the minds of the people.

I took a very keen interest in the contribution that Senator O'Brien made to this debate, He always makes a very good, interesting contribution. He said, and I agree with him, that the rate of investment in this country is too low. It is very low, indeed, in comparison with other countries and the question is how is the investment to be stepped up. National loans are floated here from time to time and are always fairly well subscribed but there must be something over and above that. If there is to be an investment in the economic development of this country the money has to be got for it, and the question is where. We are not living in a fairyland. The people of the country themselves will have to subscribe towards its development, and if the economy is to be stepped up the traders and the business people will stand to gain ultimately from it. I think myself that there will be a net gain for them even though they may have to make a little contribution now.

The difficulty about the Minister for Finance is that when he comes in here and makes concessions he gets very little credit for it. I think it is only two years ago since he made a reduction in the standard rate of income tax but he got no plaudits for that. People on the opposite side of the House were silent about it, but now that he has to make provision in another way, albeit a new way, there is any amount of criticism and condemnation. It is also only two years since the Minister gave a very important concession in regard estate duty when he raised the ceiling from £2,000 to £5,000 and as far as I can remember he got no plaudits for that.

I do not want to repeat very much what was said in the Dáil yesterday, but, as the Taoiseach said, we have come to the crossroads when we must make the decision as to whether we are going to go forward or backward. If we are to go forward with an expansion of the economy, we must be prepared to provide the finances for that. There is in my opinion no better investment for our people than to put their money into the development of the national economy. Nothing can be achieved without a little sacrifice at first, but the Programme for Economic Expansion has worked well, even much better than many people anticipated, and if it is to be continued and we are now to have a second programme for economic expansion in a few weeks we must be prepared to face up to the realities of the situation. The realities are that if there is to be a return from the efforts of our people, the programme will have to be financed not from outside but from our own people.

Senator O'Brien referred to the report of the Central Bank and to the point that they were concerned about the possibility of inflationary forces getting out of hand. We all have to have regard to that possibility, but the present Minister and Government can be relied upon to keep that under control. I must say, however, that it is the duty of the Central Bank to be conservative in their outlook. All commercial banks are conservative in their outlook. But if the Government are to advance the cause of the country they cannot be too conservative in their outlook. They will have to be prepared to get the people of the country, who have the resources, to contribute their share towards the advancement of the economy. There is hardly a doubt about that. The difficulty, of course, about this whole debate in the Dáil is that, while the Opposition Party were prepared to accept the increased social benefits now proposed here, they did not appear to be willing to face up to the commitments that are necessary for these social benefits.

Did I hear anybody here, or did anybody say in the Dáil that they were not in favour of these social benefits? If they did, where is the money to be got from? That is the major question. While it might be said that it is the duty of the Government to provide the money and suggest the means of providing it, after all, the members of the Opposition have a responsibility also to show where the money is to come from. If the Minister for Finance is presented with the problem of finding the necessary finance, he is entitled to ask the members of the Opposition what they would do and where they would get the money. But, I read the debates and searched in vain for any suggestion as to how the money could be raised. Since that is the case, we will have to leave it to the Minister for Finance and the Government to do their best to provide the necessary finances as evenly and as equitably as they can and that is the policy enshrined in the Finance Bill.

I disagree entirely with much of what has been said by Senator Ó Ciosáin. He describes this tax as fair and equitable, that it is a pleasant burden fairly placed on the shoulders of those who are able to bear it. I do not agree that it is an equitable tax and I disagree with a tax which will increase further the price of bread, tea, sugar, fuel and the necessaries of life, as this tax will inevitably do. It will place a further burden on the poor, the people with large families, those on fixed incomes and especially those who are supposed to be the backbone of the country and who are finding it almost impossible to live at the present time, that is, the small farmers of the country.

They were better off.

According to the report on the farmers living in the west of Ireland——

You said the doors were closed in west Clare.

So they were.

Not at all.

They were better off than the fellows in Westmeath.


They did. I know, perhaps, what the Senator may be hitting at. I sold a farm but I bought another one and I am entitled to do it.

An Leas-Chathaoirleach

I shall not allow even the Senator to discuss his own business, much less allow other Senators to discuss any other person's business.

If the Senator wants to be personal, I can even tell him when he was fined £10 by the Old IRA in Clare for refusing to take the people out of the county home——


And that is quite well-known. If the Senator wants to be personal I do not mind. I do not agree with personalities——


An Leas-Chathaoirleach

Will Senator L'Estrange pass on to the Finance Bill and perhaps Senator Brady will cease being provocative?

Yes, but the Senator made a reference.

The Senator made the reference. He was personal. You can expect that anytime from Fianna Fáil. I shall reply to them. I am not afraid of them or of anything they have to say to me here or anywhere else. If I do anything it will be honourable. I have nothing to be ashamed of.

An Leas-Chathaoirleach

The Senator will say all he has to say on the Finance Bill.

If the Senator wants to be personal, he can.

I did not start this. The Senator started it. And it is the Senator who is personal.

An Leas-Chathaoirleach

Senator L'Estrange will please return to the Finance Bill and Senator Brady will cease to interrupt.

I do not want to interrupt anyone unduly but Senator L'Estrange made a statement about how people had gone away and closed up their doors, which is untrue.

I made a statement which is the truth. The figure given, published prior to the Budget, was that 18,000 people left the land of Ireland last year. If the people are as wealthy as Senator Brady would lead us to believe, then those 18,000 people would have stayed at home on the land of Ireland.

Go to any chapel gate any Sunday you like.

Go to any chapel gate and there is not a young person between 20 and 35 to be seen. They have all emigrated.

They have motor cars, everyone of them. I am glad of that. The poor devils have earned them. I do not begrudge them.

An Leas-Chathaoirleach

We are all glad of that, even Senator L'Estrange.

Anything is better than walking or riding an ass.

I do not begrudge them.

The Finance Bill is the implementation of the Government's proposal in relation to taxation in the recent Budget which was introduced in May and in relation to the expenditure of the people's money during the current year. The budgetary proposals of the Government were discussed in the Dáil. They were passed on the Second Reading by 72 votes to 71 and I think by 69 votes to 66 on the Report Stage. The Government, by these proposals, which are submitted to us today, propose to extract from the people of the country —and it is a dwindling population no matter what may have been said by any of the previous speakers—the sum of no less than £181,570,000. Now that is the largest sum that has ever been asked by any Minister for Finance in the history of this State. Senator Ó Maoláin may smile but he can easily bring his memory back to 1932 when they were looking for the votes of the people of this country and they told them that they were overtaxed and they could not bear their burden and that if Fianna Fáil were returned they would reduce taxation by £2 million per annum. That was their promise that year. They got back then and every year since then, under Fianna Fáil, taxation has increased. It has increased every single year.

Do not jog my memory.

I do not mind jogging the Senator's memory but that cannot be denied. This expenditure on current account of £181,570,000 compared with the current expenditure in the last year before the present Government took office of £119,335,000 represents an increase of £62,235,000 in a period of seven years or slightly more than 50 per cent on the 1956-57 figure. We are entitled to ask, especially due to the announcements or pronouncements of the Fianna Fáil Party away back in the past, when will this rake's progress stop. There is no denying that the people suffered a shock when that staggering figure was revealed. Everyone will agree that it is a disturbing trend to have the amount of taxation increasing year by year. There is no incentive for people to work harder, because they would only pay more in taxation, and give their money to the Government to spend for them.

It might be interesting if the Minister would tell us for every £ taken from the taxpayer what goes back to, say, the recipient of home assistance, unemployment benefit, or whatever it may be. Some people claim that roughly only 12/- goes back, that 8/- is lost in collection, distribution and handing it out generally. I have no figures available to me, and I am not in a position to know, but perhaps the Minister will give us that information, because many people would like to have it.

The point has now been reached where we usually hear the same repetitive arguments which are produced each year at Budget time. The upward swing in Government expenditure fails to reflect the real gravity of the situation. In my opinion, never in the history of this country was it more desirable and necessary than it is now to have a period of stability so that producers, farmers and industrialists, can prepare and equip themselves for the more competitive period that lies ahead whether or not we enter the Common Market. Many people claim we may be in the Common Market quicker than was anticipated a few months ago. At any rate, we are entering a freer trade era which will undoubtedly have serious repercussions on our industrialists and workers.

I believe that an increase in taxation such as we have in this Budget will interfere with that stability. I think everyone will agree that today there is a relative degree of co-operation and unity of purpose between industry, management and workers. I believe that is necessary and essential for the future prosperity of all concerned. The new taxation imposed in the Budget— and especially the sales tax on bread, butter, tea, sugar, fuel, clothes and all the necessaries of life, is bound to increase the cost of living. The workers will have to look for increased wages. They will be entitled to them. We may then have the ninth round of wage increases and we shall be back to the vicious circle of wages chasing prices, to inflation with all its harmful effects. Indeed, the flames of inflation may do irreparable harm.

There is no denying that the retailers cannot bear this sales tax, or turnover tax, as it is called. I know people who keep accounts in different firms. I know a particular firm with audited accounts which had a profit last year of £22,000. If they had to pay tax on that last year they would have had to pay £2,500. This year, like everybody else, they will have to pass on that tax. The tax, therefore, will operate to increase the cost of living. It will have inevitable repercussions on wages, and there is a great danger that it will further reduce the ability of our industrialists to sell abroad.

I believe the greatest danger facing us today is the high-priced economy that has been forced upon us by the Fianna Fáil Government by reducing the food subsidies, which they promised to maintain a few years ago, and by extravagantly raising the cost of Government administration, although they promised three years ago that the Civil Service would be pruned and that there would be Government saving. We have not seen that yet. They have increased taxation by £63 million over what it was in 1956. Both national and local taxation has been increased. Indeed, it can truthfully be said that the people are perturbed at this increase. The rates have also been increased in the different counties by from 1/- to as high as 13/6 in the £.

Already many of our exports have been priced out of the overseas markets due to Government policy, or lack of enlightened policy, and to increased taxation each year. A flabby cost structure has been built up over the years. It has been inflated like a balloon and there is a serious danger of a collapse of that balloon. The Fianna Fáil Government are responsible because, despite their promises in the past, their policy has been to increase taxation year after year, and we are having a further increase this year. Senator Ó Maoláin smiled a few moments ago when I reminded him of the Fianna Fáil promise of 1932 to reduce taxation by £2 million per annum.

Do not jog my memory or I might remind the Senator of other things.

I do not mind jogging the Senator's memory and I should be delighted to hear what he has to say. I shall jog his memory back to 1956, to a statement that was made by Deputy Lemass, who is now the Taoiseach. Fianna Fáil had one story to tell in Opposition and a different one then when they got into power. They were crying out about the burden of taxation then. They were pointing out that the people could not stand up to the position imposed on them in 1956. In the Official Report of Dáil Éireann of 8th May, 1956, column 49, the Taoiseach—then Deputy Lemass—is reported as having said—I quote:

In 1953, the Fianna Fáil Government, of which I was a member, took a decision that taxation in this country had reached the danger limit. We announced that we had made up our minds on that fact and that, so far as we were concerned, there would be no increase in tax rates above the 1953 level. We made it clear that, if any Budget difficulty arose, that difficulty would be met by a reduction of expenditure and not by increasing the burdens on the taxpayer.

That was the present Taoiseach, speaking in 1956. What has happened since 1956? Have words lost their meaning I should like to know? If taxation had reached the danger limit in 1953, when Fianna Fáil took this all important decision, surely it must by now be well beyond the danger limit because taxation has increased by over £85 million since 1953. He then said there would be no increase in tax rates above the 1953 level. It is now over £85 million above the 1953 level. He stated:

We made it clear that, if any Budget difficulty arose, that difficulty would be met by a reduction of expenditure and not by increasing the burdens on the taxpayer.

Senator Ó Ciosáin asked us a question. He said he had read up the Dáil debates and he could not see where any constructive proposals were made by the Opposition stating what they would do. First of all, I want to say the Fianna Fáil Party are now in power. It is their duty to frame and form their Budget and present it to the people. Surely there should not be any necessity to teach like little school boys any of the Fianna Fáil Party, especially when their own leader, who was not Taoiseach, in 1956 said:

We made it clear that, if any Budget difficulty arose, that difficulty would be met by a reduction of expenditure and not by increasing the burdens on the taxpayer.

Is there any meaning to words in the English language? Instead of bringing in this new sales tax and all this extra taxation we have in this Budget, why did the Taoiseach not do what he himself preached in 1956? Why did he not meet this deficit by a reduction of expenditure instead of increasing the burden on the taxpayers? Have Fianna Fáil a word, as we are led to believe they have? If they keep their promises, as they claim they do, this was a golden opportunity for the Taoiseach to do that. Neither he nor his Minister did that. Instead of a reduction in expenditure and the easing of the burden on the taxpayer, as I have said, the cost of Government has been doubled since 1953.

Then we have the people on the far side of the House who protest and ask why should we seek to have this figure reduced. Fianna Fáil are in a position to clamour for its reduction time after time, as the Taoiseach claimed that the burden is too heavy for the people to bear. The amount collected last year by the Government was, I think, the highest percentage also of the gross national product ever reached in our history. Last year, I think, £1 in every £5 of gross national product was taken by the Government. It is only in keeping with what I quoted the Taoiseach as having stated here in the past that it is better for the Government to take the people's money and to do the spending for them.

For many years we have been accustomed to hear, not only from objective commentaries, but also, as I have quoted, from the Taoiseach, and from official Government spokesmen as well, that the burden of taxation was close to the endurable limit. Public expenditure and local expenditure has kept careering upwards and the rate of growth in our current public spending and that on non-productive capital items has far outpassed the real growth of the economy as a whole in recent years.

The taxation being imposed in this Budget is a record taxation of almost £80 per head in respect of every man, woman and child in the country. It is a record taxation in that rates to the tune of £23 million were collected from the people of Ireland last year. This Budget with its sales tax has affected the rates this year and will further affect them next year because health services, road workers and other people will have to get increases to cover the cost of living. It is even reckoned that this year a record of £25 million will be collected from the ratepayers of this country. This means, apart from Government grants and other receipts of local authorities, £8 roughly for every man, woman and child in this country, no matter where one goes at the present time in the country.

I have heard a lot said here about prosperity. Senator Ó Ciosáin said that the degree of prosperity was higher than many of us anticipated. Definitely there is prosperity in the city of Dublin and in our big cities but there is not the same degree, or any sign of that degree of prosperity in rural Ireland. No matter where one goes the farmers, the shopkeepers, the business people and the agricultural labourers especially are complaining of the high rates and of Government expenditure. As I have already pointed out, in the current year at least £25 million will already have been extracted from the people of this country in rates. The extra £2 million is due to the fact that national expenditure is increasing. It is throwing extra burdens on to the ratepayers. That is a further blister of £2 million. I remember at by-elections a few years ago in Laois-Offaly, in which there is a farming community, the place was covered with Fianna Fáil posters and leaflets stating that the rates were too high; that the farmers should put out the Government and that the rates would be reduced. They are 15/- higher to-day in Laois-Offaly than they were then and there is no protest. We are all told that it is a fair and equitable tax and that we all should agree with it no matter what the Fianna Fáil Party may have said in the past about increased taxation.

I believe that the only way in which tax revenue can be increased without causing inflation, or an increase in the cost of living, or bad relations between management and labour, is a growth in national production, which will provide high taxable incomes or new forms of taxation on luxuries, fur coats, dances, etc. We know that Deputy Leneghan immediately after the Budget went down to Roscommon and made a speech pointing out that the necessities of life would not be taxed by the Government but only luxuries such as fur coats and things like that. I do not know whether he was trying to mislead the people or had been misled himself but in any case he made that statement.

Statistics published by the international organisations indicate that Ireland is amongst the most heavily taxed of all countries at a comparable state of economic development in relation to its national income.


It is not rubbish but facts. The facts are there and you can look them up any time you like.

I have looked them up.

Then you can look them up again. I suppose you believe nobody speaks the truth except some members of your own Party. I quoted from what your own Taoiseach said in 1956 and it was the exact opposite of what you stated.

Facts are facts no matter who said them.

Is it not a fact that he stated this in 1956?

I am talking about the statistics.

They are taken from the Official Report. The unquestionable fact which the Government must know is that if public spending maintains its upward course at the rate of recent years—it has increased by £63 million in the past few years—it will have a disturbing effect on the real growth of the economy. The only alternative will be increased demands on the taxpayer, which have their own effect on economic progress.

These new taxes, especially this new sales or turnover tax, affect everyone in the country. This tax will affect the necessities of life and will have a distinctive impact on national economic growth. It may also lead to a curb on public consumption, and, indeed, it is bound to since there is no denying that, when the cost of living is increased, the poor people will have to reduce consumption. That will be agreed especially if we take cognisance of what the Taoiseach himself stated in 1956 in the statement I read out a few moments ago that the people of Ireland are ground down by taxation both national and local. Unfortunately, many of our people are between the frying pan and the fire and are undoubtedly suffering from this increased taxation. Unfortunately, many of them seem to be so used to mounting taxes that they have become like punch-drunk boxers. They can absorb punishment without seeming to be affected by it, but they are affected by it. There is no doubt that many of them are seriously and dangerously affected.

The fact that they will be affected was demonstrated recently in Dublin when over 10,000 merchants, grocers and others connected with RGDATA marched peacefully through the streets to protest. They have been attacked for doing that, but they are entitled to do it and I do not think they should get bloody noses from anybody for doing it. It was an orderly protest, and no doubt they were concerned with the incidence of taxation and this new form of taxation which will undoubtedly affect them. What is happening in our country is that fewer and fewer people are having to bear increasing taxation. In 1930-31 the general taxation rate was 18 per cent of the national income. In 1959 it was 28 per cent and if the figures I have are correct it will reach about 30 per cent this year.

They are not correct.

What are they? You can give them to us afterwards. I should like to hear them. But I know that they were 18 per cent in 1930-31 and 28 per cent in 1959. I shall leave it at that. These are official figures at any rate which cannot be contradicted.

They are like all your figures.

You can check my figures if you are able to and get up and make your own speech here. It would be very interesting to hear it. I do not think anybody has heard even your maiden speech in this House and it would be interesting to hear it. You can bring in your own book of statistics, whether it is supplied from Mount Street or anywhere else and correct the figures I have given here if you are able.


An Leas-Chathaoirleach

I think that Senator L'Estrange would avoid trouble if he addressed the Chair.

Fianna Fáil were always supposed to be interested in the poor people of this country and always claimed that they were interested in the ordinary people. If they are, I am surprised that in this sales tax the poor people will be paying the very same percentage of tax—the man who buys a pound of butter, tea or sugar or a suit of clothes or a pair of boots for his children—as the wealthy man who is able to pay £200 or £300 for a fur coat for his wife or a second car for his wife or some of his family to drive around in. It is no wonder they have recently tried to convince the people that they are moving to the left. If they are moving, when they have moved or when do they intend to move? If they were keeping to the left as they claim to be, they would not be putting the same taxes on the necessities of life as are being imposed on luxuries.

Fianna Fáil have assured us in the past that the buoyancy of the revenue always reflected the prosperity of the people of our country. They seem to be more concerned about that than about anything else. Dr. Lucey, the Bishop of Cork, spoke out very strongly last year, saying that what we should be interested in is the number of people in the country—in more men, more women and children, more families living in happiness and prosperity getting work at home in our own country. He said that we should be more interested in that than in the amount of money in our banks. There are many people who do not seem to share the optimism spoken of by certain people in Fianna Fáil. I do not agree with what Senator Ó Ciosáin stated here today, because if we had the prosperity that is claimed, the people would not be running away from rural Ireland as they are. If we had that prosperity, 18,000 people would not have left the land of Ireland last year. The Senator in the rere cannot state that that figure is wrong, because it is in the Official Report that was supplied to us prior to the Budget of 1963. In his leisure hours when he is not interrupting or speaking in the House he can look up these figures and see if they are correct.

The footnote says they are wrong.

It does not.

It says they are inexplicable.

If through their own ignorance they cannot explain them, we are not responsible for that. If after-dinner speeches would make the people of this country wealthy, certainly we would be the wealthiest country in the world.

You are still talking about the dinners. You are always jealous of the dinners.

There was a time when you would not wear tall hats to honour Christ the King but you were wearing them at the unruly garden party with all the thugs of the country. The President of the United States was mobbed by all the thugs in the country that you invited there because they subscribed £5 to Fianna Fáil funds.

Were you among the mob?

No, I stood back.

You were very near the mob.

Are you finished?

An Leas-Chathaoirleach

Senator L'Estrange will return to the Finance Bill.

Did the Senator ever wear a tall hat?

No, but I never said I would not wear one and then turn round. There was a Party at one time who would not wear them at the Eucharistic Congress here but then went to the Imperial Conference in Ottawa with them.

An Leas-Chathaoirleach

There is not a single tall hat in this Bill.

The tax abolished them.

The people of the country are our greatest asset and to increase the number of families living in the country should be the aim of this or any other Government. It should be the aim of every Party that has the interests of the State at heart. If we thought that this extra taxation, this extra money which the Government are getting, would be put to good use there might be some justification for agreeing with some of the proposals.

Senator Ó Ciosáin stated that everything was going well for the country for the past few years and the Opposition should like that too. Definitely we would like that if it were true. When we speak we speak, perhaps, as politicians and people are not inclined to believe us—maybe there are reasons for it at times—but I shall quote a man who is not a politician.


It is not "Miss coat", "Mr. Coat" or turn-coat. It is the address of a curate on the 8th of June, 1962 at a meeting of the Irish Transport and General Workers' Union at Killarney on emigration and other present-day problems. He said:

In 1962 we had increased productivity, more cars, more factories, more roads, more washing machines, more of most things, but we had 146,000 fewer people than ten years ago, 281,000 fewer people than when the State was founded and three million fewer people than 120 years ago. Some Kerry parishes had little more than one-tenth of their pre-famine population. A parish that had 343 baptisms in 1842 had less than ten per year today.

I can say the same for the school I happened to go to. In 1932 there were 102 pupils on the rolls and it was a four-roomed school. Today it is a two-roomed school with 40 pupils on the rolls. If that is what Fianna Fáil policy has brought us to—and there is no denying what the curate stated about Kerry is true of the whole counry— I do not think there is anything to be proud of or any reason why the taxpayers should give them extra money to continue that policy. The curate continued:

Alone amongst the nations of the world we had a decrease in population. If there was a more depressing fact in Irish life than emigration it was our acceptance of emigration as a normal natural necessary solution for some of our problems.

Is that not exactly the case of the Government today? Are they not looking on emigration as the safety valve? When they quote half truths about the country doing so well, they are not telling us the full story, that due to the increased taxation they are imposing on our country and on our economy 300,000 boys and girls emigrated from 1956 to 1961.

No, that is not correct.

No it is not and saying it will not make it so.

The figures are there and 300,000 boys and girls had to leave the country. When they tell us, as someone will before the debate is over, that unemployment is down by 20,000 we must remember that if those 300,000 people had not emigrated to England there would be 360,000 unemployed in Ireland today. Fianna Fáil seem to accept emigration as a safety valve and have done nothing about it.

We have stopped it.

In this country.

You have been in Government for 27 years out of the past forty and the population has become smaller and smaller.

It is going up now.

Up like Fianna Fáil taxation?

It went up last year.

The only years when the population was up were from 1948 or 1949 to 1951 or 1952. The figures are there and can be got at any time. The curate further continued—

Tell us his name.

An Leas-Chathaoirleach

Senators will please cease interrupting, and Senator L'Estrange will address the Chair and cease looking for interruptions.

I do not mind them.

An Leas-Chathaoirleach

I do.

The curate said:

Does one who sees tens of thousands of our youth leaving Ireland every year have to be an expert before he can see that there is something wrong somewhere?

What is wrong with the country is that Fianna Fáil have closed their eyes to that fact for a long number of years.

To come to the sales tax, the Fianna Fáil Party are asking us what are our plans.

And you will not tell them.

At the last election Fianna Fáil never mentioned the sales tax. There was no word about it because they knew what would happen if they mentioned it. They ask what are our plans. Why should we tell our plans when they refused to tell their plans when the general election was held in October 1961? They have no mandate from the people. In the only election where the sales tax was announced, the by-election in North East Dublin, Fianna Fáil got a right walloping. Where Fine Gael were in a minority of 5,500 they ended up with a majority of over 6,000. For every vote cast for Fianna Fáil in that by-election two votes were cast against them. Senator Ó Ciosáin said he travelled the length and breadth of Ireland and failed to hear people speak against the sales tax. He must have had cottonwool in his ears because the people only had to take the pencil in their hands to vote for that majority of two to one. That was their mandate in relation to the imposition of this tax. But the Government held on to their majority.

Business suspended at 6 p.m. and resumed at 7.15 p.m.

Before the adjournment, I quoted certain figures and I stated that the population of this country had increased in the past 100 years only between 1946 and 1951. I did not say that it was when the inter-Party first came into power because they put their plans for the development of the economy of this country into operation at that time. I was questioned and was told that my figures were completely wrong and the Minister for Finance laughed. I now have the Statistical Abstract for 1962 and I quote from it. In 1946, the total population was 2,549,058 and in 1951, it was 2,960,397, that is an increase of roughly 500,000. So, if Senator Killilea wants to look up the figures, he will find that my figures are correct and if the Minister doubts them, all he has to do is to look at Page 90 of the Statistical Abstract and he will see that they are correct.

It may be no harm to inform the Fianna Fáil Party, who speak today of their extraordinary plans to improve the economy of the country and who say that this country is a better place for Irish people to live in, that if we take the 1956 figures, we shall see that the total population of the country was 2,890,644 and that was after the Fianna Fáil plans had been in operation for four years. Now they are looking for £63 million extra. In 1961, the last year for which the figures are available in the Statistical Abstract, the population was 2,814,703, a decrease of 83,941, despite the fact that taxation had been increased and is increasing every year. There was a net decrease of 83,941 and that is what we are paying the present Government extra money for. All I can say is: God help us. I mention those figures because I knew that the figures I had given were correct but the Minister is never inclined to believe them because he always says in his reply that Senator L'Estrange quoted figures and that the figures were wrong. I suppose he may do the same today but if he looks up the Statistical Abstract, he will see that my figures are correct.


For five years.

There was a net decrease from 1956 to 1961.

You said it is 300,000 today.

I said 300,000 emigrated. People are born and die. I have given the net figure and 300,000 of our boys and girls emigrated during that period. In any case, the net decrease over five years is 83,941. I hope the Minister is satisfied on that point.

The Government got no mandate in the last election to impose this turnover tax. We were told by Senator Ó Ciosáin that there is such a tax in Sweden, Norway and other European countries. We know they had such a tax in Sweden. They are changing from it. I am not in a position to say what success it has had in Norway. We all know that the Government got into office in the past by making promises they had no intention of fulfilling. We remember when they said: "Let us get cracking." If the Government could prove that this extra money would be well used, that it would result in an increase in our population, that it would give more employment to our own people at home, we would agree it was money well spent.

It will do no harm to quote what the Taoiseach said at Kinsale in February, 1957. He said:

Unemployment and emigration are the acid tests of policy. A Fianna Fáil Government will measure the effectiveness of its work for these standards ... Fianna Fáil's immediate task would be to get work for the unemployed.... The unemployed could not be expected to wait until long-term production plans brought them permanent benefit.

If the Taoiseach spoke of permanent employment now he would mean that our people had found employment in Birmingham, Coventry, or some place else abroad. We all remember the Taoiseach's famous plan of 1957. He was then in opposition and he announced a £100 million plan which would provide 100,000 new jobs. That plan was announced with a great flourish of trumpets. The Irish Press issued a special supplement with a verbatim report of the Taoiseach's speech. Every effort was made to convince the people that the plan would involve no extra taxation. We were told at the time that it would provide a solution for our economic troubles. Since the Taoiseach got back into office nothing more has been heard of that great plan.

Senator Ó Ciosáin told us there is another plan on the way and that this extra taxation is needed for it. There is no doubt that if plans were the answer, this country would be one of the best in the world. We all remember the Taoiseach saying: "We are rounding the corner. We are breasting the hill." Fianna Fáil had plans for this and plans for that, but, unfortunately, when they are in office, they forget all about their plans. There have been no results from their plans, and the money they spent in the past has not shown any results either. We are told that if our economic development is to continue the Government must have this extra money.

We hear so much about what Fianna Fáil are supposed to have done. With their three papers they can paint a lovely picture, but, unfortunately for the Irish people, Fianna Fáil have been in office for 27 years since we got our freedom and they have set up many records. This demand for £63 million extra taxation is a record. The demand for £181,570,000 is an all-time record. If this trend continues, next year they will be looking for £200 million, and that will be another record. There is a record taxation of almost £80 per head in respect of every man, woman and child in the country. When you add on the £8 on the local rate, that makes it roughly £88 per head on every man, woman and child in the country.

Record rates were collected from the people last year at £23 million and it is recorded that this year a record of £25 million will be collected. We have a national debt at the present time which is a record of more than £500 million. The cost of living we have heard so much about in the past stands at an all time record of 160 points. We have a record trade balance, if we take the year ended March last, of roughly £100 million. If we take June this year it was between £105 million and £107 million. On the other side, we are entitled to ask what they have got or will they gain on the extra taxation of £63 million over 1956 that Fianna Fáil is looking for. We have a record low population of 2.8 million. As I have already said, a record of 300,000 of our young boys and girls have emigrated since Fianna Fáil came into power in 1957. We have a further record. Ireland's total population per square mile of agricultural land is the lowest in Europe and that cannot be denied. Our rural population per square mile of agricultural land is the lowest in Europe. Last year our Government created another record when they gave £14 per week to High Court judges who already had over £100 per week. This is the Government that will tell us they stand for the ordinary working people of this country.

Have the Government's plans over the past five or six years been helping to end emigration? I know the Minister for Finance will tell us emigration is down this year. There are no reliable statistics or facts. We can only go on the figures before us and the figures I have show a net decrease in our population of 83,941 from 1956.

Are there no figures except yours?

I remember when you were asked and the Taoiseach was asked in the Dáil and all you would say was—we can give no reliable figures until the statistics are published. He knew they were bad and would do the Fianna Fáil Government harm. The figures were published in 1961 after four years of your Government. A total 300,000 people emigrated and, in any case, the figure which cannot be denied is that there are now 83,941 fewer people in the country. We have the lowest population since the time of the famine—2,814,713—and if we have extra taxation put on us, God help Ireland is all I can say.

We hear much about employment and emigration. I should like to give a quotation by the Taoiseach when he was expressing his views in Dáil Éireann as recorded at column 1144, volume No. 161 of the Official Report of 14th May, 1957. Deputy Lemass, then Minister for Industry and Commerce, said:—

I and my colleagues have no doubt in our minds that we became the Government because the people expected us to work determinedly and intelligently to bring about a situation in which employment would expand, in which the twin problems of unemployment and emigration would be vigorously tackled.

That was in 1957. We cannot here take the word of any Minister. We must take official statistics which we have before us. According to the official statistics which we have before us, 300,000 of our boys and girls were exported to Britain. That is how he kept his promise as regards emigration.

When we hear so much about employment and unemployment, I think it only right that the proper figures should be given. I shall give figures taken from the official statistics issued prior to the Budget 1962. In 1955 there were employed in this State 1,181,000. The year 1955 was one of the disastrous years about which we will be told later by Fianna Fáil speakers. It is all right for Fianna Fáil to get up and tell us half the story. They will tell us there are 3,000 more employed in this industry and 3,000 more in another, but they will never give us the overall figure because it is damning as far as they are concerned. They will pick out industries where we all know the number of people have increased. According to the overall figure in 1961, there were 1,119,000 people employed in this country, a reduction of 62,000 compared with 1955, and 62,000 fewer people in employment in Ireland in April, 1961 in comparison with 1955. If that is a record of which any Government can be proud, I cannot understand it. That is where increased taxation is going despite the promises made by Fianna Fáil about extra jobs for our people.

Fianna Fáil believe that if you tell a lie often enough the people will believe it. They will tell us about these disastrous years. Let us talk about the disastrous year of 1956. The situation then was that 1,163,000 were employed as between agriculture and non-agricultural pursuits. In 1961, after five years strong, efficient Fianna Fáil Government with taxation increasing every year, the total number of people employed was 1,119,000. Therefore, there were 44,000 fewer people gainfully occupied in this country in April, 1961 than there were in April, 1956. So, instead of the 100,000 new jobs which we were promised by the Taoiseach away back in 1956, according to the figures taken from the official statistics there are 62,000 fewer people employed as compared with 1955.

Why do the Government try to fool the people? Why not tell them the truth? Anybody who goes through the country, no-matter what has been said here today, will see that the small farms are being denuded. In 1926, for example, 650,000 found occupation on the farms of this country. Ten years later that figure had gone down to 613,000. In 1956 the total was 445,000. In 1956, the disastrous year we hear so much about, there were 445,000 people gainfully employed on the land of Ireland. Last year the figure was in the region of 400,000. Therefore, in less than 30 years, for the greater part of which Fianna Fáil had been in power, over 300,000 people have left the farms of Ireland. These figures are correct because they are taken from the official statistics.

Fianna Fáil, we were told today, have the plans. There is a new plan to be issued shortly. If it fails as badly to give employment to our people as the last one did, then there is no denying that it will be disastrous for the people. There are two ways of reducing the number on the register of unemployed. One is to do what any Government with the interests of the people at heart would do—try to provide work at home for our own people. That is what the Government did between 1948 and 1951 when they doubled our exports and from the figures I have given there was a net increase in the population during those years of 5,000 people, because then the people were not ground down with excessive taxation but got an opportunity and were encouraged by the then Government to get the most from the land and from their factories and to export, and that is what they did. The country was reasonably well off because it was not being ground down with excessive taxation. The people were able to earn a living in their own land and the population increased by 5,000.

I have already mentioned that this Budget and particularly the turnover or sales tax, as we like to call it, will definitely increase the cost of living. By doing that it will, especially with this tax applying to food, clothes, medicines and all the necessities of life, affect the people least able to bear that increased taxation—the poor, people on fixed incomes and especially the people who Fianna Fáil told us so often in the past were the backbone of this country, the small farmers. They have no redress. They cannot pass on the cost to anybody else. They will have to bear it on their own shoulders which are not very well able to bear that increased cost.

I am surprised at a Government which have only now learned about moving to the left imposing further burdens on the necessities of life, on bread, butter, tea and sugar. Away back in the past Deputy Lemass as he then was said in Wexford on the 28th February, 1957:

Coalition Leaders are threatening the country with high food prices and a lot more besides if Fianna Fáil become the Government. A Fianna Fáil Government do not intend to do any of these things. How definitely can we make our denial of these stupid allegations?

Despite the fact that taxation has increased by £63 million since then, they also took away the food subsidies amounting to £11 million and are putting this further burden on to bread butter, tea, sugar and the necessities of life. I wonder would he get up now and say: "How definite can we make our denial of these stupid allegations?" If we say now that the Government are wrong they will tell us that we are wrong and that they are right to tax bread, butter, tea, sugar, fuel and the necessaries of life. Anybody who says they are not is unpatriotic, and not for the advancement of our economy.

Also at that time Deputy de Valera as he then was, now our President, stated on 28th February, 1957 that they did not want the price of bread, so important an article of diet for the poor, to be increased. Then they were all for the poor, but it seems that they have not thought of them since. I wonder how they will think of them when they move to the left. We will have to wait and see. In any case, bread is still an important article of diet for the poor, but it is going to be increased now under this Budget.

Mr. Oscar Traynor said at Doyle's Corner on 1st March, 1957 that the warnings issued that a Fianna Fáil Government would withdraw the food subsidies or increase the cost of living or increase the price of bread were just bloodcurdling stories. I do not blame the people of Ireland for voting for Fianna Fáil at that time on those promises. Despite the fact that they are now looking for £63 million we hear nothing now about "bloodcurdling stories" when the price of bread, butter and all the necessities of life is increased. Fianna Fáil got their votes then by making those promises, by fooling the people, but the moment they got back into power they forgot completely about all those promises and that they ever made them and they are very much annoyed if any of us bring our minds back to those years when they made them. How quickly can Fianna Fáil swallow their own words? Instead of opposing Fianna Fáil now they think that we should support them, agree with them and say: "Well done, boys".

The present Government are also becoming an arrogant Government, as nobody can deny. They seem to be out of touch with realities and with the common people of this country. Indeed, the manner in which the Taoiseach ran panic-stricken to the Fianna Fáil headquarters on 12th June when the Opposition gave notice, as they were entitled to do, that they intended to challenge the Government on every stage of the Finance Bill, was certainly the action of an annoyed and rattled man. From the speech he made then he seemed to be like a rat caught in a trap. His real idea was to intimidate the Independents. He did that and has carried the provisions of the Bill through the Dáil. It is evident, indeed, how Fianna Fáil so readily forget when in office what they said when they were not in power.

In 1954 Deputy Seán Lemass as he then was, now the Taoiseach, was Leader of the Opposition. He moved a motion by way of amendment to the Finance Bill of that year, but nobody on the Government side then threatened that the heavens would fall, the civil servants would not be paid, the social services could not continue or that anything like that would happen. It was his right and privilege as a member of the Opposition then to do that, just as it was the right and privilege of the Fine Gael Party to put down an amendment recently and just as it is our right and duty and privilege tonight to criticise this Bill.

Before the debate continues, might I remind Senators that the House agreed today at 3 p.m. that we would finish the Second Stage of this Bill tonight?

It was not agreed.

Senator Hayes speaking there——

Senator Hayes said that he hoped it would be finished but he added that he had no control over the House and that is the position still.

We are very anxious to finish this in any case.

I should like to corroborate what Senator McGuire has said. It was a pious hope, but at the moment it looks as if it were rather remote.

I read out the proposed programme of business. Senator Hayes said he agreed with each of the items but he questioned the last one, the Committee Stage of the Planning Bill.

It is very wrong to put words in people's mouths. It was a hope. The Seanad has not met 15 times this year and it is a disgrace that we are not allowed to do some work now.

It was quite precise and definite. Senator Hayes said he could not commit this side of the House. He hoped and we do hope and I hope. But the words he used were that it was a pious hope and that was all.

Therefore, you cannot depend on any agreement made from the other side of the House.

It is ten minutes to eight now and we can discuss this matter later.

I hope the other side of the House——

Who the hell is leader over there anyway?

Senator Hayes may control a Party but he has no control over Independents or over the Labour Party.

The Labour Party also agreed.

I deliberately refrained from any commitment. I remember almost the precise words used by Senator McGuire being used by Senator Hayes. He distinctly said he hoped. Only one member of our group had the opportunity to speak and she has not imposed on the House. At least two or three members of our group are waiting to speak and I do not know precisely how long they will take. I myself am going to speak and I will take about 15 minutes but while any member of the House is offering to speak I am afraid that we must insist on our rights in the matter.

Senator L'Estrange entertained the House for an hour and a half with a speech that is so familiar to us. I note, however, that on this occasion he did not criticise the Government for allowing farms to be sold to foreigners. The Bill before this House is undoubtedly the most controversial introduced for many years. It has met with violent opposition not alone from a section of the traders of Ireland but also from Opposition Parties. It is natural to expect that a section of the traders should dislike it because many of them have been escaping paying income tax down the years and they now realise that as a result of this legislation they will have to pay their due share.

One cannot be blamed for doubting the sincerity of the Fine Gael Party towards this Bill. Is "Chum Glóire Dé agus onóra na hÉireann" really their motto? Are they really concerned about the Finance Bill? In the past few weeks Fine Gael have done everything in their power to try to overthrow the Government.


Was this opposition created because it intensely dislikes the Finance Bill or was it because they knew that if Fianna Fáil were allowed to run their full term in office, with the extra money made available by this Bill the situation in the country would change considerably? They must know from Fianna Fáil's record in the past that this money will be used to stimulate the growing economy of the country and when Fianna Fáil face the next election in three years' time they will sweep the country. Fine Gael know that if the Finance Bill got through, in the next general election they would be sent into well deserved retirement.

What about the North East Dublin election? You were beaten two to one.

Senator L'Estrange must allow Senator McGlinchey to make his speech without interruption.

They hardly allowed me.

Senator L'Estrange must allow Senator McGlinchey to continue without interruption.

When the Dáil passed the Finance Bill last night the dying kick was given to the Fine Gael Party.

Belton gave you the dying kick.

The introduction of taxation is naturally unpopular. Fianna Fáil's success over 30 years is due to the fact that at all times they were never afraid to meet their responsibilities no matter how unpopular a decision might be. If extra taxation were required in the interests of the people of Ireland Fianna Fáil at all times would think of Ireland first. They did not at any time desert the Irish people as their friends in Fine Gael did just six years ago.

Eight elections in 15 years did not look like that—from 1932 to 1947.

As a result of taxation our progress has surpassed practically every country in the world. There is not a person in the House whose blood would not boil if a foreign friendly newspaper described us as a primitive nation. We would be angry because we would know it was not true. Great progress has been made. Houses have been built for the people. Water and sewerage have been provided. Schools have been built and industries have been established particularly in the rural parts of Ireland. We must accept the fact that progress has been made and we hope that it will continue in the future.

As one of the younger members of this House, I am more concerned about the future of Ireland than its past. I hope that the day will come when all our children and our children's children can live in this country without the threat of emigration. I hope the day will come when our children can live in any part of Ireland as comfortably as in any country in the world. That is the ultimate aim of the Fianna Fáil Party —to provide a decent standard of living for every Irishman and every Irish woman, to provide employment for them and proper social services and particularly to help those people in Ireland who cannot help themselves.

Even the children in national schools must appreciate that if this work is to be done extra money must be provided. If there is one person in this House who can tell me that the work can be done without extra cost to the Exchequer. I should like to shake his hand.

The Taoiseach said in 1957 that you could. I quoted that.

I have not heard all your quotations.

You can have them all later. You can get them from the Official Report of the Dáil.

If progress is to continue, we must provide the money for it. We have a long way to go before employment is provided for all our people and water and sewerage brought to the most remote parts of Ireland. Twenty or thirty years ago water and sewerage facilities in rural Ireland could be found only in the doctor's house, the teacher's house or the solicitor's house. But today times have changed. The Irish people are demanding them not as luxuries but as vital and absolute necessaries and they look to the Fianna Fáil Party to give them to them and the Fianna Fáil Party intend to provide them. If they do, it is natural that more money must be provided for that purpose.

I have listened to several speeches today by Fine Gael speakers, Senator Hayes and Senator L'Estrange, for a greater part of the time. They were back 40 years ago, years before I was born. I should like to remind them that this is 1963 not 1923, and the sooner they remember that, the better for the people of Ireland. We should look to the future of our nation, realising that the provision of extra taxation is for the ultimate good of the Irish people as time will prove.

The question, therefore, we must ask ourselves is: do Fine Gael want this progress to continue or not? If they do not, then the answer is they are entitled to their opinion and the Irish electorate will be given an opportunity to deal with them eventually. But, if they do believe progress should continue, then perhaps they might suggest how it can continue without providing extra money. Nobody has done so so far. They have been too busy quoting statistics from 20 years ago.

It is time they realised we should be looking to the future of Ireland and not dwelling in the past. Let us look with pride by all means on our past, but with pride also in our future.

This Budget has been described elsewhere as a pedestrian, unimaginative Budget. I should like to comment that while it may be pedestrian and it may be unimaginative, as far as we on this bench are concerned, it contains one very alarming provision in respect of which we are very much concerned and very much alarmed. I think I should also say that those of us who have been long enough in this House have come to appreciate every Minister for Finance when he is faced with the duty of coming to this House or the other House to look for more money from time to time is entitled to expect the co-operation, even the sympathy, or even the help of the House, and if we are honest, whether we are on this side of the House or the other, in our secret hearts we have to admit that.

Having said that, I want to go on to say that that fact does not entitle the Minister or the Government to expect this House to approve or to endorse any or every proposal with which they may see fit from time to time to come in here to this House and ask to have it approved. Certainly, I suggest that the Minister hardly expected some of the proposals in this Bill to be approved by the House without a good deal of criticism and questions. I suggest also that we are entitled to ask the Minister to make the case—and to expect him to do so—for every proposal for increased taxation in this House. Speaking for myself at any rate, I want to say that I have not heard that case made yet.

The increased taxation can undoubtedly be secured under a number of headings. I do not propose to go into all of them—too much has in fact already taken place on some aspects of this Bill, including this one I am alluding to now, but the point I want to make is that I am convinced and certain beyond any doubt that the improvements which are badly needed in social services generally for our people, the stimulation in trade and industrial demands of that kind, undoubtedly can justify increased taxation. Generally speaking, therefore, my colleagues and I on this bench have no great fault to find with the general provisions of the Bill in that respect. But we do object to and will continue to object—to criticise and to oppose—the imposition of increased indirect taxation by this new method now proposed under this Bill, while at the same time, the Government almost in the same breath proceed to introduce and to impose a virtual standstill on all movements on salaries and wages.

The Government should at this moment take serious note of the fact that upwards of half a million people represented by the trade union movement in this country through their elected spokesmen have expressed themselves in unmistakable terms on certain proposals in this Bill. They have indicated quite clearly that they will not accept restraint and that they will in fact take any steps that are found necessary in order to secure fair compensation for what we believe will be the inevitable increase in the cost of living which will result from the provisions of this Bill. That is their right, and I may say quite clearly that that is the policy of the trade unions in this country, and will remain so, as long as the Government continue to refuse, as they are continuing to refuse, to control profits and dividends in industry generally.

I have already alluded to the wages standstill order, and make no mistake about it, a wages standstill order is in operation in this country at the moment. I am not alluding to the control—or perhaps I should say restraint, as the Government have attempted to call it—which the Government may see fit from time to time to exercise on their sectors of employment in this country. I am speaking of the wages standstill which is at present in operation and having a very serious effect on trade unions generally in carrying out their normal functions on behalf of the people whom they represent.

I shall point to one clear case as an illustration. I should like to mention, for the information of some members of the House who may not be aware of it, that in the case of the salaried or clerical groups employed by the ESB, an arbitration award freely arrived at and which, it is believed, was unanimously arrived at, was issued several weeks ago, even months ago, but at the request of the Government it has not yet been put into operation in respect of that important group of employees.

In fairness it should be said that the ESB have an excellent record in the implementation of arbitration awards down through the years, but it is a fact that the Board are at the moment apparently prohibited from implementing that award which has been granted by an independent freely constituted arbitration board. It is also a fact that that position has been imposed on the Board by none other than the Government.

I do not have to remind the House that in the course of his speech yesterday in the other House, the Taoiseach admitted that the findings of several arbitration proceedings are held up at the moment and are not being implemented by the Government. That is unfortunate so far as the sectors of employment over which the Government have control are concerned, but I want to point out that it is even more serious when it is implemented in the sectors represented by the trade union movement. In an atmosphere in which the representatives of the organised groups of all categories of workers are unable to carry out their normal functions on behalf of the workers, it is preposterous to suggest that they should be expected to accept restraint on their freedom to negotiate on behalf of their members or to look for improvements in their conditions, while, at the same time, their members are expected to contribute to the additional burden of new taxation.

Section 46 of the Bill, which is the section with which we are mainly concerned, proposes to introduce this new form of taxation commonly described as the turnover tax. As we see it, a turnover tax can be justified only as a substitute for some alternative form of taxation. We also know that the Commission which recommended its introduction recommended it on the distinct and definite understanding that there would be a reduction in the ordinary rate of income tax by the direct method.

I suggest the Government are acting foolishly, if not recklessly, in imposing such a tax at this time. As has been said already, it could be justified only if its application were confined to luxury goods or services but its imposition flatly, and without regard even to the poorer sections of the community, is not just and cannot be justified. The proposal itself has generated more heat and controversy over the past few months than we have experienced in this country for a long number of years. I suggest it is also significant that it has generated a tremendous amount of heat from a particular section of the community, from traders and business interests generally.

We hear a lot about the proposal in the Bill which will provide for the disclosure or examination of certain bank accounts, matters which up to now have been kept very closely guarded secrets. I want to remind the House that for a long number of years salaried workers, to take one group as a case in point, have had to submit year after year to a microscopic examination of every item of their personal incomes because of the nature of their employment, and because they had no other store of worldly goods to fall back on. Because they were in that vulnerable position, they were subject to that examination and they also had to bear the burden of direct taxation on every £ and shilling of their earnings while business people "got away with murder", to use a colloquialism. In addition to having to continue to bear that burden, that section will also suffer the full impact of this new and increased taxation. That is another reason why I and my colleagues oppose this Bill.

I want to refer now to the method proposed for the introduction and application of this tax. It raises a number of questions and, if I may say so, it lends itself to at least a possibility of further exploitation of the consuming public. That is patent to anyone who has any experience of the operation of this tax in any other country. I have seen it in operation in some of the States of the United States. They have simple and effective devices and, above all, they have a clean method of applying the tax. You go into a store and you buy something for 25 cents or 50 cents. It will be stamped with the exact amount of federal tax, or you will find the exact amount stamped separately on the receipt which you are entitled to demand for your purchase. If some such method had been employed here, it would have removed a great deal of the objections which have been raised by our own people. The method itself leaves the door open for a great many unscrupulous people and I am afraid that, whether or not we like to admit it, we have quite a number of them left in our community.

If we look in the Bill for concessions, we find a rather peculiar situation. The Bill contains many rather grim provisions, especially if you read the details. One thing that struck me in my perusal of the Bill is that the concessions seem to be confined exclusively to a certain section of the community. The concessions are referred to in the explanatory memorandum as being contained in Section 3 of the Bill which allows for the continuation of the provisions already contained in the income tax code. Business firms are enabled to set off a business loss "against the tax-payer's other income of the same year." I do not see that there is anything wrong with that. I think it is quite a nice provision. My only complaint is that it is a bit too exclusive. It is not passed on to other sectors of the taxpayers.

In this Bill the time limit for making claims of that sort is extended from one to two years during which the appeal procedure may be set in motion in order to pick up that compensation. That is why if compensation is put in the Bill, any concessions in it are confined to the privileged, if you like, or there is favouritism as far as one section of the community is concerned.

Apart from what we regard as the unnecessary and the undesirable increase in the cost of living which will inevitably result from the widespread application of this type of tax, I also feel that its worst effect is that to which I have already alluded, that is, the operation of a tax in this particular form appears to us to suggest that the public again will become the victim of a continued and widening spiral of exploitation under this new code.

It is clearly evident from the Bill that traders are free to pass on, if they decide to do so, the full cost of any extra tax they may be required to pay to the Exchequer under this new code. They are entitled not alone to pass it on but to select the range of goods themselves on which that extra cost will be imposed before it reaches the consumer. Finally, they are entitled under this Bill to decide to what extent and in what proportion that cost will be imposed. I suggest that it is not very hard to imagine a situation in which groups of traders can quite easily, and very likely will, meet and decide for themselves precisely how much the public will be required to pay in order to compensate them not only for the taxation involved in this Bill but for their own estimate or forecast, imaginary or otherwise, of what it will cost them to operate the new system. Then the public are left completely at the mercy of any approach they decide to take on that particular line of action in operating this new Bill.

Another possible consequence of the imposition of this type of unregulated tax may well be an increase in unemployment. I think several speakers, both in this and the other House, have already pointed to the possibility of that arising. I believe that the greatest danger of that arises from the fact that the Minister is content to leave the control of prices, while operating a system of taxation of this sort, solely to competition. It should, I suggest, be very clear to the Minister and to the Government by now that in their attitude they are clearly favouring not only one section of the community against the interests probably of the majority of the citizens of the country but also favouring, inside industry itself, the larger combines, the bigger and more powerful traders to the inevitable detriment and the possible extinction of many small family or one-man businesses.

Therefore, if the Government and the Minister had decided to accept and to implement the recommendations of the Income Tax Commission on this point, or even if they had at this stage decided to take proper steps to devise a reasonable and a just system of indirect taxation at consumption level, it would not have left the poorer section of our people open to what we believe will be greater exploitation and greater hardships. If these things had been done by the Government, it might have been possible for me and my colleagues to support the measure. As it is, we are permitted no option in the interests of the people for whom we speak here but to oppose this Bill and to protest in the most vigorous form to what we believe is an unjust imposition, an imposition on those sections of our people who are already carrying an unfair share of the burden of taxation in this country and of the cost of the administration of the services of the State. When it comes to the passing of the particular section, I and my colleagues will have to oppose it, and will do so as far as it lies in our power.

We have been told that the amount of taxation has increased considerably in the past five or six years. In figures that is so. But surely it must be related to something. If a person is manufacturing goods, for instance, and he pays £50,000 for his raw materials and produces £100,000 of finished products, he is paying 50 per cent for his raw materials. If in three years' time his raw materials have gone up to £80,000 he does not necessarily complain that his raw materials have gone up to £80,000 if his end product is £200,000. The real test is what percentage of the Gross National Product does our tax bear— our tax from all sources going into the national Exchequer. Is that percentage going up or going down? If it is going down, of necessity we are doing well; if it is going up we are doing badly. Let us take that basis. In the year 1957 the percentage of Gross National Product paid between local taxation and State taxation was 23.9. In the year 1962/63 it was 23 per cent. To say we are taxed out of existence, that percentage must be compared with what is done in other countries what percentage of the Gross National Product of other countries is expended in taxation. I find that in the same year in which ours is 23 per cent, in Britain it is 26 per cent, in Belgium it is 24½ per cent, in Italy it is 29 per cent, in France it is 34 per cent and in Germany it is 34 per cent. To say that because the figure increased from £100 million to £140 million or £140 million to £180 million unless you compare it to the increased amount of the end product it has no practical meaning whatsoever. For instance, despite the fact that the total amount of our tax has gone up over the past five or six years, the amount of income tax has gone considerably down, because income tax at the same rate brings in more money.

Of necessity the amount of tax must go up if there is to be a buoyant economy. Taxes are expended on education and health, two absolutely essential items in a progressive country; and on grants for tourism, grants to the farmers to enable them to produce more on their lands, grants to industries, grants for Bord na Móna, for forestry, and for fisheries—but so long as those grants increase the gross national product, then the country is doing well provided that the percentage of taxes paid in relation to the gross national product is not increased. In this case it has gone down. I quote from the statistics here in front of me and I find that the gross national product has increased over the past five or six years by over £160 million.

If you just take figures on their own and do not compare them with the end product, you are misleading yourself. We are all agreed that when taxation produces more productivity then that taxation is justified. Senator L'Estrange and every speaker up to the moment admitted that. Then the only question to consider is the relation to gross national product. The percentage of taxation as related to gross national product has since 1957 gone down by almost one per cent instead of going up.

During the past five years we have had a five year programme of economic expansion. For some 14 or 15 years prior to that the increase in the gross national income was only at the slow rate of one per cent each year. Then a five year plan was prepared and a target was set of two per cent. The average to date has been four per cent increase in productivity each year in spite of the fact that the target was only two per cent. Now the Government are preparing a 10 year plan and they have doubled the target again, from 2 per cent annual increase in productivity to 4 per cent. If that target is to be achieved, you must, of necessity, spend more money on the education of your youth, on the training of your businessmen and of your farmers in the best use of their machines and their land, and spend more money on making the best use of your bogs, your forestry and all your raw materials. All that costs money, but despite all that the rate of tax really has not gone up in the meantime.

There are certain unproductive items on which a Government must spend money if we are to have a proper social conscience. You must give somewhat more to the old, to the widows, to those people in bad health, to the blind and the destitute. The extra taxation that has gone into the present Budget over the past six years would scarcely cover the increases given in that regard alone. But in any event any increases in taxation necessitated for the purpose of increasing the buoyancy of progress and for assisting those people whom we believe to be deserving of assistance, if we have a proper social conscience, are a proper charge on the country's Exchequer even if they mean that the Minister has to look elsewhere than the normal sources for taxation. The reason for looking elsewhere than the normal sources this year is that the income from tariffs and customs and excise has gone down by approximately £3,750,000. There has been a reduction in tariffs of 10 per cent last year which incidentally should reflect itself in a reduction in the cost of living. This year there will be a further 10 or 15 per cent reduction and the Government have bound themselves to have all tariffs removed by 1970, possibly before it—I think 1968 or thereabouts.

When the Government are looking for extra taxation to meet these things, to meet the loss of these tariffs that are reduced, to improve the lot of those who are deserving of social welfare, to meet the increased educational and development expenses, there are only two types of sources to which they can look. They can look to direct or to indirect taxation. Of the two, as Senator O'Brien has pointed out, indirect taxation, if you want buoyancy, is the source to which you should look primarily, because if you are going to tax a man's income more, you detract from his ambition to work more. There is no factory worker who will be prepared to do an extra four hours work on Saturday for overtime if he has to give one-third of what he earns by way of income tax to the State, and it is approximately one-third at 6/4d. in the £. There is no business executive working 50 or 60 hours a week who will fit in an extra four, five or six hours by staying up working until early morning if he has to work four out of those six extra hours for the State and only two for himself.

If you increase direct taxes you go directly contrary to the principle the Government have in mind. What they want to do is to make people ambitious to work more, to work longer, to work harder; but if you are going to take from them a substantial percentage of what they earn in doing so you are going to destroy that ambition.

There are many other objections to direct taxation. It helps to undermine one's integrity. There are many people who avoid paying their full share of income tax if they can do so. They feel justified in their own conscience. These are people who ordinarily would not defraud anyone. It is certainly putting a temptation in their way. Likewise, an increase in direct taxation detracts from savings and detracts from investment as distinct from a tax on expenditure which encourages savings and investment.

So of the two, therefore, if the ambition of the Government be, as we believe it is, to increase productivity and encourage savings and investment, they have to turn in the first instance to indirect taxation. One of the arguments used against the new form of indirect taxation which is being adopted by the Government is that it is being paid by the poor as well as the rich. Of course, the rich will pay more. The man who spends £2,000 a year in running his house and keeping his family will find it costs him four times as much as the man who spends £500 a year in doing so. But, as Senator Crowley pointed out, the man who spends £500 a year may be paying out of what he wants for necessaries, so the Government have brought in compensatory factors making up for that to the poorer sections of the community. It is an acknowledged principle of political science that there should be no taxation without representation. It is an equally true principle of political science that there should be no representation without taxation. In a healthy democratic community as, thank God, we have got here, every citizen of this State no matter how humble, may become a member of its Government and has equal rights with every other citizen.

It is a proud heritage. Rights beget obligations and, therefore, he, too, has his obligations of the very same types as the obligations of every other citizen, even the obligation to pay taxes. That principle is admitted in local authority taxation. The owner of every house must pay rates on his house. The occupier of every house must pay rates even if he be poor. He may not be paying so much on his little cottage because the valuation is not as high as on the large house of the wealthy man. At no time have I heard the suggestion either from a local authority or from either House of this legislature that rates should be forgone on the poor man's cottage, although I have heard the suggestion that they should be forgone on land. Surely a roof over a man's head is equally as important as his food, his clothes and the other necessities of life.

I do agree, however, despite the fact that the principle remains intact, that every man must bear tax obligations to the State, nevertheless it is right and proper that there should be a grading down; and certain people may even get compensations higher than the amount of tax they have to pay, as is now being done for old age pensioners, widows, the blind, the unemployed and the ill.

Let us now consider the type of indirect taxation the Minister has selected. What he has chosen is neither novel nor untried. The first of the bigger countries of Europe to introduce a turnover tax was Germany. Germany introduced a turnover tax in 1919. It was found that it worked so well there that it was introduced in France in 1920. The Opposition in the French Parliament in the general election of 1924 promised as one of the main planks of their platform that if they were returned to power they would abolish it. They were returned to power in the 1924 election but they did not abolish it, and it remains in France to this day. It spread from Germany and France throughout the other countries in Europe and at this time it exists in every State of free Europe except England and Ireland. Between 1929 and 1933 it spread to America and it exists in practically every State taxation system in America. It spread to Canada where it exists also for many years. It exists in some of the countries of South America and in Australia. I have heard the argument urged that turnover tax is not satisfactory except in countries where there is decimal coinage. There is no decimal coinage in Australia. They have the very same monetary system that you have here, but they have got a turnover tax in Australia and it works very satisfactorily there. For quite a long period one-fifth of the total revenue in France was collected by this turnover tax and one-tenth of the total revenue in Germany. If I may have your permission I shall read a short extract:—

"The sales tax has been thus far particularly illuminating in demonstrating how a group such as retailers can in a comparatively short time whip themselves into a frenzy of activity which for a while bears all the earmarks of a popular uprising. If some future historian should judge the opposition to the sales tax by the number of telegrams sent, mass meetings held, circulars distributed and even local election activities fostered, he might well wonder how 17 sales tax laws could be passed within 17 months."

That could very easily have been an extract from one of our daily papers during the past months. The quotation is however from a book published over 25 years ago entitled: Sales Tax in the American States by Haig. Human nature being much the same everywhere, the history of this tax is much the same everywhere. One objection which the retailers have is that they are being converted into tax collectors and that the Government are unfair in doing that, and that the Government have not been right or proper in face of all the opposition of the retailers in persisting in the sales tax. After all, it is Government's duty to govern. It is their duty to steer the boat and not to let any section of the community upset the boat. There is another group who are collecting between them £5 million worth of taxation in this country. I refer to my own profession—the solicitors' profession. There are approximately 1,000 solicitors' offices in the country and we between us collect each year approximately £3 million in estate duty and £2 million in stamp duty. That works out at an average of £5,000 for every solicitor's office in the country and is considerably more than the solicitors' gross income. We did not march on Leinster House; we did not find it too hard. It is undoubtedly some hardship. We have to do more book-keeping. If we pay stamp duty before collecting from our clients as we frequently have to do, or if we pay death duties before collecting from our clients as we sometimes have to do, we have to wait for it. Retailers have not to pay tax until they collect the money. The amount the retailer has to collect is relatively small towards the amount each solicitor has to collect. On top of that, for the past two or three years if a solicitor draws a bill of costs for £150 outlay, say, and £100 professional fees, that is a total of £250; when he taxes the bill of costs he has to pay 2½ per cent tax on the total of £250. He is entitled to collect a refund afterwards if he can and sometimes if he is lucky.

We as a profession feel that there is a national obligation on us to do our part towards the common good. We do not find it an undue hardship. Surely the retailers in this country should have at least as much pride in their own country and be as much desirous to help the common good as we are.

Our incomes do not increase with the turnover in the country. By reason of the improvement in the gross national product each year, the retailer's gross takings go up. He gets a percentage profit on his gross takings. His overhead expenses do not as a matter of course increase proportionately with his increased turnover and so, his net income is increased as the country's productivity improves. I do not begrudge it to him. He is quite welcome to it. The ordinary grocer or shopkeeper is a very decent man who works hard. I do think a grave disservice was done to the shopkeepers by stirring them up to all this opposition and getting all these resolutions passed: "We will not pay this, we will not do that, the Government must look after us as against every other section of the community." If half the energy they devoted to protests and meetings had been diverted to meeting the manufacturers and meeting the wholesalers, and arranging with them and with the Department of Finance how the tax could be operated so as to cause least hardship, the retailers would have done very much better for themselves. They would have had time to think things over and iron out difficulties so that there would be no great hardship upon any shopkeeper in putting the tax into operation.

The second serious basis of objection to the present Bill is the increase in Corporation Profits Tax. Again, if we are to judge that properly we must look at it against the background of facts and the background of history. Corporations are limited companies. They came into being with the industrial revolution. They can have all the rights of citizens, own property, sell property, make profits, but they escape many of the liabilities and obligations of the ordinary citizen.

An Leas-Chathaoirleach

Does the Seanad want to adjourn in the absence of the Minister?

It has been the practice to continue in the past and I do not think we should deviate from that.

An Leas-Chathaoirleach

Does the House want to go on in the absence of the Minister?

A Senator

It rests with Senator Nash, what he wishes to do.

I feel I would be discourteous to the Minister and with your permission, a Leas-Chathaoirleach, I should like to sit down.

On a point of order, I wonder could some arrangement be made by which the Minister, while in the Seanad, could have some reliable member of the Opposition to act for him? To say the least of it it is awkward for the House that we should have these fairly frequent breaks as we had last week. If that arrangement could be made it would be better for all concerned.

An Leas-Chathaoirleach

I quite agree.

Could we occupy our time in finding out what we are going to do this evening?

My understanding of the arrangement was that we should finish the Second Reading and we should sit late to do so.

I say we should finish at 10 o'clock tonight and take the Committee Stage and other Stages tomorrow.

We have all had long experience and I have no guarantee we will finish the Committee Stage tomorrow. I suggest in the best interests of all that we should finish the Second Stage tonight.

I believe we could finish all Stages tomorrow. After all, we begin at 10.30 a.m. and if it has been agreed we will finish all Stages tomorrow.

I understand that an allegation was made here earlier this evening that the Leader of the Opposition in this House, Senator Hayes, had agreed to the conclusion of this debate at 10 o'clock. With the greatest respect, I would say that that is not so and the record will show that that is not so. When that suggestion was made Senator Hayes said he hoped to conclude but he had no control over the people who wanted to speak. It was absolutely clear that he was not undertaking to this House or anybody else that he was agreeing to the conclusion of the debate at 10 o'clock.

I never said Senator Hayes agreed to conclude at 10 o'clock. I said Senator Hayes agreed to conclude the Second Stage tonight.

Senator Hayes said he could not speak for everybody on this side of the House.

I was a witness of this. Senator Hayes was not speaking for everybody on this side of the House but he was speaking for his own Party, the Fine Gael Party, and he said it was not difficult to stop anybody who wished to speak, that they did not want the Committee Stage immediately after the Second Stage, that we could finish the Second Stage tonight and the Committee Stage and other Stages tomorrow.

That is what we agreed here. I suggest that we sit until 11 o'clock tonight and, if we have not finished the Second Stage by then, we can continue it tomorrow, finish the second Stage before lunch, take the Committee Stage after a break, and take all Remaining Stages tomorrow.

My understanding of the agreement was that we would finish the Second Stage tonight. I want to stick to that agreement and not have this business of people forgetting what arrangements were made.

That is completely wrong.

I feel very strongly about this. There was no agreement with the Independents in this House and we have the right to speak until we are finished, if we feel like it. No agreement between the Leaders of the two main Parties is binding on the House as a whole, so Senator Mullins is just wasting time talking about an agreement unless he has got the consent of every individual member of the House outside the main Parties.

I support Senator Stanford very strongly. Speaking for my colleagues on the National University Panel, we were neither consulted nor would we agree to such a limit.

Senator Stanford is the last person in the world I should like to deprive of his right to speak. I would sit here until 5 o'clock in the morning to listen to him, if necessary.

I do not intend to speak. I do not wish to speak, but I want to make sure that my colleagues maintain their right to speak for as long as they like.

No one objects to that. What I am interested in is seeing that the Second Stage of the Bill is concluded tonight.

Five or six Senators have offered to speak. We should try to compromise.

Under Standing Orders the sitting terminates at 10 o'clock. No motion has been moved to suspend Standing Orders.

Is there any reason why we should finish tonight?

An Leas-Chathaoirleach

In practice, the House would rise at 10 p.m. but, by agreement, it may continue to a later hour. It is not necessary to move that Standing Orders be suspended, but there must be agreement.

Can the Leader of the House impose an extension without the agreement of all sides of the House?

An Leas-Chathaoirleach


I think this side of the House is not agreeable to sit after 10 o'clock but by way of compromise, we would agree to sit until 11 p.m.

An Leas-Chathaoirleach

Can we get agreement before the Minister comes back?

We are now waiting for a ruling from you.

An Leas-Chathaoirleach

In the absence of agreement, we shall rise at 10 p.m.

I want to stick to the agreement which was made that we would finish the Second Stage tonight. I do not see why we cannot.

The only valid agreement is one made in the public business of this House. Any private agreement made by Senator Ó Maoláin with some members of the House is not valid. The only agreement that binds is an agreement that is made now.

An Leas-Chathaoirleach

Has the Leader of the House any specific proposal to make?

I suggest the House should agree to allow the Minister to begin his reply at 10.45 p.m.

We should like to agree but, to my knowledge, four or five Senators have prepared long speeches. This is a very important measure and people have gone to a great deal of trouble to prepare their speeches.

This is one of the most controversial measures to come before the House in a long time. It makes a radical change in the basis of our taxation. It is rather remarkable that the Seanad should be expected to do in one day what the Dáil saw fit to take two weeks to accomplish.

I outlined the programme today with the intention of facilitating not only Senators but the staff of the Oireachtas who have been working hard and are unable to make holiday arrangements if they are not certain of the date the House will rise for the recess. In order to do that it was necessary that the Finance Bill should be concluded in the time specified. The programme was outlined to accommodate Senators to make holiday arrangements, and the staff must be considered also. I do not see anything unreasonable in asking that the Second Stage should be finished tonight and that the Minister should begin to reply at 10.45 p.m.

It is unreasonable to ask Senators to abandon speeches which they have carefully prepared. It is most unreasonable. The Leaders of the House have had an opportunity to speak and why should not backbenchers, and even some frontbenchers, get the same opportunity?

I suggest that we adjourn tonight at the normal time, sit again in the morning, and sit until we conclude the business.

Undertake to finish the Bill tomorrow and, if necessary, sit until 12 midnight?

We have agreed to that.

An Leas-Chathaoirleach

Have we agreement now that we rise at 10 p.m.?

I am prepared to accept Senator Murphy's suggestion that we adjourn at 10 o'clock tonight, if it is clearly understood that we take all Stages tomorrow and sit until we finish the Bill.

That was my suggestion too.

An Leas-Chathaoirleach

We have agreement.


I was referring to corporations. They cannot be sent to prison. They do not pay any death duties because they never die. They pay no surtax but, in place of surtax, they pay what is known as corporation profits tax. They have those rights and privileges by reason of the fact that originally the purpose behind limited companies was that enormous enterprises were being started which no one man could afford to undertake.

The general public had to be brought in to put up the money. Their liability had to be limited. If the business speculation goes wrong the limited liability company enjoys a great advantage. Today, however, those advantages were found to be too good to be missed by the ordinary man and approximately 90 per cent of the limited liability companies of this country are no longer public companies. They are private companies belonging to private individuals who make a good deal of money and who want to avoid the tax obligations of the ordinary citizens. A businessman who is doing well will convert his business into a limited liability company. He himself can control it perhaps, by controlling £100 worth of preference shares. He, therefore, can pass on his assets to his children or to his widow, or dependents, or anyway he likes without discharging the liability for death duties, which attaches to ordinary private citizens. If a farmer with 50 statute acres dies leaving money in the Bank and his stock and his total assets amounts to £6,000, and he leaves a widow and young family, they pay an estate duty on the value of his assets. If instead of a 50-acre farm he has an 800-acre farm, it will pay him to convert himself into a limited liability company, so that when he dies there are no death duties payable.

Likewise, the ordinary businessman who converts himself into a limited liability company can avoid all liability for sur-tax. There is no sur-tax up to £2,500, and so he will first draw £2,500 as Director's fees. Let us say his company makes a further £10,000. Now his company is really himself under another name and heretofore on that extra income of £10,000 he paid only 2/- corporation tax and so his total tax, including income tax and Corporation Profits Tax, was 6/4 in the £. on the first £2,500 and 8/4 in the £ on the balance of £10,000. If, however, his next door neighbour who had not converted himself into a limited liability company had, let us say, altogether only £5,000 taxable income, he would have to pay 6/4 on the first £2,500, and 8/10 in the £ on the next £2,000 and 11/4 in the £ on the remaining £500. If a private citizen were lucky enough to earn taxable income of £7,500, on anything over the £7,500 he would pay 13/10 in the £ as against his next door neighbour who would pay only at 8/4 in the £ being 6/4 Income Tax and 2/- Corportation Profits Tax.

Therefore, when it comes to increasing direct taxation and it was necessary to increase it somewhat to make the Budget balance, the Government looked around and said: "What can we do that will not interfere with productivity and will cause the least hardship to the community of this country?" They increased the corporation profits tax from 2/- in the £ to 3/- in the £. Now this man who as a private company earns £10,000 a year will be paying 9/4 in the £ despite the increase while his next door neighbour who trades as an individual, and makes £8,000 a year is paying 13/10 in the £ on portion of his income. That increase in Corporation Profits Tax on the public companies is negligible; and the rate of tax between corporation profits tax and income tax on our public companies, who are only about 10 per cent of the total limited liability companies in this country, compares very favourably with the rate of tax on public companies in other countries. The proof of that is that despite the increase in corporation profits tax, the price of practically every Irish share on the Stock Exchange has gone up since last January. The company that makes £100,000 profit per annum is charged an extra £5,000 tax—a negligible sum in £100,000. The company that makes £100,000 profits, after paying its dividends and everything else, will not feel that extra £5,000 and it will not interfere with its expansion.

One objection that has been raised against the corporation profits tax is the term "retrospection" which has been used. We are told "it has been retrospective". Let us see whether that is so or not. If as a private individual you pay income tax, the sum upon which you will be assessed, which is taken as your income for this year, is your earnings of last year. If the rate of income tax went up this year from 6/4 in the £, which it is, to 7/9 in the £, which it is in England and it was somewhere around that six years ago here, and you earned £2,000 last year you would now pay your income tax on £2,000 at 7/9 in the £ even though you would not have known that it would be 7/9 until this Bill was passed.

Likewise, there is no doubt whatsoever about it that the limited liability company also would have paid 7/9 in the £ on its profits of last year. It has never been suggested that Income Tax has been assessed retrospectively. It is an ordinary principle of taxation which has been accepted year in, year out, whether income tax goes up or whether income tax goes down that the basis of taxation is the previous year's profits. It has, however, been suggested that corporation tax, and that only when it is increased, is retrospective if charged on the previous year's profits.

With very great respect, I would submit that that is really an accounting fiction. I agree that when one gets one's accounts balanced at the end of the year the accountant makes up a beautiful set of figures with the total at the bottom, setting aside a certain amount for income tax and sur-tax if you are a private individual and a certain amount for income tax and corporation profits tax if you are a company. The real reason that this increase is being described as a retrospective tax is because it has been so long since any alteration has been made in corporation profits tax. As far as I know—I am subject to correction— I do not think that any alteration has been made for 30 years. If income tax went down as it did a few years ago, the accounts of a company would be all done beautifully too and it would have set aside a certain amount for income tax which now proved excessive and no company would complain that now they would have too much to go to their reserves. I have seen and heard this tax debated as if the accounts, when balanced on the 31st December, with a certain amount for dividend, a certain amount for income tax and corporation profits tax and a certain amount for reserves were sacrosanct and could not be disturbed. You are told that it is a hardship to a company if the corporation profits tax is increased by 1/-. The impression you are left under is that the company take their reserves and put them into a strongbox, that they take their corporation profits tax and their income tax and put them into the top drawer of the desk to hand them to the tax collector the following week. That, of course, is completely divorced from reality.

Here, again, companies have a very special privilege. So far as corporation profits tax is concerned there is a provision that this tax cannot be raised on a company for a minimum period of six months after the close of an accounting period and it cannot be demanded for a further minimum period of two months and eight days. Therefore, assuming that this Bill had been passed long ago and that the company had their accounts made up to last December, the very earliest date at which corporation profits tax could be demanded would be the month of September next. As this Bill has not yet passed and we have now gone into the month of July, even if every inspector of taxes tomorrow worked like a machine, the earliest demand that could be made for any increased corporation profits tax is about next October or next November.

What really happens is that the company have put their reserves into their ordinary trading account to make the money work. The company have put their income tax into their ordinary banking accounts also to make the money work. They will have been trading from last December until next October and out of the accumulated profits of the whole lot they pay this extra shilling in the £. Therefore, there is no terrible hardship. It is not going to put the poor fellows into the workhouse despite all the sympathy that may be wasted on them.

I should consider that they were very lucky that it was not an increase in income tax because had it been, it would not have been an increase calculated on the profits for the last accounting period that would have been taken and not until the 31st December. If a company closed their accounts last June, they would have to pay an extra shilling in the £ income tax on those accounts up to last June even though they had their lovely balance sheet made out, everything in the right column and added up. They could not have objected to that. They never did when income tax was increased because they had the advantage when it was reduced. Now they have this very special privilege, that instead of being handicapped by what we are told is a retrospective tax, and despite the fact that their accounting period may have ended last June, they have to pay only on the profits for an accounting period up to the 31st December, so really far from having any cause for complaint the contrary is completely the fact.

Somebody—I think it was Senator Crowley—described this Budget as a pedestrian and unimaginative one. Bearing in mind what is the policy of the Minister and the Government, that the nation should have a buoyant economy, that the taxes should be such as not to interfere with the buoyancy of that economy, I would think that the contrary has been the case, and that so far from criticism the Minister is deserving of congratulation. Despite all the protests and the opposition he has had the courage to insist that while an Opposition need look forward only to the next election a Government must look forward to the next generation. While an Opposition need consider only its own Party, a Government must consider the nation. While an Opposition can drift with every current of every dissident, vocal section provided the pressure group is strong enough a Government must hold the scales evenly between all sections of the community — between those who are small and have very little voting rights and those who are large and powerful because of money interests behind them or because their voting strength is great.

I had some words prepared to say tonight but before launching into them I must say that I listened with amazement to Senator Nash's very interesting speech which purported to explain that there is, in fact, no extra taxation on business people in this Bill although I know from sad experience that there has been a very heavy one imposed on every single trader large or small in this State. He almost mesmerised even me into believing that the sums that I and other business people are going to be called upon to pay are purely figments of my imagination.

He went on to tell us how a retrospective tax was not retrospective. We ought to be glad that we did not have income tax instead of the corporation profits tax, whereas the fact is that as well we will have the turnover tax added.

One thing that everybody would have thought would have been that if we were going to have indirect instead of direct taxation that we could expect some relief on the income tax side. I must say that Senator Nash is to be congratulated on his defence of the Budget, and I feel that if the same defence had only been made in the Dáil people would have been so mesmerised that they would not have been in a position to make any case. I almost believed myself that, having this extra taxation, I should be happy to feel that it was there and that I would not be worried about finding all the money that I and other traders must find that is being taken out of the till from me and every other businessman in the country. It really was an amazing performance.

This Bill enables the Government to implement the proposals of the Budget, and I think it is fair to say that no Budget, since the establishment of the State, has been so attacked or created such hard feeling in so many sections of the community. The general citizen's criticism of the Budget and of the conditions of our economy is bad leaving aside any of the political criticism and the excitement which inevitably has arisen both in the Dáil and in the country. There is grave disappointment among citizens generally. Everybody knows that and it should not be hidden away or denied. Citizens generally are disappointed with the state of affairs which makes these harsh financial proposals necessary, imposing as they do new tax demands on every class of citizen in the community. What makes the disappointment keener is that all this comes at a time when the Government have been assuring us of the great and growing prosperity of our economy. Indeed, there was expectancy of some reliefs in taxation, and this was expressed in chamber of commerce journals over the last few months preceding the Budget and even individual Ministers had been stating that taxation was already too high. The business community were expecting further tax incentives to enable them to build up new capital for investment in new methods, and new machinery in order to increase their efficiency and their ability to compete in the world's markets. It is only a very short while ago since business firms were exhorted by the Taoiseach and his Ministers to improve their efficiency and competitiveness in the context of the Common Market. Certain Ministers, one at least to my own knowledge, had even gone so far as to say to those concerned that the abolition of death duties might easily be expected in the near future from the Government — the abolition of death duties.

There is a feeling prevalent among the citizens generally that money is being improvidently spent and even wasted by the Government. This view is expressed in the June issue of the Irish Hardware and Allied Trader. In the course of my remarks I do intend to quote certain traders and representative trade bodies because I do not want my remarks to be taken as merely my own. I want to make my contribution to this debate not as a political member of the House, though I am proud to be a member of the Fine Gael Party, because I feel that this House has an element of vocationalism and I was elected to the House by the Federation of Employers and the Banks Standing Committee. Therefore, when I speak in this House, I want to give the business point of view. When I have spoken I shall have given the Government credit for any good thing they do and I am honestly trying to make a business man's speech and give the criticism of business of the proposals in the Finance Bill. I propose to back up what I say by the considered opinions of the representative bodies concerned with these new impositions of taxation.

I quote the Irish Hardware and Allied Trader on the question of improvident and even wasteful expenditure. This is the relevant part:

There is another side to the picture, a reality with which our leaders have long been out of touch —the view of those who must live under present-day Budgets and find the money for it all. It is more than time that our legislators tailored their expenditure to suit income rather than the reverse.

If this squandermania did not exist there would be no need for a turnover tax, but could we at least have some assurance that other taxes will go or that the new one will not be raised later?

This quotation is only one example of what is being freely asserted, that politicians have no idea of the value of money which is not their own money, which has to be found from citizens and groups of citizens who earn their money the hard way.

It is very greatly to be regretted that the necessity has arisen for the proposals in the Finance Bill which have shocked the taxpayers and which will have a retarding effect on the economy. Its ill effects are not only financial but psychological as well. The Budget is a blow to national morale which will take a very real sense of duty on the part of citizens to overcome. It also has the unfortunate effect of playing off one section of the community against the other. It divides labour and management groups in the country with the object of reducing the effectiveness of the Opposition to some of the more undesirable proposals in the Bill.

As a result of this, we will now have such things as the principle of retrospective taxation of profits established and the confidential nature of Irish banking destroyed. Incidentally, the Labour Party, to their credit, voted against retrospection in the Dáil.

The Central Bank Report stresses the vital necessity to produce more competitively and to export more if the country's long term economic growth is to be assured and emphasises that Government spending in this country is excessive in relation to national income and has contributed to the emerging inflationary pressure on prices and costs.

The Minister, when criticised, asks what expenditure can be reduced. But the answer to him is that public spending cannot permanently ensure a continuing rate of growth which is beyond the real resources of the economy. He must tune his spending to the economy's ability to pay instead of spending first and finding the money from the taxpayers afterwards.

Speaking to the annual meeting of the Hely Group Limited as reported in the Irish Independent of 6th June, 1963, the Chairman in the course of his address said:

The heavy burden of taxation and tax collection imposed on industry by the Minister for Finance would appear to be at complete variance with the exhortations of other Government Departments who pressed for greater productivity and increased exports.

It is only a very short time ago since there were exhortations by the Taoiseach and his Ministers to greater efficiency and competitiveness in the context of the Common Market. Yet now the business community are presented with a bill of costs by the Government which the Chamber of Commerce Journal of May, 1963, describes as:

A severe disappointment to the commercial community.

The increase of 50 per cent in corporation profits tax it describes as:

already an undesirable form of taxation.... It will seriously affect the development of many small companies which cannot raise funds from the public and their normal methods of expansion is to restrict dividends and plough back profits into the business ... It will also have the effect of discouraging the investment of risk capital and reducing the amount of corporate savings. Furthermore, at a time when the country is anxious to encourage foreign interests and is encouraging foreign industrialists to expand production still further, it is unfortunate that the Minister for Finance should seek to raise so sharply the level of company taxation.

I feel that a lot of the impositions put on business generally and the increased taxes on profits in this Budget have really been done as a sop to people who do not understand the necessity for profits in order to make business successful and capable of giving good employment and paying good wages.

As to the turnover tax, I do not propose to make very much comment because enough has already been said by others both in the Dáil and in trade associations generally, but I do say that the proposal simply bristles with difficulties. My own opinion is that a purchase tax would have been better as it would be more flexible in its administration. Purchase tax could have been applied with a heavy hand to luxuries and with a less heavy hand to other items until you came to commodities which would be exempt altogether. Another advantage it would have is that it would be the natural follow up to the removal of tariffs. Tariffs are included in prices going to trade and then translated into the prices going to the consumer. That is going to happen in any case and I do not see any reason for complicating it by going this roundabout way of the turnover tax.

Personally, I am not opposed to a turnover tax. I think there would be every justification for the tax for the reasons given, that it was necessary to throw the net into a wider field than at present, but it should be in substitution for and not in addition to income tax. That is a fault and I think it is not justifiable. For the time being while it was in process of being introduced, there could be a combination of both methods, that is some form of turnover tax if you like, but some compensatory reliefs through a reduction of income tax on the other side. That is what was envisaged by the Income Tax Commission.

It has been the avowed aim of the Government to attract foreign capital and the method used up to now has been one of grants and special tax reliefs. Some of the proposals in this Bill undermine the good effect of these incentives and any thinking businessman will look long at the proposals. He finds that the initial benefits which he gets are liable to be negatived by retrospective taxation on his profits and his tax reliefs removed. All form of taxation is being steadily and gradually increased and this is having a very bad effect on investments in this country. I feel that that is one of the very bad things which is happening at the present moment. I have some extracts here to show that it is not my own opinion I am giving. I should like to quote the Chairman of Unidare Ltd., a Company of some £2 million capital, which we all know is one of our most important industries. It is an industry of which we are all proud. Speaking at the company's annual meeting for the year 1962-63 the Chairman, referring to the corporation profits tax, said:

This is probably one of the most disturbing actions ever taken by the Department of Finance. In fact, it is much nearer the pattern we expect to find in countries with a controlled economy rather than in a country which claims freedom.

He goes on to say:

How can you possibly plan your business or look after the interests of your shareholders if, having closed your accounts and paid out your dividends, you are presented with a Government order to go back to your previous year's trading and extract a further sum of money for which no provision has been made? Our shareholders should be aware that the retrospective increased corporation profits tax is, in fact, a capital levy—a levy on your capital which we are holding in trust. The only difference between the Cripps capital levy in Great Britain and this one is that Cripps levied on the recorded capital of each individual. This levy is only upon those courageous persons who have had the courage to put their money into Irish Industry. I know of no measure more likely to frighten Irish investors and restrict confidence than this one.

On the same subject of retrospective taxation the Chamber of Commerce Journal, June, 1963, remarked and I quote:

They add up to a clear levy on capital, not income, since last year's undistributed profits are part of this year's capital used to run a business. It is perhaps a clever way of doing it provided one has no care for retaining the confidence of the business men that there are rules which will be observed.

Again, I might mention that this retrospective proposal has been characterized by the Chairman of the New Ireland Assurance Company, Mr. D. McCullough, at their general meeting as being "plainly unjustifiable and indefensible". I should also like to quote one other scource of criticism of back-dated taxation. Mr. Desmond J. O'Kelly, President of the Irish Branch of the Association of Certified and Corporate Accountants, speaking at the annual general meeting of that body, called it "A startling decision" and said that:

legislatures up to now had fought shy of retrospective legislation. This step on the part of the Government must, he said, tend to discourage investment from outside this country and run directly counter to the objects of the Industrial Development (Encouragement of External Investment) Act, 1958.

Now these are the opinions of a cross-section of the business community who are affected by this tax. I should like to just make a remark about the effect of intrusion into the confidential method of banking to which I referred. Many people view this with much apprehension. From his remarks, Senator Crowley's view on this subject is coloured merely by the idea of seeing that certain persons do not get away from paying their legitimate taxes to the State, but I suggest that this is a very drastic operation. There are so many ways of getting this information without breaking down the confidential nature of banking. I should like to quote from an article written in the Financial Times on the Lebanon on the 23rd May, 1963. It says:

There is perhaps no country in the world which allows its banks a greater freedom of operation than Lebanon. The absence of Government restrictions, together with the enactment of a Swiss-type banking secrecy law in 1956, has undoubtedly contributed to the emergence of Beirut as an important centre of international finance. There are now over 90 banks operating in Lebanon, of which 17 are branches of foreign banks, including three British and three American. According to official statistics, the annual average of bank deposits rose from £49 million in 1955 to £124 million in 1961 but it is generally conceded that the actual figure is substantially higher than this.

Anybody who knows the necessity for banking deposits as fuel for the building up of industry in this country will know how important it is to conserve every possible form of capital and to get in every possible form of capital for the purpose of lending it out for the development of our industrial economy. So much for the breaking down of the banking confidence and secrecy.

Ever since the inception of the State the citizens have always shown themselves willing to accept Budget proposals. They have always accepted the proposals for extra taxation burdens. Sometimes they have been accepted with a lot of grumbling but as regards the budgetary proposals in this Bill there has been a general wave of indignation and I believe the members of the Government Party themselves are not too happy about it. We all understand with their loyalty to their Party they cannot express themselves officially. Much exception is being taken to the fact that a level of taxation has been designed this year which is in excess of present Exchequer requirements. This is a most unsatisfactory state of affairs for two reasons, first, because by doing this the State takes more than is necessary from the already overtaxed taxpayer. They take more money than is needed. Secondly, with more money in the coffers of the Government it is only natural that it will encourage them to increase expenditure unnecessarily. It is only human nature that the more money you have the more you spend. The fact of the matter is that this country is becoming a high taxation one.

We are an underdeveloped country whether we like it or not. In the past it was argued that because of our lower taxation we attracted industries and capital, but unless something is done quickly this trend will be reversed now. We can only have a better life, of which the Taoiseach has spoken, if we earn the money to pay for it. We must create wealth before we can spend it. This Budget is a case of spending first and finding the money afterwards. I should like to be able to praise the good in the Finance Bill. I always try to give credit where credit is due, but I am sorry to say the undesirable features so far outweigh the good ones that it is not possible to do so on this occasion.

I listened with great interest to Senator Nash. He put in another form the point which Senator O'Brien made earlier in the debate that this is a growth Budget and that the Government must find money from some source for the various expansion plans which they have. We have already gone into the Government's difficulties in great detail. We have dealt with the lowering of the rate of progress of the Irish economy from an average 4½ per cent growth per annum to an actual 2½ per cent in 1962.

This is basically a growth Budget. It may be true, as Senator McGuire said, that the Government have been extravagant but, nevertheless, Senator Nash's figures on the relationship of taxation to gross national product impress me considerably. I cannot believe that, in relation to other countries, we are as overtaxed as Senator McGuire thinks. I support the turnover tax. Income tax is paid by something like one in 17 of our population. The turnover tax is an attempt to make taxation fall more evenly on all classes and sections of the community. In effect, it will pull in a great number of people who, up to now, have not paid their share of tax. It is because there are a great number of people who, up to now, have not contributed their due share of tax that there has been this outcry about turnover tax.

In principle, I support the turnover tax. Senator Nash spoke of solicitors collecting tax for the Government. We may do so to a certain extent, but I would not go all the way with him because I do not think many solicitors pay out stamp duties from their own moneys these days. Certainly, I have never heard of solicitors paying out death duties for a client. In a sense they collect the tax, but I do not think they put it out themselves. I was frightened at the suggestion Senator Nash made. I was afraid it would encourage the Minister to exclude professional services from the exempted activities. I hope the Minister will not get any ideas on that line.

I said I support the turnover tax in principle, but there are certain points on which I cannot support it. I should like to have seen food excluded. I should also like to have seen hire purchase excluded. I cannot see the real difference in the First Schedule in the exempted activities of banking and money lending services from hire purchase services. If a man wants to buy a motor car on credit he can go to the bank, borrow the money, and he will pay the bank interest on the money he borrows. That service of the bank is expressly excluded in the First Schedule. If he wants to borrow money from some person to buy a motor car, that service is also excluded in the First Schedule but for some reason, which I do not entirely understand, the First Schedule says that money-lending otherwise than in connection with hire-purchase or credit-sale transactions is exempted.

I cannot see the practical difference between a hire purchase transaction and a bank transaction to finance, for example, the purchase of a motor car or a straight money lending transaction. I think the Minister is putting an unnecessary and harsh burden on people buying motor cars or domestic goods on hire purchase. I propose to raise that point in more detail on Committee Stage.

There is one point on which I should like some clarification from the Minister, that is, in relation to the exclusion in the First Schedule of "services of an educational nature". Had he in mind —I do not think he could have in mind —services of a semi-educational nature, such as the Dublin Zoo? At the moment I think the turnover of the Zoo would be caught. It seems to me that the Zoo is a national institution which should not be caught by his taxation. The Zoological Society should be exempt from this tax because it performs an educational function. It is not clearly covered by the present exemptions.

I take exception to the retrospective assessment of corporation profits tax because whatever Senator Nash may say about the provision not being retrospective, in effect it is retrospective. It must be retrospective if a company such as Unidare, which was mentioned by Senator McGuire, completes its accounts, distributes its dividends and later finds it has tax liability in respect of a year in which it has already closed its accounts. In that respect the tax must be retrospective. I know there was precedent for this back in 1932 or 1933, but it was a bad precedent. I entirely support what Senator McGuire has said on this point. This will undermine the confidence of foreign investors. It is a great mistake to try to raise a few millions extra by this method. In effect, the Government are going back over accounts which are already closed. In that connection I do not see how the section will apply to a company which has been wound up. I have set down a recommendation to cover this point. Where a liquidator has liquidated a company, I do not see how the Government can possibly go back over the previous receipts of that company to January, 1962. The money will be already distributed.

Retrospective charging of corporation profits tax strikes at the very root of confidence, and will have a most serious effect, not only on our own industry and commerce, but on the foreign investors whom we are so anxious to attract here. Even at this late stage the Minister might consider raising this money in some other way, or adjusting the tax, rather than extracting what is, in effect, retrospective taxation whatever the legal position may be. In principle, I support the Bill but, in certain details, I do not.

Debate adjourned.
The Seanad adjourned at 10 p.m. until 10.30 a.m. on Friday, 19th July, 1963.