It appears to be inevitable that the Finance Bill of 1963 will shortly become law but it would be wrong to allow this occasion to pass without registering a final protest against it. I rise to do so because, in the words of the Taoiseach, this Bill effects a revolution in the tax structure of this country, a very undesirable revolution, I suggest. It imposes tax without regard to the capacity of the people being taxed to bear it. It imposes a tax on everybody, a tax on the poor as well as the rich. It imposes a tax which will equally affect the necessaries of the poor and the luxuries of the rich man.
Early on in the debate on this measure, there seemed to be some doubt as to whether or not it would affect the cost of living, but as the debate dragged on in the Dáil and as we discussed the measure in this House, it has become clear, and has been accepted by the Minister, that it will affect the cost of living; in other words, it is now agreed that the business people of this country are not philanthropists, that they are not enjoying huge margins of profit and that if they are to stay in business, they will have to pass this 2½ per cent tax on to the consumer. That is the first reason I object to this Bill, that it will hurt the people who are not in a position to protect themselves against it.
It may be said that organised labour will protect themselves by demanding an increase in wages. That may be so. It is, in fact, my opinion that that will happen, but there are very many people throughout the length and breadth of the country who have to buy food, clothes, boots and other necessaries of life, who will not be able to protect themselves against this iniquitous tax on the very existence of mankind in this country. It has been stated that up to now there has been no rebellion from anybody except the organised traders, but I venture to suggest that it will not be long after the 1st November until you have a universal outcry against the tax and a demand for increased wages all over the country.
In fact, it is not correct to say that there has been no protest on a general line against the tax. I must again refer to the by-election in the largest constituency in the country. The people there in no uncertain way by a vote of two to one registered a protest against the tax. In fact, the Government know perfectly well that this tax is not acceptable to the people of this country because on the Fifth and Final Stage of the Bill in the Dáil the Taoiseach used language which meant, in effect, that he believed that if the Government fell on this measure and went to the country they would be hopelessly beaten. I think that is a fair summary of the Taoiseach's speech in the Dáil. I can quote it if necessary. On the 17th of this month he said that if the Government fell on this measure the result would be that there would be unstable government for a long time. I do not accept that in its literal sense. I do not accept it as an admission from the Taoiseach that his Party would be defeated, that he would not have a majority on the issue of this tax, that other Parties would have the majority.
This tax is being imposed on the people against all advice. An independent commission on income tax, after hearing expert evidence, gave its report and advised that some sort of sales tax be introduced but it made two qualifications. The first was that exemption from tax should be given to goods essential for agricultural production, goods essential for industrial manufacture and goods for export, agricultural and industrial. Food, particularly essential food, fuel, newspapers, books, household non-durable goods, goods already subject to heavy customs or excise duty such as tobacco and works of art should also be excluded. That was their recommendation; that a tax excluding those items should be introduced.
It had a further proviso in its recommendation: the tax should be substituted for income tax or rather certain reliefs should be given. They recommended a minimum relief of 2/-in the £1 in income tax if even that limited sales tax were introduced. What have we here however? An all-embracing turnover tax that covers everything a person has to eat, to wear or to use and, at the same time, we have measures to ensure that more income tax will be collected as well as this sales tax.
The people who gave evidence before the Commission on Income Taxation consisted of professors of economics from three university colleges and each and every one of them advised against a sales tax. The Revenue Commissioners prepared a considered memorandum and submitted it to the Commission late in 1957 and for reasons, which I have given earlier, they advised against such a tax as this as costly to enforce, difficult to enforce and involving too many people. Therefore, you have the experts all against this and as far back as 1957 advising against the tax. The people of Dublin North-East a short time ago registered their protest against this tax and still it goes through by a majority of one vote in the Dáil. I do not think there is any necessity to labour further the turnover tax, which hits the poor person and hits the essentials of life and cannot be justified according to any standard.
I oppose this Bill on the ground that it creates another undesirable precedent in that it makes provision for the levying of tax retrospectively in the form of corporation profits tax. If the Government want to increase the rate of corporation profits tax and think it is necessary, they are entitled to do so, but the people of any country are entitled to know from year to year what tax they have to meet. When a business firm closes its books at the end of the financial year and has made provision for tax for the year which has ended it is entitled to say: "I have no further tax to meet here." The Minister, however, in reply to a query of mine on Committee Stage, admitted that under the provisions for increasing retrospectively the corporation profits tax, a company which has already paid tax in respect of an accounting period can now be called upon to pay a further five per cent tax in respect of that period. That is retrospection, and it is a bad precedent.
The Minister also admitted that under the provisions of this Bill very many limited liability companies whose profits for the year did not exceed £2,500 and who were free from corporation profits tax will now be told: "We have changed our minds; you must pay the tax."
There is a drive to induce foreign capital to come in here in the form of companies setting up industries and bringing with them their know-how and some foreign capital. We are expending a considerable amount of money on advertising in order to attract such companies here and to put before them the privileges and advantages to be gained, such as grants, cheaper labour,et cetera. I venture to suggest that this retrospective provision in this Bill will far outweigh any publicity we can engage in to attract foreign industrialists here. The amount involved in this retrospection appears to be £2½ million, and it is not worth it. The amount being taken in in the additional revenue in this Bill is £14 million, I understand.
There is another provision in the Bill which I violently oppose because it is quite unsettling to the people of this country, that is, the provision which coerces the commercial banks into disclosing the business of their depositors to the Revenue Commissioners. A lot of us here have knowledge in one way or another in dealing with the ordinary countryman, and we know from our experience that he wants to keep his business private. We know that he has a considerable amount of money on deposit in the banks because he thinks it is the only place he can put it where it will not be known to his neighbours and to the Revenue Commissioners. I say that the provision in this Bill which compels the banks to furnish a list of depositors of £1,500 and over to the Revenue Commissioners is a bad provision. Not alone will it put out of the banks large deposits but it will discourage the small depositor of even £500, £600 or £1,000 from depositing his money in the bank. He will refuse to do it because he will fear that his business will be known.
Up to now, it has been very difficult to get the farming community to invest in Government loans or even to put their money in the Post Office. The reason is that they fear their business would be known and that it would have some queer consequences for themselves. It is obvious from that that money which would otherwise be deposited in the banks will now be hoarded in small or large amounts in the homes of this country. The economy of the country in general will suffer as a result.
I do not wish to drag out this debate any longer than necessary, but I feel that this House should and must protest against this measure on the grounds I have given—the turnover tax, the retrospective provision in respect of corporation profits tax, and the interference with the confidential relationship of banker and customer. I sit down now after listening to this debate and reading all that has gone on in the Dáil and the Seanad, and having regard to the lack of intervention in this debate by members of the opposite side of the House, I find it indeed extremely difficult, in fact, impossible, to understand how they can support this Bill.