The Minister will recall with some satisfaction that I am one of the tethered Senators who cannot say much on this Bill. Indeed, I have only a couple of general comments to make. The introduction of this tax is a surprising decision for the Government to make. Three years ago they had the choice of either a turnover tax at the retail stage or a tax at the wholesale stage and the Minister differentiated effectively between the two by saying that while the turnover tax had to attach to virtually all commodities subject to limited exceptions, wholesale tax is being applied to a small number of firms. Such a tax can be selective.
The turnover tax, in a country which has not got a decimal coinage, can only be levied in units of 3d and 6d in the £ as to go below 3d would cause a great many difficulties. This means the minimum amount the Minister can raise is about £7½ million a year. I am inclined to the view that one of the reasons this tax is being introduced is because of the inflexibility of the turnover tax. This tax is too good for raising money, for a minimum increase of £7½ million is too much of a bludgeon when one is trying in a Budget to collect a million here and £2 million there— where you do not want to raise a large volume of revenue. This new tax is being introduced because of failure by the Government to appreciate, when the turnover tax was being introduced, how inflexible it was. This new tax will enable the Government to raise smaller sums when smaller sums are needed. It will enable the Government to be selective. This tax will not cover the full range of goods which would fall under the hammer and the bludgeon of the turnover tax.
There is a strong case for this tax as against the turnover tax. At the time of the turnover tax I was surprised at the Government's decision to introduce it on all goods. This was not in accordance with the recommendations of the Income Tax Commission which favoured rather a tax of this kind. It is particularly difficult to swallow the argument made for the turnover tax—that it was simpler to operate. We now find that the Government are turning away from that and imposing this other tax. The Government have got themselves into a situation in which they are now imposing a tax which they said was too complicated and hard to operate when the turnover tax was introduced. They now find it is necessary to have two such taxes. It seems to me that the tax announced is flexible. It can be applied to a relatively narrow range of goods and it will collect about £5 million or, if it is placed on the whole range of commodities at the wholesale level, it would bring in a much larger sum.
I am not naïve enough to ask why we do not abolish the turnover tax and give up £15 million revenue. But I want to know why we have got to have this new tax, which can be levied on some goods and also have to have another turnover tax on a full range of goods which applies to about 30,000 retailers. I know there are more retailers than that but some of the smaller retailers do not pay the tax themselves but buy goods tax-paid. There are probably about 30,000 who actually pay this tax. So far as I can make out the wholesalers from whom those people are buying goods will also be paying tax on some goods at the wholesale level. Those wholesalers could, at the drop of a hat, add the 2½ per cent turnover tax to this new 5 per cent tax and thus save the retailers from the complicated business of filling up forms. The retailers could then be exempted from filling up those forms.
Perhaps I misunderstand the position. I realise that there are certain wholesalers whose lines are such that they will not be paying the wholesale tax. Nevertheless, many of them will be paying it. You could, therefore, by levying the turnover tax on them exempt 30,000 retailers from this complicated business of having to calculate their turnover which, at the retail level, is something not all firms do in the ordinary way. Many small firms do not do so and they could be exempted.
The only reason I can see for not doing it this way is that some wholesalers will not be paying this new tax and that you would have to extend the system to them in order to bring them within the framework of this tax. That is a weak argument because, in fact, those wholesalers are probably already involved in turnover tax proceedings on behalf of small retailers buying from them on a tax paid basis. I doubt if there are wholesalers, not under this new system, who are not paying tax of one or other type. It seems to me that you could abolish the liability of retailers to make those returns and could collect both taxes at the same level.
The only other argument I can see is that if this were done the Government might feel it was a climb down and an admission that they were wrong in the first instance and that this turnover tax should be at wholesale level. The Taoiseach a few minutes ago said that the Government were more concerned to be responsible than right. If they find they were wrong about the turnover tax they should not be afraid to admit it and to change their minds. They would have a bit of fun poked at them by the Opposition but they should not be afraid of that. I would like the Minister for Finance to do something with regard to this and to accept that there is no point in retailers, as well as wholesalers, filling up forms with regard to the turnover tax when the whole business could be done at the wholesale level.
There is one other argument which could be put forward—that is that if you charge the tax at wholesale level the margin would be added as it goes along—that it is likely that if it was put on at wholesale level that you would get a certain amount of pushing up of prices and certain increased profits, but with the price control measures now available to deal with this matter this should not present any problem. If you charge the turnover tax at the wholesale level it should not lead to any increased profit taking. If it does, the Minister for Industry and Commerce has ample power to deal with any such abuses.
I can see no reason for requiring over 30,000 people to continue filling up forms for this turnover tax. If the Minister has some good reason for not doing this he should tell the House. I have not seen anything in the Dáil debates referring to this matter. I have not read that it has been justified in the Dáil that the turnover tax should continue to be levied at the retail level. If it has already been justified in the Dáil I would like to hear about it.
The Minister should explain why we have to have two different forms of taxation. That is a fair question and it is one which I hope the Minister will answer when he is replying. I would also like to say that the addition of this £5 million to the burden of taxation is something about which one should make some protest. I am not personally opposed to an increase in taxation when one gets some concrete benefit from it. I consider the Government were perfectly right in the Second Programme to plan to increase the burden of taxation by 10 per cent over the period. They said that this money would be used for education and health. It seems quite proper to do that but we now find that for the last three years the extra taxation is not producing extra educational or health services. We are getting increased taxation but we are not getting increased benefits from this. We are getting the burden of taxation which was planned for 1970 at this stage, which is just three years after the start of the Programme. In that time the burden of taxation has risen 2½ times faster than was planned. The extra taxes of which this tax is a part will take about 55 per cent of the increase in national output this year. The amount which the Government expect to receive from the various taxes in the two Budgets, plus the somewhat uncertain buoyancy it expects, will represent about 55 per cent of the national output which the Government have forecasted. The Government should not manage its affairs in such a way as to take 55 per cent of the national output in any one year. Thirty per cent, perhaps even 33 per cent, is tolerable but no country can stand the situation in which the proportion of national output taken is not one-quarter to one-third but well over one-half, as is the case this year. This extra taxation which could have been avoided, if the Minister had held fast to the principles of the Second Programme, is something which is imposing an excessive burden on the economy. I think it is fair to say that and if the Minister came back and asked "What do you want to cut out?" it would be proper for me to say at this stage that I dealt adequately with that on the other Finance Bill.
The fact is that this involves a failure of management far beyond that which the economy should be expected to tolerate and the source of this extra taxation is not in the immediate decision of the Government to pay wage claims and additional aid to farmers, but it lies in the background of the past. It is founded on errors made previously upon which these particular provisions have been superimposed. It is there the trouble lies. However, I do not want to go further on that. I have spoken at length already on this general question of taxation. I merely want to raise this particular point on the Bill and let others who are not so tethered as I am, unleash themselves on the broader fields.
