Dáil Éireann díospóireacht -
Wednesday, 22 Apr 1925

Vol. 11 No. 1

CUSTOMS RESOLUTIONS. - RESOLUTION No. 5—TOILET SOAPS.

Mr. BLYTHE

I beg to move:—

That in addition to the Customs duty imposed by Section 21 of the Finance Act, 1924 (No. 27 of 1924), a customs duty of an amount equal to ten per cent. of the value of the article shall be charged, levied, and paid on all toilet (including shaving) soaps, soap powders, and soap substitutes imported into Saorstát Éireann on or after the 24th day of April, 1925.

It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

I referred to this briefly in my general statement. We are, as I said, satisfied that this particular alteration of the tax will enable the industry to get on its feet here. There is not very much, from the point of view of profit, in the manufacture of common soap. The end of the business that pays and the end of the business that will cause the manufacture of the remaining classes of the article to be carried on, is the part concerned with toilet soap and shaving soaps. If we have these we will have the manufacture of the common soap. On the other hand, if we have only a duty at the rate of ten per cent. we will probably go on simply having a manufacture of the common soap here. The position will be that the tax to maintain the manufacture of the common soap and to prevent its being again threatened by imports would have to be made practically permanent.

There is another advantage in including these toilet articles. That is, we will have employment given to young chemists from our Universities. We will have some of the men we are training employed in their own country on the scientific side of industry, and we believe that that employment of some of our young University men on the scientific side of industry will have a very tonic effect generally, and may lead to improvement of standards in quite other lines of manufacture than the particular lines we are dealing with now.

Major COOPER

I just want to remind the Dáil that this is a leap in the dark. It is an inevitable consequence of protection that every industry protected comes along and says it has not got enough protection, and that an additional 10 or 20 per cent. is needed to put it on its legs. We are asked to make this increase of duty in connection with the one industry for which we have no data as to the effect of the duty imposed last year—absolutely no data of any kind. The Minister himself in his speech says that the effect of the duty on soap and candles cannot be judged in consequence of the forestalling that took place. That is what we told him last year, and then he did not believe us. I cannot find the reference now, but I have a vivid recollection of Deputy Johnson urging on the Minister that the delay in imposing duty on soap and candles was producing forestalling in certain imports and the Minister saying that a certain amount was taking place but that it was not anything very serious. Deputy Johnson invited the Minister to walk down the quays, and the Minister said that he would not do that. I think I am accurate in that. I always like to quote my references if I can.

In regard to the soap duty, I want to quote a couple of points. The Minister, when he introduced the 10 per cent. duty, said that "if manufacturers and workers are prepared to give a fair deal to the general public, practically all the soap and candles required in the Saorstát should be supplied from home factories without any added cost to the consumer. The value of these commodities imported annually is something between £340,000 and £350,000." That is the Minister's prophecy.

My prophecy made later on in the same debate was: "As a result of the postponing of the coming into force of this duty until the 1st July, I can prophesy that the Minister will get no revenue at all." I gather that he has not, because he has not told us. "There is ample time between now and the 1st July for the retailers of this country to import the whole of the soap that is needed for the next twelve months and to store it here. But though the State will get no revenue and the manufacturers will get no protection, the retailers will put up the price."

Mr. BLYTHE

They did not.

Major COOPER

I was a false prophet there. I then urged the Minister to postpone putting on the duty until the machinery was ready. What are the facts? The Minister says that the average import of soap and candles was £350,000, whereas last year, according to the Ministry of Industry and Commerce, it was £674,000, or almost double what the Minister believed. We have no data or facts to go on in dealing with this resolution. The Minister told us that owing to forestalling he cannot tell the effect of the duties. He has proved to be 100 per cent. out in his estimate of the total trade, and we have no knowledge of any extension in the soap industry beyond the statement of the Minister for Posts and Telegraphs, in Cork, that the foundations of a new soap factory are being laid. Yet we are asked to double this duty. I say that this is an illustration of the dangers of Protection. I am not going to take up the time of the Dáil, or to challenge a division, but I think that this is a very important matter and should be carefully considered before we decide to increase the duty on this substance.

Mr. JOHNSON

I think we cannot consider this matter without bearing in mind the fact that the greater part of the soap factories in the Saorstát belongs to the firm of Lever Brothers, and it is very largely in their hands, whether they will supply from their English factories or from their Irish factories. The 10 per cent. has not been sufficient, as I gather, to induce them to put their Irish factory on the production of soap for the Irish trade. I think that the proposition in the resolution is justified. I think the fact that a Deputy has quoted £600,000 as being the amount of soap imported is at least a very important item of information which goes far to justify the proposition in the resolution.

I want to raise a question which I raised last year. I am not sure what answer was given to me, but I imagine there was some doubt as to whether the duty was paid on the value of the soap, or upon the value of the parcel of soap that was imported. I think I quoted a case where it was shown in a trade journal, when advocating that certain Canadian manufacturers of shaving soap should try and capture the English market some years ago, and when a detailed costings analysis was given, that the retail price was something like 1/3, and that the freight, carriage, retail profits, etc., were so much, while the advertising, packing, printing and wrappers were so much, but the price of the soap itself was 1½d., while the balance of the 1/3 was for things other than soap. We know that a great deal of toilet and shaving soap is sold in fancy packages, and I am curious to know whether it is the intention to charge this extra ten per cent. on the value of the soap, or on the value of the article which is sold to the customer in the shape of soap, duly wrapped and packed. I think, if it is not the latter, that it will help to encourage the sending of soap in one parcel and the wrappers in another, but that, at any rate, would lead to a few people being engaged in the occupation of putting soap into wrappers, wrappers into boxes, and so on. That brings me to a question that really affects not merely soap but the whole financial proposition as regards the tariffs on imports. It is as to the method of checking the value of the articles imported. Most of us are new to the experience of ad valorem duties, and it will be some satisfaction to know that there is a real check upon the price, or rather upon the value, that is declared, and that the revenue is getting the full value of the duty. For instance, it is suggested to me, that boots are imported, the declared value of which is very much lower indeed than the price which is actually being paid by the wholesale importer, and while you are supposed to be getting fifteen per cent. ad valorem—three shillings on a pair of boots worth £1— I would like to have some information from the Minister as to how that value is checked. It will come on this particular proposition as well as on any other, in as much as soap may be valued at a certain price, and it may be found that the purchaser on this side of the water is actually paying a much higher price than that he is being charged on the invoice. Perhaps the Minister would find an opportunity to tell us the method by which the ad valorem duty is being checked, being quite sure that it is ad valorem.

Mr. GOOD

I think, in approaching this question of tariffs on different articles, the hesitancy of the Minister has led him into some difficulties, and we have one of these difficulties before us. Before the question of a tariff on any particular commodity is brought before the Dáil. I think it ought to be carefully inquired into by the Department concerned, and if the Minister makes up his mind that by imposing a tariff his object would be to encourage employment rather than to obtain revenue, he ought to take drastic steps along lines which will carry out his intention. In a country such as this, where our basic industry, on which the welfare of the country entirely depends, is agriculture, which depends for its success on its ability to meet traders from elsewhere in the great market in the adjoining country, I say that we ought to consider the question of tariffs very carefully, and only bring forward tariffs in cases where we are satisfied that the commodity can be produced in this country and give employment here, and be sold at a price not higher than that at which it is being sold at the moment. If I might illustrate that point, I would refer to the tobacco industry. There, as I previously pointed out, employment has been given to a large number of young people, a large amount of capital has been spent in this country, and we are paying nothing more to-day for that particular commodity produced by these factories than we were paying when these factories did not exist here, and when that particular item was imported. We are, therefore, not penalised in any way, but, on the other hand, we have a great advantage in additional employment, and in the spending of a large amount of capital in the country. If the Minister made up his mind that this is an item that could be manufactured here as cheaply as it is being sold, and, therefore, that it is an item which he should tax in order to provide employment at home, he should have made his tax very much higher. That, to my mind, as I pointed out this time twelve months, was the mistake which he made in connection with the boot tax.

What has happened in connection with the soap industry is that on the other side there were a very large number of manufacturers, and their Irish trade formed a very small portion of their output. If they had to sell the particular quantity required to meet the Irish demand even at a loss it would have a very small effect on their profit. That being so, it is obvious that if you want to stop that particular commodity coming in and ensure that it will be manufactured at home, the tax must be fairly heavy. Therefore, I would impress on the Minister in connection with these tariffs, if he is satisfied that the item is a suitable one from the point of view I have mentioned — because tariffs will want to be very cautiously used and carefully inquired into before being adopted—that he should not kill his effort by making the tariff a small one. That, I think, has been the failure in many of his proposals, and I think that is true in this particular case. I have grave doubts, knowing the conditions of this particular trade, that the additional 10 per cent. proposed will be sufficient to ensure that this particular commodity will be manufactured in this country.

Mr. BLYTHE

It is true that an amount of forestalling took place which I did not anticipate. It was an amount of forestalling that the rate on the commodity did not justify. It was due to a certain number of people losing their heads, and rushing in large quantities of soaps. They have made no profits by the forestalling, and there has been no increase in the price of soap. They simply have had large quantities of soaps on their hands with no advantage to themselves. They did, as I have said, forestall, and to that extent they prevented any increased employment in the soap industry here. We still believe that the 10 per cent., when the quantities brought in by way of forestalling have been worked off, will give increased employment, and cause increased manufacture in common soap. We have come to the conclusion that the better way of dealing with the matter is to put a higher tax on the finer ends with a view to removing in a reasonably short period the tax on common soap. We would not be in favour of keeping the tax on it if the manufacturers did not rise to the occasion and equip themselves to manufacture the finer ends of the soap industry. I do not want at this stage to enter into the question of the boot tax, but I believe it is having its effect in the extensions which are taking place. While there might be arguments for having it higher, the increased production we had in mind is being brought about with a fair amount of rapidity.

Deputy Johnson asked were we reasonably sure that we are getting the right value. In many cases where we have no reason to suspect the genuineness of invoices, and we saw nothing in the behaviour of the particular trader or importer on previous occasions to make us suspicious, the invoices have been taken, but in other cases very close inquiries have been pursued before the invoices were accepted, and even the question of the retail price at which the boots were afterwards sold has been examined. In the case of house to house imports, a firm outside sending its goods to its own branches here, we cannot, of course, accept invoices, and in these cases there are long-drawn-out and careful inquiries made with a view to establishing that the alleged value of the boots was the real value. There might be cases where this would escape us, but as our experience grows in the case of any particular class of goods, and where officers get more experienced in detecting tricks that may be resorted to, the administration will be tightened.

Resolution No. 5 agreed to.