I have always held that it is a sound principle of procedure that what might be legitimately defined as non-recurrent expenditure should be put to debt and only met in respect of its debt-charges from year to year and not in respect to itself. But, having adopted that principle, I think the Minister has not justified the particular items that he has so transferred, and I would like him, in winding up this debate, to touch upon those various items if he would. If I remember rightly, when the phrase was first used, to the expression "non-recurrent" was added "or foundational expenditure." Two years ago it was obvious that we, as a State, having only just been established for some six months, were incurring various forms of expenditure that was of a foundational nature and that was incidental to the establishment of the State. It was not only non-recurrent, therefore, but was a foundational expenditure. I think only that particular type of non-recurrent expenditure ought to be funded. There are certain kinds of expenditure which are non-recurrent but which, nevertheless, ought to be met in the year in which they are incurred.
I now here desire to strike a note of caution in regard to the procedure which the Minister, although he at one time was not in favour of it, has now accepted. Not merely has he accepted it, but he has accepted it to the extent of making it the very basis of his whole Budget. I will take, by way of instance, the various items that he has so transferred, making up the sum of £4,686,110, which he calls non-tax revenue. He sets that out in his speech yesterday under seven heads, dealing with the various items. There are: "Local Loans in respect of new capital; Public Works and Buildings; Property Losses Compensation; Personal Injuries Compensation; Technical Instruction—not ordinary technical instruction, but a duplicate item that was in previous Estimates; expenditure in respect of the Army over and above two million pounds, two millions, therefore, being accepted by him as being normal expenditure in respect of the Army, down to which figure it is proposed we should go. With all that I agree; but then the particular item to which I am now directing attention is under the letter G, included in his category yesterday. He says: "Central Fund Services, Services of Debt, Sinking Fund, etc., being the provision included in Central Fund Services for repayment of ways and means advances and savings certificates."
Without some further information than is in my possession at the moment, I fail to see, although I agree with the principle that non-recurrent expenditure should be funded, why this particular item is included in the category of such non-recurrent expenditure, and so turned over to a fund. There probably is some reason in the Minister's mind, and I will leave it to him if he will deal with that more fully when he comes to reply. As it seems there now, it appears to be of the nature that is strictly recurrent, and therefore should not have been funded. I think, while I am about it, I may mention that we are really getting away from the time, like the last two years, when we were incurring a vast amount of expenditure that was both non-recurrent and foundational. We are now at a period when we have almost attained— many think we have attained—a period of normality in the ordinary running of this huge business concern that we call a State, where, apart from special matters of a developmental nature, National Debt charges would have to be incurred. All other charges would be of a nature that ought to be treated as, perhaps, non-recurrent, perhaps recurrent; but in any case they would be of a nature that ought to be met in the ordinary revenues of the year. I agree with the principle, however, that the Minister has now accepted.
I move on to the next point upon which I would like him to deal more fully when he comes to reply. It is in regard to this particular debt. A sum of money is being transferred to debt, increasing the amount of debt existing at the present moment. He set out the various forms of debt which we have now. The total debt outstanding at the present moment, whether in respect of National Loan, Compensation Stock, Savings Certificates, or otherwise, according to the figures he gave, was £13,360,000 odd. To that must now be added £6,116,492, giving a total indebtedness at the moment, and as a consequence of the statement the Minister made yesterday, of £19,476,000 odd—roughly, nineteen and a-half million pounds. That is to say, nineteen and a-half million pounds is the indebtedness of this State at the present moment. It is not a large debt; it is a very small debt. As National Debts go now, it is a very small matter indeed, but the Minister stated yesterday also that the National Loan outstanding, after having been sunk to a certain extent by the operations of the Sinking Fund, was £9,760,000 odd. That is to say, that of the total debt which this State incurs because of the matters to which the Minister referred yesterday, and as a consequence of this Budget, of the total of nineteen and a-half millions, nine million and three-quarters have been funded at the present moment. That leaves another nine million and three-quarters to be funded. The amount of debt which, as a consequence of the Budget, the Free State will have to fund, will be, roughly, £10,000,000. I think the Minister should take the opportunity of the Budget and the winding-up of the debate on the resolution which is moved to-day, to make a statement as to what steps the Government proposes to take for the issuing of a further loan so as to fund this amount of money. I think that will be looked for, and I think the Minister would do well if he would deal with this question of the unfunded debt, the proposals for its funding, with any particulars as to the amount of the issue he may have in his possession as the result of the decisions of the Executive Council.
On that basis the Minister proceeds to remit certain taxes and to impose certain fresh taxes. It is inevitable as a result of his speech, and even if he had not used the words it would be inevitable in view of what had occurred, that a large number of Deputies would make a reference to the old discussion as between Protection and Free Trade and that we would get the usual tags that we always hear whenever either of these words is brought into a debate. Deputy Cooper, for example, spoke about an increase in the cost of living. I think Deputy Egan has largely answered him on that matter. I fail to understand how any Deputy could state that the result of the present Budget will be to increase the cost of living when the total amount of revenue to come into the State as the result of the taxes to be imposed by the Budget will be less than it was before the Budget was introduced. It is agreed that there will be an increase in respect of certain matters where new taxes are introduced, where those taxes did not exist before, but they will be compensated for by reliefs that will be given, and that are intended to be given, by taxes that are remitted and by taxes that are lowered. Inasmuch as the total revenue will be less, the cost of living will be less and must be less.
I suggest that the right attitude for the Dáil to adopt in regard to this question is not to burden itself with the words "Free Trade" and "Protection" at all. I think we would all agree that it is necessary that this State should confront its own difficulties for itself. It has now entered upon its third financial year. Three years ago it received, as a result of its connection with Great Britain, a fiscal system and a scale of taxes that were originally devised for the needs of Great Britain, the needs of a highly technical, industrialised country, devised and drafted for its needs and not devised and drafted for our needs at all. It was clearly necessary once we broke away from that system, once we broke away from the unity with that system, that we should set down our own problem, take stock of our own circumstances, and devise a system of taxation that is suited to our conditions, without respect to any of the prejudices that tax might carry because we had taken it over from people with whom we had been previously connected, people whose circumstances were very greatly different from ours. In other words, we should not consider a tax as being good or bad in the degree in which it could or could not be called Protection, or in the degree in which it could or could not be called Free Trade, but it should be considered in the degree in which it was a good tax suitable for our own needs.
I take it if we were starting off entirely fresh, being bound by no prejudices and no burdens of the past, and we had to consider a tax, we would proceed in that way. Supposing there was at this moment no such thing as a tax on tea or a tax on clothing and the country had to consider which of the two taxes it was better for the State to adopt, as being most suitable for the lives of the people, I believe that the majority of Deputies would come to the conclusion that the tax that would suit us the better of the two would be a tax on clothing, because the tea has now become a necessity of life just as much as clothing. There are many parts of clothing that are of the nature of luxuries, whereas tea, while once considered as a luxury, is now a necessary commodity in the life of every household. Therefore, it is not whether we can or cannot make our own clothing, whether these new taxes will or will not give protection, that I suggest the matter should be considered. I suggest that it should be considered in the light of which of these two taxes is better for us in this country. The tax on tea is paid, in respect of every part of it, by the consumer. That is not true of a tax on clothing. If 4d. be remitted from tea or added to it, the circumstances of the distributive trade in that commodity are such that the whole of that benefit or the whole of that burden can be transferred, and should be transferred, to the consumer. In clothing, that is notoriously not the case. Some of us have had experience of the very remarkable fact that is to be met with in ladies' clothing, of how many items there are, all getting the same mysterious figure that stops short a farthing off a shilling. You get item after item marked up to a farthing off a shilling. I decline, and I have always declined, to believe that these articles that have always received that one mysterious figure, 11¾d., or whatever shilling may be before it, were all manufactured at one price. It is perfectly clear that the haberdasher, or whoever the person may be, if he finds himself with a commodity that can be put up to the nearest 11¾d., he pushes it up to the nearest 11¾d. There is a case where this tax will in part be paid for not by the consumer but by the distributor. Therefore, I think, as between these two taxes, apart from the argument as to free trade or protection, that the better tax is the tax on clothing, and a relief that will give the greatest amount of benefit to the consumer will be a relief in respect of tea.
On these grounds I think the Minister has done wisely. What he has done in effect is to change the basis of our taxation. Deputy Cooper referred in protest to the originality of this Budget, but I do not think that that is a charge of which the Minister need have any fears. The Deputy also said that there was no information available on which Deputies could frame an adequate judgment. That information would never be available until it was first acquired, and it is an excellent thing that it should be acquired. I am now speaking in regard to the general terms of the Budget. I am not, and have not been, dealing with its particulars. I am not altogether in favour of the particular form of taxation on clothes, but what I say is, irrespective of the details and incidence of this Budget, that the principle is a sound one, and we should be able to consider the merits of the respective kinds of taxation without having our minds encumbered, without having to consider them in reference to fiscal debates that have no relation to this country. I doubt if these fiscal debates have reference to any country. I think I remember stating in this House before, when this matter was under discussion, that so far as I am concerned, and I have been reading this subject for twenty years fairly intimately, that if I were in Great Britain I should be in favour of the form of taxation that prevails in that country, and if anyone were to inform me that I were a free trader I should say that it did not affect me in the least, as the form is one which I consider suitable to that country, which depends on its carrying trade. Similarly, if I found myself in the United States, with its vast internal resources, I would believe in the form of taxation which it has devised for its needs, and, similarly, if anyone said that I were a protectionist I would say that that may be so, but it would not disturb a moment of my sleep. Similarly, in this State I agree with the Minister for Finance in branching out in the form of new taxation which he has undertaken, and I do urge when they are submitted to debate, as they should be, and submitted to analysis and criticism, that, at least, they should not be encumbered by terminology which has very little reference to us, and very little reference to our needs and circumstances. We should be able to discuss whether a tax is good or bad without being compelled to consider it as a protective or free trade tax. There is one particular tax where the Minister has made a remission, to which I wish to refer. I only wish to touch on one or two particulars of this Budget before we come to the Committee work, where we will have an opportunity of considering the particulars more fully. I refer to the income tax.
The Minister has received measured and moderate praise for his drop in income tax. I am glad he has given that relief, because I think the effect of it will be very widely felt by an increase in business activities, but while he is about it, I would like him to consider that this which we call an income tax, is not a tax at all. The English Minister with whose name it is associated, because he gave it its modern development, described it very aptly and justly by saying that it was not a tax but rather a code or system of taxation in which each different schedule was its own separate tax. That is just, and if the Minister is going to give relief I suggest that he might be wise to consider, even at this stage, before we come to Committee, the different schedules of that tax as a different tax of their own. Take the different five schedules. Schedule A is a tax on landed property, including houses— that is, a tax on rent. Schedule B is a tax on profits arising from occupancy of land. Schedule C is the income payable on interest out of public funds. I suggest that Schedules A. B. and C are schedules in respect of which relief is not so urgently required as it is in respect of Schedules D and E, to which I am not referring now. I would like all professions and forms of employment, including farming, to be brought under Schedule D, but profits arising from profession, trade, or employment, salaries or pensions, stand in an entirely different category from profits arising in respect of earlier schedules which are strictly non-productive and which, in a sense, might more legitimately be called idlers' taxes than the remaining two schedules which are taxes on working people. I suggest that that ought to be considered, that we ought not merely to speak of, and think about income tax as if it were one single tax, but we should deal with it as a whole code or system and deal with separate parts of it as separate taxes. If the Minister were to do that and put up against each particular schedule receipts in respect of taxes for that schedule he might be able to give a larger relief on Schedules D and E and a lesser relief on what I may call income derived from funds. I remember saying here two years ago and I hold to these words still, that the Minister and the State will find that relief given in income tax is one that will handsomely pay for itself in the future. I think I said two years ago in this House, when I urged the drop in income tax to 4/6, that that tax of 4/6 would in less than a couple of years be more remunerative to the State than a tax of 5/-, but I believe the rate of 4/- which will prevail when this Budget is passed will, in not very many years, prove more remunerative to the State than if the Minister had left it 5/-. I consider this drop a sound investment for the future.
I wish just to touch, in concluding, on this tax on wearing apparel. Deputy Mulcahy said yesterday that coupled with these taxes it should be remembered that the Minister said that it was not intended to break any new ground before a general election. This is a tax which will not directly help our own natural industries. Members of the Farmers' Party, and Deputies from different parts of the House, yesterday spoke of the bad state of our own clothing industry, and the various homespun industries in the West that are notoriously in a bad way. The tax will give them no benefit; it will only benefit the city manufacturer, or I might more properly describe him not as a city manufacturer, but as a city assembler of clothing. It gives no benefit on clothes, but only on the manufactured article, and I add my voice to those who put this matter forward yesterday that the real benefit that is required is the benefit to the manufacture of clothing, the raw material of which we produce in this country. I hope before we emerge from Committee the Minister will consent to the attempts that will be made to change these taxes so as to bring in the manufacture of cloth, and to make it apply less and less to the wide range of articles it at present covers. While some Deputy was speaking yesterday, the Minister for Finance interjected that special relief would be given in respect of travellers. I think that is a matter to which he might direct more attention in his concluding remarks. I may appear to close on words that would appear contradictory of what I have already said. I am not at all afraid of saying things that might appear to be contradictory of other things I have said. That would be a very absurd attitude to adopt in any assembly, but I have said we ought not to talk about Protection, and I adhere to that. Having said it, I go on to say that in considering taxes we ought to consider the utmost amount of Protection we ought to give. Those two statements are quite consistent, one with the other. I do not think that many of the taxes the Minister has introduced will help industries in this country. There are taxes that could help industries in this country lying very near industries which we already conduct—lying very near and parallel with the fundamental industry of this country, which is farming, and which we ought to encourage. I mention the manufacture of cloth, seeing that we grow our own wool.
Then I believe there is another point. I think Deputy Daly referred to it yesterday, and I am very glad to mention it myself, because I so seldom find myself in agreement with Deputy Daly that when I do I rejoice to celebrate the fact, and that is—why not something that would help our own flour-milling industry? I think these are matters that ought to be considered. In fact, I will go further and say that they ought to be considered now, because the Minister has said that if we do not go into these aspects of the question now there will be no further opportunity until a new House assembles some time in the future after the general election, and many of us may not be here to consider them at all, so we ought to take utmost advantage of the opportunity offered to us now. Generally these are matters that will be discussed in Committee. I think the Minister will be advised, in view of his own assertion, that he is shutting the door on further consideration for probably two years, to treat the criticisms in Committee with the utmost amount of hospitality. If it is any inducement, for my part, in respect of any amendments I may introduce, I may say that on the general lines of his Budget and the general policy enunciated of widening the basis of taxation, and searching for new taxes, which, even if not successful, will bring fuller information to this State than it has at present, I welcome it.
