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Dáil Éireann díospóireacht -
Friday, 3 Apr 1936

Vol. 61 No. 7

Private Deputies' Business. - Proposed Ground-Rent Levy.

Debate resumed on the following motion:—
That the Dáil is of opinion that local authorities in towns and cities should be empowered by legislation to supplement their revenue by levying a rate upon moneys received by ground landlords in respect of ground rents.—(Deputies Anthony and Morrissey.)

Deputy Anthony to conclude.

Before the Deputy concludes, are we going to hear nothing from the Opposition to indicate that Deputy Morrissey is sponsoring this motion with their authority? I see the leader of the Opposition present.

We should like to hear the Minister for Finance on the subject.

Apparently the Opposition is ashamed of Deputy Morrissey. They have taken care to be very ostentatious in their silence, and to disown him throughout the course of this debate. It is rather striking that when this debate was adjourned on the last occasion a leading member of the Front Bench rose to speak. I do not know whether that speech would have disclosed any difference of opinion in the ranks of the Fine Gael Party as to the merits of this motion. I understood that we were going to have a learned legal disquisition about the exact content of the term "ground rents": therefore, that we were going to have an exhaustive view of this most complicated problem; but apparently an extinguisher has been put on Deputy Fitzgerald-Kenney, and he, who is generally so vocal on matters of this sort, is to-day absent from the debate, and there is no Richmond to take the field in his place. We do not know either whether we shall hear any statement from the leader of the Opposition in regard to this matter before the debate concludes. I shall, however, take the opportunity, in the course of my speech, of pointing out to the House and to the public the tactics which are being pursued by the Opposition in regard to this motion.

Now, Sir, so many matters have been referred to in the course of this debate that I feel it necessary to draw the attention of the House to the terms of this motion:—

That the Dáil is of opinion that local authorities in towns and cities should be empowered by legislation to supplement their revenue by levying a rate upon moneys received by ground landlords in respect of ground rents.

It is unfortunate that the consideration of this proposal, already complex enough in itself, has been complicated still further by the importation into the discussion of arguments which might have some bearing on the nationalisation of land, on the taxation of site values or on the reduction of urban rents but have no significance to the question of levying a local rate on ground rents. I have said, and I hope to show, that the proposal contained in this motion is by no means as simple as the terms of the motion would suggest, but is one which, if given effect to, would have far-reaching consequences upon the whole credit structure of the State and of the community.

Let me remind the House that hitherto the position, as generally understood and accepted by the public, has been that ground rents are regarded as a gilt-edged security and therefore, practically untouchable except in so far as they come within the scope of the existing income, property taxes and death duties. Many persons accordingly have invested their savings in them. Bankers have regarded them with favour, and insurance companies have considered them as possibly the safest media for the investment of their insurance funds. That is, of course, for the investment of the funds of their policy-holders. Moreover, since some of the statements which have been made in the course of this debate would appear to indicate that there is a popular belief that private holders of ground rents are, in the main, exceedingly wealthy people, I may say that an analysis of the returns made year after year by the Revenue Commissioners of property liable to estate duty will indicate that this is hardly the case, as more than half of the ground rent property assessed to estate duty appears to have been held by people who were in comfortable but comparatively modest circumstances. May I also say, in passing, that all property in ground rents here, by whomsoever enjoyed, whether by a resident in this country or elsewhere, is assessed eventually by the State to estate duties and pays such duties to our Exchequer at the rate which the total value of the estate warrants and which, in fact, may be so high as 32 per cent. of the whole estate. Moreover, if the estate should pass twice after the expiration of five years, it has again to pay estate duties at the rate appropriate to its then value. This is an aspect of the matter which, I think, has been completely lost sight of in the course of the debates, but which I should like to emphasise. In so far, therefore, as there is any increment, whether earned or unearned, in the capital value of property, whether it be held in the form of ground rents or otherwise, passing on the decease of the owner, a very large share of it is taken by the State.

As I have said, ground-rents hitherto have been regarded as a gilt-edged security. They are a property in which many persons have invested their savings to make provision for themselves in their old age and for their widows and children after them. Insurance companies have invested the funds of their policy-holders in them and banks have accepted them as a sound security for the advances which they have made from their depositors' funds. If the House were to accept the motion standing in the names of Deputies Anthony and Morrissey, the value of these ground-rents would be immediately and seriously depreciated. Let us consider, then, the financial and social consequences which would thereupon ensue. The capital of individuals would be gravely and seriously depreciated. Possibly, if this proposal were to be carried to extremes, it would eventually be wiped out. In any event, there would be, as a first re-action, a considerable diminution in their incomes and, of course, in their purchasing power, leading ultimately to an increase in unemployment in this country. The position of insurance companies would likewise be affected. They would be compelled to make good the deficiencies which would arise at the expense of their staffs or their policy-holders or their shareholders or all three. Once more, there would be a serious diminution in income and in purchasing power with grave repercussions on the position of those employed in our productive industries. Banks would find themselves compelled to recall some of their loans or to ask those ground-rent owners to whom they had made advances—most probably to finance industrial undertakings—to put up additional security or to curtail their productive activities. The consequence of all this would be that there would be an immediate restriction of credit at a period when the growing demands of industry and agriculture make an expansion of credit desirable. There would be an undoubted diminution in the purchasing power of the community, leading to a decrease in the volume of employment and an increase in the volume of want and destitution. A feeling of insecurity and uneasiness would be created in the minds of the investing public which, for a time at any rate, would retard, if it did not wholly paralyse, the efforts which the Government is making to reconstruct our agricultural economy and to develop our industries. We must remember that, in carrying out our programme, in building our beet factories, in providing funds to carry out our housing programme, in launching the Industrial Credit Corporation, which has been instrumental in financing so many of the newly-established industries, and even in fighting the economic war itself, we have not only to rely upon the taxpayer but, should the need arise, we have to look to the lender and investor to provide for us what the taxpayer cannot supply. If, at this critical period, we do anything to disturb the confidence of our investors in what has been regarded as one of the fundamental investments for savings, is it likely they will invest their liquid capital in our loans or in any industrial or nation-building projects which we sponsor. The success of the Government's social and economic policy depends on our ability to secure and retain the confidence and trust of the people who have been thrifty, who have saved, and who have put the fruit of their savings into Irish ground-rents and other Irish investments. If we bear this in mind, we may catch a glimpse of the real purpose which Deputy Anthony and Deputy Morrissey had in view when they put this motion down on the Order Paper for the first time in the year 1932 and when they reinstated it thereon after the general election of 1933. Once more, they are fighting Britain's battle on the home front.

There may be something to be said for this motion but I do not think so. I think that there is a good deal to be said against it. Consider the position of the Deputies in whose names it stands. It is notorious that Deputy Anthony receives the support of a large section of the propertied people of Cork. Those who are known as ex-Unionists, in default of a candidate of their own, have preferred him even to the leader of the Opposition. Furthermore, he gets the tail-end of Deputy Cosgrave's preferences after Deputy Desmond——

Very few.

——Deputy Anthony professes to be independent, but every speech and public utterance of his proclaims him a follower of Deputy Cosgrave.

I should be very independent if I went over to you.

If the seconder of the motion, Deputy Morrissey, were here, he could not deny that his most prominent supporters in Tipperary are lords and ladies, members of the British aristocracy and he, unquestionably, is a member of the chief Opposition Party——

That is not a bad "speak."

——and, judging by the consequential manner in which he addressed himself to the House and the favours that they have been instrumental in bestowing on him in the past, an influential member of the Party. What I have said as to what would possibly ensue if the Dáil accepts this motion is enough to emphasise its importance. Yet, consider the manner in which it has been presented to the House. The motion has been on the Order Paper for at least three years. Surely, on a question of such fundamental importance, Deputies who take responsibility for making such a proposition as this, ought to undertake and discharge the duty of preparing themselves and making as good a case as possible for their proposal. Yet Deputy Anthony, in proposing the motion, stated that although it had been on the Order Paper for over three years, it was only on the day preceding the debate that he had prepared the data. I have read his speech, and, after reading it, have come to the conclusion that the preparation was of the slightest. Yet, the Deputy, who admitted that he himself had given the subject no serious study, made himself responsible for many wild and sweeping statements.

Did the Deputy use those words?

Wild and sweeping statements calculated only to mislead the public, to increase unrest, and to dislocate, if he could, the whole economic sphere.

Considering the fact, Sir, that the Minister is reading his speech, I think he ought to quote the Deputy's actual words.

If the Deputy's point is meant as a point of order, I would state that the Chair has no power to prevent a Minister or Deputy from interpreting the speech of any other Deputy, but if he purports to quote another Deputy's words, he must do so accurately.

Surely, Sir, that rule should be stretched in the case of a Minister who is reading a prepared speech.

I have not yet heard, Sir, that it is contrary to the orders for the Minister to refresh his memory by consulting notes, particularly in a matter of importance.

It is in accordance with precedent.

And, because it is important, I think the Minister should quote Deputy Anthony's own words.

I assume, Sir, that the Chair has already ruled on that matter.

Even though it may be the practice, I always said it was bad form to read a speech.

I am not reading it. However, I am refreshing my memory from my notes. Of course, nobody would expect Deputy Anthony to go out as a real whole-hogger either on this or any other matter. That is not Deputy Anthony's technique. He prefers, by innuendo, by half-assertion, and by a process of suggestion, to secure his effects while, all the time, he will disclaim his real purpose and intention.

A regular Machiavelli, I suppose.

No, a Caesar Borgia. Again, during the course of his speech on this motion, not once but a dozen times, he proclaimed that it was not his design to confiscate the property of any ground landlord. That would not be his style. A policy of open confiscation in regard to land might rapidly be applied to other property, such as, for instance, lease-holders who have built houses on land, or the owners of factories or business-premises. If you are to deprive a man of his right to property in land, might you not be equally justified in depriving him of any right to property in bricks or mortar, machines or materials? In short, what would there be to prevent you, once you had gone so far as to expropriate private ownership in land from communising industry. Of course, the advocacy of such a policy would not go down with Deputy Anthony's propertied supporters in Cork, and therefore, a dozen times over, we have him proclaiming that he does not stand for such a policy in this matter. Yet, what does the motion propose to do? A citizen of this country, who enjoys income from ground-rents, is taxed like every other citizen. Just like every other citizen, he pays his duties on his tea, sugar, and so on. He pays his income tax, and sometimes surtax, and when he dies his estate pays estate duties, and his heirs and successors pay the appropriate duties on the legacies which fall to them. Is it wrong to own land? If not, why penalise the owner? Is it immoral to own land? If so, declare that such ownership is immoral and abolish it, but do what you want to do openly and boldly. Do not don the mask of a hypocrite and say, like Deputy Morrissey, "I do not want to talk of confiscation; I do not believe in it."

This motion of Deputy Anthony's would single out for special penal treatment those who are the owners of ground-rents and make them liable to additional taxes, merely because they are the owners of ground-rents. What would be the effect of this additional tax, except to confiscate some portion of the value that is inherent in such property? Moreover, since the resolution imposes no limit to the amount of rate which might be imposed, it might, in fact, be carried to extremes, and confiscate all the value there would be in property in land. At best, what Deputy Anthony proposes would be partial confiscation. At worst, it might be complete confiscation. Yet, Deputy Anthony keeps on bleating that it is not his intention to confiscate any ground-rents. I am not arguing as to the merits or demerits of a confiscatory policy, if it were embarked upon. I am merely being honest and facing the facts, and I am asking Deputy Anthony to be honest also and to face the facts. I suppose I am over-optimistic in regard to Deputy Anthony, but I do hope that he will be honest and that, when he is winding up this debate, he will face the facts and tell the House that his real design is to confiscate, if he can—and I am going to show later on how difficult that may be—some portion of the property that there is in ground-rents and devote it to the use and benefit of some individual or some corporation other than the original owner.

I notice, Sir, that Deputy Morrissey has just entered the House, and I am reminded thereby of the battlement scene in Hamlet, and would say that Deputy Morrissey "comes most carefully upon the hour." Deputy Morrissey also, like Deputy Anthony, does not want to talk about confiscation. "I do not believe in it," he said. I concede that, in this regard, I am not surprised, because I do not think Deputy Morrissey believes in anything. So far as political principles and political ethics are concerned, Deputy Morrissey is the complete agnostic.

That is a bad reception so early in the morning.

The question, however, arises as to how far this agnosticism is shared by Deputy Morrissey's Party. Unlike Deputy Anthony, Deputy Morrissey, as I have already pointed out, does not pretend to be an Independent Deputy. He accepts the Whip of the Fine Gael Party and, on occasions, we have seen him do what Deputy Belton used to do, before General O'Duffy made him minister-designate for agriculture—we have seen him, when the occupants of the front Opposition Bench were either absent from it or have had their attention otherwise engaged, steal down to sit among the shadows.

I sat on a front bench before the Minister discovered that the Oath was an empty formula.

Even Deputy Morrissey, I presume, would not have the effrontery to invade the sacred precincts of the front bench opposite unless he felt that his influence and weight in the Fine Gael hierarchy entitled him to do so.

This is a great twist.

Unless we are to believe that he has been merely playing the cuckoo on the front bench, squatting, so to speak, in the nests of Deputy Brennan and Deputy O'Higgins, we must assume that Deputy Morrissey, as seconder of this motion, has the weight and authority behind him of the official Opposition. We must believe that in sponsoring this proposal he has the authority behind him of Deputy Cosgrave, Deputy O'Sullivan, Deputy Dillon and Deputy Costello, and that he is supported by Deputy John Good, Deputy Dockrell and Deputy Thrift, and that if it goes to a division they will vote with him.

The Minister did not say what Hamlet said.

Are we right in that belief? Are we right in the belief that he has the support of Deputy Good, Deputy Thrift, Deputy Dockrell, Deputy Gun O'Mahony, Deputy Alfred Byrne and Deputy Belton, and that they will all go into the Lobby after Deputy Morrissey in support of him and of his motion.

I hope the Minister's speech will enable the Revenue Commissioners to interpret the Finance Act of last year.

I assume that interruption is Deputy Belton's way of saying, in reply to my question, "not damn likely."

I welcome the Minister's twist. It means money to me.

Can we imagine these Deputies permitting any Government depending on their votes to bring in such a Bill. Surely, the wildest flights of our imagination could not encompass such a picture. A moment's reflection on that fact will show what a cruel fraud upon the public is this motion which appears on the Paper in the names of Deputy Morrissey and Deputy Anthony.

On a point of order, is the Minister, in a debate like this, entitled to a privilege not given to any other member of this House—to come in with a carefully prepared speech and read it out to the House? That is a privilege not granted to other Deputies.

That point has already been ruled on. A Minister, in making a pronouncement on an important matter, is entitled to consult his notes. That is what the Minister told us. He has assured the Chair and the House that he was not reading his speech.

Will the Deputy say whether he objects to my speech because of this exposure of Deputy Morrissey and Deputy Anthony?

And those of some members of your own Party.

Possibly I am fretting the Opposition.

The Minister is twisting himself.

I thought that an official expression of the views of the Opposition might be of some importance to the people of this country. Apparently I was wrong, as Deputy Mulcahy appears to regard those views as of no significance at all.

The Minister's speech is significant and the preparation of it is significant.

It is great stuff.

Am I to assume that anyone coming into this House to make a speech, and who has the courtesy in the discharge of his duties to the public and the country to make up his facts—a thing which neither Deputy Morrissey nor Deputy Anthony did—is not to be allowed to do so?

We would not be allowed to read our speeches.

I again deny that I am reading my speech. There is no visible sign that I am reading my speech. I contend that if I want to cogitate, and that is all I am doing, I am entitled to bend my head to do so. Apparently, Deputies opposite, on the front bench, who have sat in shamefaced silence with heads down, apparently are not prepared to allow a Minister even to nod in the House.

You will have to keep off this oration.

It is quite clear that the whole object of these interruptions is to get the official Opposition out of the embarrassing position in which their undignified silence on this matter has placed them. I was saying that this motion is a cruel fraud upon the public.

So are you!

Because they are thoroughly well aware of the fact that if ever an unlikely turn of opinion was to put Deputy Cosgrave and the Fine Gael Party in the saddle again, they would never give effect to the principle which is contained in this motion. The Party opposite knows that. Deputy Cosgrave knows it, and Deputy Mulcahy knows it, and their supporters know it and yet they sit here in this House in silence. They have not the courage to do what it is their duty to do, and to say that when seconding that motion Deputy Morrissey was not speaking for the Party. These gentlemen opposite are prepared to play with fire. They think this motion and this agitation will embarrass the Government.

It must be embarrassing the Minister.

The Opposition in this matter is behaving like the gentlemen who launched a certain Dr. Townsend on the troubled waters of American politics and who now wish he was never heard of. Deputy McGilligan last Wednesday referred to the position in Alberta. I would not compare the position in regard to this motion to the position in Alberta. There, a simple, inexperienced but honest man is battling with difficulties which arise from his own refusal to recognise the fundamental realities which underlie finance and economics.

May I ask if Dr. Townsend's position has any relevancy to this motion?

Not that I can see.

It is as relevant as some of the matters mentioned by the Party opposite. Here we have a caucus of wily politicians who are endeavouring to exploit a position for their own ends, fostering hopes and giving countenance to a proposal which, if ever they have power and responsibility again, they will disown. No, the position of the leaders of the Opposition in this matter is not Albertian; it is not even Gilbertian, it is merely hypocritical.

But, nevertheless, it is important that we should know what exactly is the understanding between Deputy Morrissey and his leaders—I presume they are still his leaders in this matter.

What is the understanding between the Minister and Deputy Victory?

At the moment, Deputy Cosgrave is like the Heathen Chinee—"His ways are peculiar."

No longer like Pontius Pilate?

He has always put himself forward as a paragon of financial soundness. He has eschewed all innovations and all self-proclaimed Radicalism, either in regard to taxation or to the ownership of property. In period after period, whirling and contorting like the tentacles of a cuttle-fish, his principal lieutenant, Deputy Dillon, has professed his readiness to die in defence of the sacred rights of property. This motion has been on the Order Paper for over three years. It does infringe the interests of certain property owners.

What about five-fourths of the valuation?

It might even in certain circumstances deprive, wholly, the legitimate owner of property of his rights in regard to it. It involves in effect, as I have already shown, either partial or complete confiscation of a value attaching to a certain class of property. And it is seconded by one of the principal members of Deputy Cosgrave's Party. Now, we all know that no member of a Party will put a motion down on the Order Paper, or will second a motion, except with the permission of his Party leaders and his Party Whip.

Not always.

Did Deputy Morrissey secure the consent of his Party leaders before he put this motion down in 1933? It is vital that we and the public should know. The House is entitled to this information because during the three or four days on which this motion has been discussed the Opposition leaders have been silent in regard to it.

Not merely is the House entitled to know whether Deputy Morrissey has acted with the consent and support of his leaders and his Party, but we are also entitled to know the grounds on which that support has been given. What are the alleged considerations of public interest which have moved the Fine Gael Party to adopt the views which have been expressed by Deputy Morrissey and Deputy Anthony? Hitherto, the Fine Gael Party have professed to speak for the property owners of this country, for the men who have a stake in the country, as they say. Are those men of property behind this motion, and, if so, for what purpose? Is it because they think that by a little judicious fanning of the flame they can produce chaos and economic disorder here? I have already pointed out the source from which Deputy Anthony secures his support in Cork City and the type of voters on whom Deputy Morrissey relies in Tippcrary.

The Minister and Deputies should realise that all Deputies have been duly elected and to that extent stand on an equal footing. It would make for better debate if that fact were generally recognised and acted on.

And, with all respect, if the Minister would apply himself to the motion. He has not referred to the motion for the last 20 minutes.

The Minister has had a very long innings on this subject, and do I understand that an innings on that particular line is not going to be allowed to anybody else?

If and when the question arises it will be decided.

I should like to point out that the movement for which Deputy Morrissey proposes to speak is closely associated with the City of Cork. So that I may show the relevance of that remark, I may say that in moving the motion Deputy Anthony read, in justification of the step which he was taking, a resolution which he had received through the medium of the City of Cork. I say that a recent meeting there was to give countenance and support to Deputy Anthony and Deputy Morrissey. I say that some of those who were most prominently identified with that Cork meeting were very closely associated with very large owners of house property, and that these property owners at one time were very closely associated with the Opposition. Now, one of the effects of Deputy Anthony's motion has been to depress very substantially, during the last two or three years, the value of ground-rents below the hitherto prevailing values. If ground-rents were bought at to-day's figures, they might in certain circumstances represent a very good bargain indeed. For instance, if the improbable were to happen and Deputy Cosgrave was to come back into power, and if with Deputies Dillon, Mulcahy, and Fitzgerald-Kenney he were to throw over Deputy Morrissey and to refuse to give effect to the proposal contained in the present motion, the value of ground-rents would immediately appreciate, and those who bought them at present-day prices would reap a very good profit indeed.

Of course, one's predisposition to undertake a gamble of that sort would be very much influenced by the views which one took as to the result of the next general election. For instance, if a wealthy supporter of the Fine Gael Party thought that Deputy Cosgrave would come back into power and that he would, as I have said, dissociate himself from Deputy Anthony and Deputy Morrissey, then, of course, it would be a very good thing to buy ground-rents and quite a good thing to support and foster any agitation which was calculated to depreciate their present value; all, of course, on the understanding that when Deputy Cosgrave came back such ground-rent values would rise. When we ponder over this——

The Minister, in dealing with this motion, should refrain from making such insinuations.

And not be repudiating Deputies Corry and Victory and at least half a dozen others of his own back benchers.

Will the Minister tell us what Polonious would say to these proposals?

I am dealing with the economic consequences of this motion, and the point which I have made is designed to show the importance, from the point of view of public interest and for the sake of political morality, of having an official expression of opinion from the official Opposition in regard to this motion. The public are entitled to know whether the fact that Deputy Morrissey has seconded this motion commits the official Opposition to Deputy Morrissey's and Deputy Anthony's policy.

Or whether Deputy Victory's or Deputy Corry's commits the Minister.

They are entitled to know that, because the gamble which is taking place is based upon the fact that the House has discussed for three or four days a motion in the terms which Deputy Morrissey has put on the Order Paper. I think the public are entitled to know how far the Opposition have examined this question, and to what extent they are prepared to commend this proposal of Deputy Morrissey's to public acceptance.

But have they examined the matter at all? During the whole three years that this motion has been on the Order Paper, sponsored by one of the leading members of their Party, have the Opposition discharged the duty of an Opposition and investigated the merits of the proposition for themselves? In my view, they have not, because even a casual examination of the proposal would satisfy any intelligent investigator that the proposal would not merely be injurious to public credit, not merely inequitable as between one taxpayer and another, but quite impracticable to operate.

If the Opposition have considered this motion, which they have permitted Deputy Morrissey to second, they might, for instance, tell us what they mean by ground-rents. It did not enter into the minds of Deputy Anthony and Deputy Morrissey to tell the House what they meant by that term, as it appears in their motion. Apparently, in their anxiety to play the political game, they did not give this very complicated question a moment's thought.

I am advised that it would be very difficult to give an exact legal definition of "ground-rent." For instance, some authorities hold that the expression "ground-rent," if otherwise unexplained, as it is unexplained and undefined in this motion, is to be understood as a rent less than the rack-rent which, of course, is only a rent equal to, or nearly equal to, the full value of any tenement, that is, a rent approaching to the full annual value of the property out of which it issues. It is, in short, a rent less than the property is worth to let by a willing landlord from year to year to a willing tenant. But, quite obviously, if one person is charging another a lesser rent than he might in law and equity, he does not wrong any man. Deputy Anthony and Deputy Morrissey, by their unqualified use of the term "ground-rent" in the motion before the House, would make him subject to a special impost, while the person who, at his expense, was enjoying a value in excess of the rent paid by him, was to go scot free.

The Minister has not read the motion. He does not know what he is talking about.

I am dealing with the fact that the Deputy has used the expression "ground-rents" without qualification or definition in the motion and I am telling what the law books will say on that matter.

Read the motion and tell us about that.

The proper meaning of "ground-rent," however, I understand, is the rent at which land is let for the purpose of improvement by building. If I had time to go into this aspect of the question at length, I think I could show clearly that to whomsoever else any increment in the value of land let in this way should inure, certainly the person who has a lease of the land on such terms has as little claim upon such increment as anyone. Yet, as I hope to show later, if this motion were adopted, the owner of the ground-rent would be taxed in order to relieve the other party to the lease, that is, the other party to the original contract. The occupier of the buildings erected on such ground would, consequently, be relieved of what was an essential feature of the bargain entered into by him with the owner of the land.

Would I be in order in suggesting at this stage that copies of the Minister's speech should be circulated to Deputies and the remainder taken as read?

I should very much like the Minister to read that last paragraph again.

I do not think that simply because the Deputy has an unruly Party behind him——

The Minister got mixed up in it.

He skipped a line.

The meaning is not clear from the last paragraph the Minister read and I submit that to the Chair. I do not know whether the Chair followed the paragraph or not, but the meaning is not clear.

The Deputy, who is, presumably, going to deal with this, will deal with it after the Recess. He will have an opportunity of studying it carefully.

Will the records of the House be what the Minister said, or what he has written in his document? Will the line be put in or will it be left out?

The Minister has assured the Chair that he is not reading his speech; that he is quoting, refreshing his memory from notes.

Surely I may put this to the Chair, on a point of order——

Not while the Ceann Comhairle is on his feet. The Official Records will contain what the Minister said.

The spoken word?

The spoken word.

On this ground, I would ask that Deputy Cosgrave's appeal be listened to by the Minister and that the Minister would repeat what he intended to say.

Is it conceivable that if the Minister leaves out a line, or mixes a line, the official reporters will not correct it?

I did not leave out any line. I made a complete and rational statement, a statement easily understandable by any person who was competent to follow it.

Do what the Americans do—hand in your speech.

I was saying that in the case of a lease based upon a ground-rent, in the proper connotation of the term, to whomsoever else any unearned increment might inure by reason of the grant of such a lease, the leaseholder had as little right to it as anyone else, and I said that if I had time to go into that aspect of the question, I would prove that.

Column 3.

I said that what we were asked to do here by this motion was to break a contract that had been entered into between the owner of the land and the builder of the property, in order to relieve the latter of what was an essential condition of the contract, and I am going on to say that, in other words, the State would intervene to break contracts relating to the ownership of property upon a wholesale scale; that if it is entitled to do that, it is equally entitled to break all other forms of contracts, such as wage contracts, pension contracts, constitutional contracts and the like; and that if the State once enters on activities of this sort, as we have seen in Germany and Italy and elsewhere, it will be hard to limit or restrain these activities in this or any other regard.

That has nothing whatever to do with the question.

However, in this country the term "ground-rent" or "head rent" is ordinarily applied to a rent payable on long lease which is substantially less than the full annual letting of the property comprising the site and the structure. Now it is physically impossible to divorce the building from the site upon which it stands, and, at the same time, maintain the structure. If we wish to divorce them, we must dismantle the building. Accordingly, the ownership of any building held otherwise than in fee simple is, in effect, divided between two or more people. The person who pays the ground rent has one part of the ownership, and the recipient or recipients of the ground-rent or head rent has the remainder.

Possibly at this stage I should remind the House that one of the fundamental principles upon which our social system has been built is the right of private ownership in land. Our whole rural economy is based upon that principle. We fought the Land War in order to establish it, and I believe that any person who attempts to undermine it, will face an opposition that would overawe a Hitler or a Stalin.

Deputy Anthony and Deputy Morrissey apparently realise that also, and, accordingly, they seek to placate this feeling in favour of private ownership in land by saying, "We are not in favour of confiscation"; that they "do not want to talk about it"; and that they "do not believe in it".

Even Deputy Norton took the same view. He expressed dissatisfaction with the motion because it did not deal with the position of future ground landlords, who, he said, might be able to circumvent not only existing taxes, but any local levy that might be imposed upon them. He offered his own solution to this problem and suggested that sales of building sites should be effected "through the local authority, in such a way as to ensure that the local authority would become the ground landlord." So far as I could gather from the latter part of the Deputy's speech, the procedure by which this was to be accomplished was that, first of all, negotiations should take place between the owner of the land and the prospective lessee. Then, when as a result of these negotiations, a bargain was struck—presumably on the basis that the owner of the ground would receive what he thought it was worth to him, and the prospective lessee on his side would give what he thought it was worth to him—the local authority would intervene and acquire the ground. Presumably also, in the course of acquiring the ground, the local authority would have to negotiate to buy out the right of the lessee or in some way to secure a superior title to his. However, as Deputy Norton did not outline his proposal in any great detail or with any great precision, it is scarcely necessary, at this stage, to go into the manifold difficulties that would arise. The point I do want to make, however, is this, that Deputy Norton, like Deputies Anthony and Morrissey and the vast generality of the people of this country, recognises that the owner of land which somebody else wishes to acquire for the purpose of improving it by building, is entitled to the full market value of his property.

If the owner of land is, by common admission, entitled to its full value, should somebody wish to buy it off him, how can we, in justice, penalise him, as this motion asks us to do, if he says:—"The land is my own, I do not want to dispose of it outright, but I will let you have the use of it for a very long term of years at a very low rent, provided you give me security that once the land has been rented to you I will derive an income such as I would derive if I built houses on it myself, or such as I would derive if I leased it for grazing or if I let it to a market gardener. Accordingly, if you give me that security and if you erect on it an appropriate structure, I will give you a lease of it." In effect he says:—"You come to me and you say to me that you want the land to make a profit on it yourself. I am already enjoying a profit out of it from the use I am making of it; I am not ready to forego my right to that, but if you want a lease you can have it by a bargain entered into freely between you and me."

I have shown that in general, in the case of any property which is not held in fee-simple, the ownership of the site and the structure is divided between two or more people. I think it will be admitted also that each of these people has an equal right to that portion of the ownership which he enjoys, whether it be part-ownership of the building or part-ownership of the site. Furthermore, I do not think it will be contended that the owner of the ground or site upon which a building held in fee-simple stands has any greater moral right to own that ground or site than he would have if he did not own the building as well, but owned the site only. Can the House see the point?

Well, after some of the statements which Deputy Cosgrave has made on the question of finance, I accept his answer without reservation.

Get a blackboard.

There are two classes of property-owners—there is the person who owns the site, and owns the structure, and there is the other category in which the ownership of the site and the structure is divided between two or more persons. I am saying that the person who owns the site and the structure has no greater moral right to the ownership of that property than have those people who have only part-ownership in it—people who partly own the structure and partly own the property.

With these fundamental principles in mind, let us revert again to the consideration of what a ground-rent is. And here one of the first things we must grasp is that a ground-rent is not necessarily equal to the true annual value, at any given time, of the bare site. It may be greater or less than such annual value or may by the merest accident, just equal it. If the ground-rent is less than the ground value, or, in other words, is only part of it—this is the point to which I would like Deputy Anthony to address himself when replying—on what principle of justice can the taxation or rating of the ground-rent alone to the exclusion of the rest of the ground value, be justified? If, in fact, the rent is less than what the site is worth annually, how can any person on any principle of justice or equity justify the infliction of what would be a penal impost on the person who is giving something for less than it is worth.

Take now the other case in which the ground-rent is greater than the ground value, that is the case in which it arises partly out of the building on the site. It is difficult to see on what principle a rate or tax could be levied on that part, arising out of the building, which is not levied on other rents arising from buildings alone. It is the recognition of the principle that it is not possible to do that sort of thing in equity which distinguishes this proposition the income-tax code, where the tax is levied on all rents whether the value arises out of the site or out of the structure, from Deputy Anthony's proposal.

Does that argument apply where the ground-rents are doubled or trebled?

We will deal with that later. Let us now consider the position which would arise if, in consequence of the adoption of a motion such as we are discussing, a special tax on ground-rents were imposed. As an example, we will take the case of A and B, two traders living in a certain town, and occupying business premises side by side. The premises are equal in size. The annual value of the site of each is, say, £100. A, however, holds his property in fee-simple, paying no rent of any kind, whereas B holds his on a long lease on a ground-rent payable to C of, say, £100 a year, that is the equivalent of the annual value of the site. In that state of facts, £100 a year of ground value remains with A, who holds the whole property in fee-simple, while B pays over to C £100 a year of ground value. It will be appreciated, I think, that on no principle of equity could C be rated or taxed in respect of his £100 if A were allowed to escape rating or taxation on his, once we admit C's right of ownership to exist and, as I have already pointed out even Deputy Anthony and Deputy Morrissey admit that. They have told the House they do not want to confiscate ground-rents——

Unlike some of your own members.

These cases of A, B and C are comparatively simple cases. Let us take a slightly more complicated one. It is necessary to do this because, in putting forward their motion, Deputies Anthony and Morrissey made the point that what they were after was to catch, in the words of Deputy Norton, "a certain portion of the enhanced value which is being given to ground-rents by the community efforts." Of course, that may be a very excellent thing if it could be universally and equitably accomplished. The difficulty in this particular case is that the motion quite overlooks the fact that it may not be the owner of the ground, but the lessee of the premises, who is reaping the larger benefits from the activities of the community. If, therefore, you are seeking to tax unearned increment in land, there may be more justice in taxing the occupier or the lessee than in taxing the ground landlord.

The owner of the premises is already contributing to the local rates.

If the Deputy will listen to me he may at last understand this problem. In order to illustrate this point, let us consider any hereditament and suppose the true present annual value of this building and site is £200. In other words, if the premises were vacant and were thrown upon the market for an open competitive market rent on a yearly letting, the premises would fetch £200 in rent, over and above rates and over and above cost of repairs and maintenance. Suppose, again, that the bare site, if cleared, would sell in fee-simple with possession in the open market for £1,000. Let us assume interest at, say, 4½ per cent. per annum, and we can then assess the present annual value of the ground at £45 per annum. If we subtract this sum from the £200, which represents the true annual value of the site and structure, we have £150 as the part of the annual value of the property which is due to the fact that a structure has been erected on the site.

Should it not be £155?

I beg your pardon, it should be £155. Let us assume an individual, once again named A, occupies the premises.

Has the Minister finished with the £200 case?

I am dealing with the various modifications of the simple case which I first dealt with and which may be met with in practice. I am now going to examine a more complicated aspect.

The Minister has not made any definite comments in the £200 case.

I have already pointed out—I do not know whether the Deputy has been able to follow me or not——

We are following you, all right, even to the subtractions.

I am glad to see Deputy Bennett is taking a sufficiently intelligent interest to correct my error in subtraction. Perhaps the fact that I made it is some indication that I am not reading my speech. I started off with this position, that there was a certain hereditament the true annual value of which was £200. I pointed out the site might be bought for £1,000. Taking interest at 4½ per cent., it left the true market value of the site at £45, and subtracting that from £200 per annum we were left, as Deputy Bennett was good enough to point out, with £155 to represent the true annual value of the structure. I will proceed to the basis of that hypothesis, that is to say, that we have a site the annual value of which is £45 and a structure on that the true annual value of which is £155. Now let us consider some of the variations which might arise in the relationship between A and B. Let us assume once again that this convenient individual A owns the premises in fee-simple. He pays rent to nobody, but he enjoys the benefit and advantage of such rent himself. In such case, clearly he owns the ground and, if any rate or tax is imposed on any other ground-rents, he ought to pay on the same basis, and pay a comparable amount. There was nothing in the Deputy's proposal dealing with that. What I am showing, in fact, is this, that it is quite impossible to proceed with an equitable tax scheme on the basis of ground-rent payable. If you want to do anything it would be necessary to get back to the ground values. The Deputy did not give the proposal sufficient thought to ascertain that.

I hope the Minister will advise the Revenue Commissioners accordingly.

Again this individual A may hold the place at a rent, over and above maintenance, of £200 per annum, which he pays to another individual B, who owns in fee and pays no rent. In such a case presumably, at first sight, B may be taken as the owner of the whole £45 per annum and, of course, would pay his tax accordingly. But since the ground-rent is not necessarily equal to the true annual value of the site then, in between these two positions, as I have already indicated, A may hold the place at any figure of rent ranging from one penny per annum to £200 per annum, and indeed in real life, in the more valuable sorts of urban property, A is more likely to be found holding at such an intermediate rent, large or small, than at a rent of nil or at a rack-rent. Let us consider some of the positions which these realities of tenure create. Let us assume that A, in fact, is found holding at a rent of £40 per annum payable to B, who holds in fee-simple. At first sight the inference is that B is owner of £40 per annum of the ground value, that is, of 8/9ths of the ground-rent income, and that A owns the remaining 1/9th of ground value, or of ground-rent income, that is, £5. But if so, then surely A, who owns part of the ground-rent, ought to pay a tax on his share as well as B. There is nothing in the resolution about that——

It would be a very big motion if they were all in it.

——nor was there anything in the speech of the proposer or of the seconder of the resolution dealing with the problems created by those cases.

Again, perhaps A would be found to hold at a rent of £45 per annum, or indeed perhaps at a rent of £50, or £100, or £150 or a higher figure, payable to B, who holds in fee-simple. At first sight, again, the inference most certainly is that B is owner of the whole £45 per annum ground value; that A is owner of none of it, and that, therefore, B should pay the whole rate in respect of ground-rent. A little consideration, however, will show how wrong such inferences may be. Further investigation of the position of those two men may disclose that A's rent of £150 is on a lease dating from 1900, and that, in fact, it represents the rack-rental value of the property at that time. Furthermore, in 1900 the site may have been worth £25 per annum, and the structure £125 per annum, values which, remember, by now have risen to £45 in the case of the site and £155 in the case of the structure. In that state of facts, the true view, contrary to our first impression, would seem to be that B is not the owner of the whole £45 per annum; that, in fact, he owns only £25 of it, while A, whom we thought owned none of it, owns the remaining £20. On even further consideration, we may feel that we can have less compunction in asking A to pay site rate or tax on his £20 of the annual value or ground-rent than in asking B to pay it on his £25 because, after all, B is only getting the same £150 per annum out of the property, that is no more than he was getting before the war, and he may have bought the place for £3,000 in 1899, and therefore may be getting only 5 per cent. on his investment. On the other hand, A, the occupier, enjoys the whole £50 per annum of what for convenience we shall call unearned increment—£20 unearned increment in respect of the site and £30 in respect of the structure.

Again, let us consider the case if A is found holding premises at a rent of £40 payable to B, who is a fee-simple owner. The facts in this case may be that the rent is as low as £40, because A on taking the lease from B's grandfather, say, in 1880, paid a lump sum of £2,000 to him, in addition to contracting to pay the rent; that the grandfather—though it is not a material point at this stage—may have bequeathed that £2,000 to X, who has vanished out of the whole transaction; and that the annual value of the premises in 1880 was £120, of which £20 was the annual value of the site, and £100 the annual value of the structure. In that state of facts, B could argue with justice that if the present ground value be £45 per annum, the true division for any discussion of ground ownership interest is £25 to A and £20 to B, and not £5 to A and £40 to B, because the £25 unearned increment in ground value which took place since 1880 is being wholly enjoyed by A. If we consider this claim of B we must admit that he is enjoying nothing from the ground beyond the £20 of ground value which existed in 1880, and that the other £20 of the rent which he receives is from the bricks and mortar as it was when the rent was agreed in 1880.

The mere recital of these hypothetical but typical cases will, I think, make us realise that in order to make equitable assessments for the purpose of imposing a fair rate or tax upon ground-rent owners, the taxing authority—the local authority in the case proposed in the motion—would have not only to face the difficulty and the contention of fixing the true site value, but in some cases would have to face also the contention and the difficulty, in fact the impossibility, of similarly estimating what the real annual value of the property was years ago, possibly before the officer dealing with the matter was born, and that sort of retrospective estimation for any property might have to be done for as far back as hundreds of years. Whatever may be the real purpose of those who have made themselves responsible for this motion, I presume that, if ever legislation based upon it were to be enacted, the Oireachtas would insist that it should deal equitably with all the recipients of ground-rents, whether such recipients in effect, as owners of the fee simple, paid rent to themselves, or whether, as leaseholders enjoying the use of a hereditament, at a rent less than its true annual value, they in fact impounded some of the ground-rent on its way to the ground owner. It is unthinkable for instance that the Dáil would allow local authorities to tax a widow whose husband had provided for her and his children by investing in ground-rents in a certain town, on the plea that this taxation was necessary in order to relieve the wealthy shopkeeper who occupied her site of some part of the rates which he should properly pay upon the structure which he was using or occuping. But, if the Dáil wished to avoid such injustices, and was anxious to do justice as between two or more people who had an interest in the same property, then, as I have shown, it would be necessary to set up very complicated machinery indeed in order to determine first of all what was the true ground-rent payable in respect of any property, and who in fact were the real recipients of such rent.

But in this connection I must emphasise that the examples which I have cited merely show some of the relationships which may exist between two persons, A and B, in regard to the same property. As they are confined to the relationships existing between only two people they are relatively very simple cases. The parties concerned were, as I pointed out, merely one occupier and one fee simple owner. In the great majority of actual cases to be met in practice however, the House knows that there may be one, two, or more middlemen intervening between the occupier and the owner of the fee-simple, so that the amount of research necessary to ascertain how the present ground-rents are split as regards ownership would be almost impossible. Furthermore, the cost of such research would be enormous and would have to be defrayed by the local authority, which would make the tax uneconomic. That is a point to which I shall refer later.

One of the arguments which Deputy Anthony used in favour of this proposition was that the municipal and local authorities have a moral right to demand that some of the rent should be returned to them in the shape of a tax or levy; the implication apparently being that, in fact, such return is not at present being made to municipal or local authorities. That Deputy Anthony should have made a statement containing such an implication is merely another indication that he has given no real consideration at all to the terms of his motion. Municipal and local authorities already receive very large grants from the Exchequer, and these grants in turn are provided by levying annual taxes in the shape of income-taxes upon ground-rents and by making what in effect is a capital levy on the capitalised valuation of such ground-rents when their owner dies. These annual taxes may be levied at rates which, in certain circumstances, may be as high as 10/- in the £, and the capital levy may again, in certain circumstances, reach as much as 32 per cent. of the whole estate. Thus, the local authorities do get the share to which Deputy Anthony suggests they are entitled.

And the Guarantee Fund is all right then.

But let us contrast the simplicity of providing this share by levying an ordinary Schedule A income-tax with the complexities of trying to levy a rate on ground-rents in the examples which I have mentioned. Under income-tax Schedule A, the occupier of premises pays income-tax on the valuation of the property plus 25 per cent. If he pays a rent, then when paying it he deducts the tax at 4/6 in the £, and the party receiving it, if he is a middleman also paying rent, deducts 4/6 in the £ on paying his rent and so on, so that everyone enjoying a share of the £200 income automatically bears income-tax at 4/6 in the £ on the part he gets. If any of them are exempt from income-tax on the ground of smallness of means, or are entitled to relief on the score of wife or children, they know that when they go to the Revenue Commissioners they can claim repayment. Otherwise, the Revenue Commissioners take no interest in the middleman or the head landlord, and do not need to know even who they are, where they live, or how much rent they get, except in the case of those whose total incomes from all sources are big enough to make them liable to surtax.

If the occupier has paid?

I think they could only take into account speculative builders and those taking up an unreasonable attitude. If the occupier is paying a net rent of £200 or over, the Revenue Commissioners may, for convenience, collect the whole tax from the immediate lessor.

May I ask the Minister with great respect if he has to go through all this?

I am dealing with this proposition in the way that the Opposition should have, in order to show that they seriously examined it. Many speeches have been made on this motion, none of which, so far, has examined the case fully except mine.

I think yours is only an alteration of mine.

I can say that the Deputy certainly did sense the realities.

I have to pay for them.

I suppose Deputy Belton would not agree with Deputy Anthony's statement.

Certainly not.

In the course of his speech Deputy Anthony referred to the fact that he had been unable to get statistics as to the aggregate amount of ground-rents payable in the Saorstát, even though he put down a Parliamentary question. As this matter has often been raised in this House, I should like to deal with it. A consideration of the manner in which income-tax is collected will explain why such statistics are not available. Income-tax, as the example which I have already given shows, is largely levied at the source. Thus, take a building in Dublin with Schedule A assessment £100, occupied by X who pays a lease rent of £20 per annum to Y, who in turn pays a lease rent of £20 to Z, and so on. There are cases in Dublin where there are five or six interests intervening between the ground landlord and the immediate lessor. The Revenue Commissioners go to X and get the whole income-tax from him, that is to say, 100 four and sixpences.

Would they not get 120 five shillings?

For simplicity we will take 100. X, when paying rent to Y, will deduct 20 four and sixpences, and Y in turn deducts 20 four and sixpences from Z, so that the Revenue Commissioners have got their tax and do not need to inquire how much rent X pays to Y, or how much Y pays to Z.

How much is 20 four and sixpences?

The Deputy has shown himself so apt at mental arithmetic that possibly he will be able to do that sum in his own mind.

In a nutshell, £4 10s. 0d.

The point I am making is that the Revenue Commissioners need only have regard to X. They do not have to worry themselves with Y or Z. They collect the whole tax from X, and let him make adjustments with the others. Hence the Revenue Commissioners—and possibly Deputy Anthony will get this into his head— are not in a position to compile any statistics relating to ground-rents, and those who have compiled them are simply making guesses.

It is only fair to say that what the Revenue Commissioners want is the money.

Precisely. I am glad the Deputy has at last got a sound grasp of one of the fundamentals of public finance. To return to the terms of the motion, The Deputy proposes that a rate of tax should be payable by owners of ground-rents over and above the ordinary income-tax or surtax which such persons, like everyone else, if their total incomes are large enough, now pay. That would be tantamount to a special extra income-tax on the owners of such invested income. The singling out of income from the ownership of ground from other sorts of unearned incomes for the imposition of this special tax would not be easy to justify, and has not been justified. That would be particularly so where the ground ownership income consisted of a rent arising upon a pre-War lease in which—as some of the examples we have been considering show, and as would usually be the case—the rent, so far as appropriate to the ground, is likely to be less than the present value of the ground. In that state of facts, the rent recipient would plead that as he was only getting the same income as pre-War, and as this was an income less than the present value of the thing he leased, there could be no question of his profiteering out of the property and no reason for singling him out from the possessors of other sorts of unearned income for a penal income-tax levy. Added to that might be the fact also, that he might have bought an interest in the property for the full cash value of the interest, and his income therefrom might be only an investment return, so that a query from him as to why his investment should be singled out for special taxation would be very difficult to answer.

Moreover, this special income-tax, such as the motion proposes, would be a crude form of income-tax indeed. It would press harshly on ground value owners who were in poor or modest circumstances, since it would be a flat rate in the £ for rich and poor alike. It would provide no exemption or relief, as does ordinary income-tax, for persons of small total means or for persons with wives and families to support. Thus, if there were a widow whose total income consisted of £100 in ground-rents, and a tax were imposed on ground-rent owners at 2d. in the £ on capital value, equivalent to, say, 3/4 in the £ on the annual value—and nothing less than this would be of any use—she would have to pay about £17 per annum. This, considering that her income would only be £100, I think even Deputy Anthony and Deputy Morrissey will admit would be a savage tax, considering, furthermore, that the ordinary income-tax code does not ask a person of her very limited means to pay a penny. Moreover—and this is a point to which I think serious consideration would have to be given by Deputy Anthony and Deputy Morrissey—since the tax was imposed in relief of ordinary rates, she would be paying this £17, not so much for the benefit of the public Exchequer or any public fisc, as for the benefit of her lessee whose rates she would thereby relieve. Yet he might be enormously wealthier than she and, no doubt, would have promised in his contract with her that he would bear all the rates.

You have lots of time.

There is a great deal more to be said on this matter.

Post it to us.

If Deputies are really interested in the question, I may. I should like the two Deputies who have made themselves responsible for the motion to consider their proposal in comparison with the present system of rating. I could say quite an enormous amount on that. I could show that even if the House did adopt this proposal, it would in practice, in the course of a very short time, be completely nullified. The ground-rent owner would find it quite easy to abolish the income from ground rents and substitute for it another income drawn out of the property. I think, as Deputy Morrissey does appear for the first time to be interested in his own motion, I might deal with that and some of the other points.

The proposal contained in this motion is put forward as an addition to the present system of rating, but those who demand it as an addition will equally press for it as a substitute for the present system. Let us consider it from that point of view. The present system of levying local rates on the basis of the poor law valuations of the premises, in each local area has two merits. It is simple and it is inexpensive. It is, further, fair in its incidence and it gives a stable yield. Each of these qualities is not only important in a local tax but is almost vital. If the tax is not simple and inexpensive to administer, it will be an uneconomic tax. If it is not fair in its incidence, it will be an unjust tax. If it is not stable in its yield, it will be an undependable tax. Taking simplicity and inexpensiveness, if you are going to have complicated taxes, you are going, as I have already indicated, to pay for the administrative ability and experience required to manage and collect them, and this is a deduction which may prove a very serious deduction from the gross proceeds.

Is it a deduction or a reduction?

I said deduction. The present system of rating on valuations is eminently satisfactory in regard to these two items of simplicity and inexpensiveness. Again, the present rate system is fair and equitable in its incidence as between one owner or occupier and another, in the same local area. I make that qualification. The valuations are fixed by a central authority whose impartiality in the matter is not open to question. It can be readily admitted, if the Deputy wants to make the point, that the present valuations of urban property are little more than conventional figures and that they do not indicate what they purport to indicate, the fair annual letting value of the property, taking one year with another, but this fact merely proves that the central valuation office has been at pains to maintain, even against the definite interests of the Revenue authorities of the State, the relative positions of new and old property. It has ensured that the valuation bears a fixed ratio to the true letting values, and in this way it has ensured that the incidence of a local rate will be fair.

Again, a local tax must be stable in its yield, or, at any rate, the yield must steadily improve and never fall back unexpectedly. If you have taxes with an unstable basis you are going to see your income flunctuate wildly, and will find it very difficult to frame local budgets upon them. I do not know whether Deputy Anthony will address himself to that point and say that the State has many taxes, with a yield which is far from stable, but, in the case of the State, a fall in the yield of one tax will be compensated, in an unexpected increase in the yield of another tax, or a decline in the yield from one part of the country, say Cork, will be compensated for or offset by an expansion in the yield from another part of the country, say Limerick. Averaging in this way, the State is not materially affected by short-period fluctuations. The local authority, however, can never hope for this variety of taxes nor the separate locale which the State has to assist it.

We can see, therefore, that the present system of local rates has the merits necessary in any system of local taxation. The question, accordingly, is: how far the proposed rate on ground-rents will conform to these facts; that is to say, how far the proposal to rate ground-rents would be simple, inexpensive and just.

I have already stated that the term "ground rent" is not at present effectively defined by law, and, therefore, if such a system as the motion proposes were adopted it is essential to have a definition; but, even though we may define ground-rent as closely and accurately as possible in law, there will still be plenty of room for differences of opinion in practice. People who, looking at the income tax code, see the comparative simplicity and economy with which income tax is collected, forget that behind that code, behind that simplicity and economy, there is a most complicated code of law-case-law and statute-law—built up well over a century. In order to give effect to such a tax—what is, in fact, a special income tax on ground rents—the same process would have to be undergone here, and the question will arise whether, in any circumstances, the game could be worth the candle. Local authorities levying a rate on ground rents would have to build up an administration charged with the duty not merely of assessing the rate, and we have seen how difficult that might be, but of fighting and defending cases in the courts coming within the scope of the new levy. Judges will vary in their interpretation of the law, and each varying interpretation would require an amending statute.

Not merely, however, would the administration have to set about securing the information necessary to enable assessments to be made and to fight and defend these assessments when made, it would finally have the job of collecting the tax. In the latter connection it must be remembered that there will be cases in which the recipient is not resident in the local area, and will have no property in that area which can readily be realised to cover a liability to tax. But, apart from that, there are other avenues of evasion open.

The next test we must apply to this proposal is whether the levy would be fair as between one person and another in the same local area. It must be admitted, from what I have already said, that a rate on ground-rents dismally fails to satisfy this test. I was going to re-state the fundamental principles which govern this division of ownership of property and of the ground-rents arising therefrom. But I will not deal with it at length again. I merely repeat a ground-rent is the result of a bargain between a landlord who grants a lease and a leaseholder who takes it, and that it is only by the merest accident, as I must again emphasise, that it represents either the annual letting value or the poor law valuation or, indeed, anything as definite as either of these. As Deputy Belton well knows, it has been the practice for a number of years for builders building houses for sale to reserve to themselves a ground-rent equal to a proportionate part of the ground rent, if any, for which they themselves were liable, plus an additional sum the capitalised value of which was approximately equal to their profit on the house. I think that the Deputy, in the course of his speech, made the point that in the case of most builders these ground-rents represent the profit on their labours.

Their profit on the ground-rent?

What happens is that a builder builds a house. He sells it for what it cost him to build it, in most cases, and relies on the ground-rent to yield him a profit on his investment. This practice may, quite possibly, have something to do with the fact that builders contended that the capital value of the ground-rents so reserved were not liable to income tax. That point has now been set at rest by a section in the Finance Act of last year, and it is possible, therefore, that builders will not continue the practice. They may reserve no more than the proportionate part of the ground-rent for which they themselves are liable. I am merely citing the practice, however, to show that ground-rents do not relate to anything definite and objective, but are fixed solely at the discretion of the persons granting and receiving the lease, and that, therefore, they are liable to be influenced by external considerations. Builders went in for creating a ground-rent because they thought it would escape income-tax, but now when they find that they are not going to escape income-tax, there is not the same inducement for them to create a ground-rent, they may ask a person to pay not merely the cost of building the house but the profit which they might legitimately expect to derive from their operations.

Next we have to consider whether the yield of the new levy would be stable, and this is a most important aspect of the question. Clearly, if a local authority incurs new liabilities on the basis of an expectation of income from a new tax or if it reduces the level of its ordinary rates because it has an alternative source of income, if those expectations are not fulfiled and the income dwindles to vanishing point a very serious situation would be created. That is to say, if a local authority rushed in and imposed a rate, as Deputy Morrissey calls it—a special income-tax, as I call it—upon ground rents and found that the basis of this new rate or tax was to vanish because ground-rents went out of existence then a very serious situation, as I have said, would be created.

I grant that, in considering the aspect of the matter, we must distinguish between ground-rents under existing leases that have a period still to run and new ground-rents. We need not waste much time in dealing with new ground-rents because they are simply not going to come into existence. If we say to a landlord, "We are going to tax you on any ground-rent which you may reserve," he will not reserve any ground-rent. If a speculative builder, such as Deputy Belton thinks that he is going to have not merely to pay income-tax on the capitalised value of his rents, in the first instance, and income-tax to the State year after year on the income which he derives from the creation of these ground-rents, and, in addition to this, a special income-tax to the local authority, well, Deputy Belton or any other builder who leases land for building purposes is going to see that no ground-rents come into existence. Instead, he will capitalise the ground-rent which he might have expected he would enjoy and in lieu of leasing that property for a lump sum, subject to a ground-rent, he will sell, if he can, the fee-simple in it and thus avoid the special levy.

And put up the price of houses.

That is the point I was about to make for the benefit of those Deputies who think that they are going to help the social services or the housing programme of the Government by the adoption of such a specious proposal as they have put before the House. With the ground-rent capitalised and added to the purchase price, no special duty will be payable, but the price of houses will go up. People who are clamouring for houses and for homes in which to shelter themselves and their families will find it harder to possess themselves of these.

If, however, the ground landlord is a little far-seeing, if he thinks that this new tax will defeat itself and will not be maintained in practice and if he does not want to part with the fee-simple he will take a large lump sum or fine for the lease and reserve a purely nominal or peppercorn rent— say, one penny per annum. He can take a very substantial fine for his lease and reduce the ground-rent to vanishing point. He may find another way to evade the tax. He may lease the whole property and then the ground-rent will be merged in the rent for the property constructed on it and the new levy will be defeated. He need not charge any ground-rent. He may say, "Pay me a capital sum equivalent to the cost of constructing this house and I will give you the ground in fee-simple, but you will pay me a rent for the house, or structure, as distinguished from the site." That is what is going to happen in the case of new ground-rents.

That is a good tip.

The Deputy, with his natural business acumen, would think of that himself if he were up against the difficulty which would follow the adoption of the proposal of Deputy Anthony and Deputy Morrissey. That is going to be the position in relation to new ground-rents.

The Minister is helpful.

But Deputy Belton cannot evade income-tax. He will pay income-tax. He can avoid the rate on ground-rents which this motion asks the House to adopt.

The policy was "no income-tax."

Let us consider the case of ground-rents levied through existing leases, with a period still to run. The local authority may get something at the beginning if they are sufficiently quick. Until he has succeeded in getting rid of the ground-rent, the ground landlord will have to pay the tax. But what is to prevent him getting rid of the ground-rent? If ground-rents are coming into existence every day, they are also going out of existence every day and the process would be speeded up enormously if the new rate-levy ever became a reality. All the ground landlord would have to do would be to arrange the sale of the ground-rent to the lessee. Deputies should note that a large part of this agitation is designed to compel some such sales. Once the ground rent is merged in the lease and the lessee obtains the fee-simple, the rate disappears. The landlord may have to make some sacrifice, depending on the amount of the levy and the bargaining power of the tenant, but that is not going to help the local authority, which will have to watch the basis of this new tax vanishing before its eyes.

The ostensible purpose of this motion is to benefit local authorities, by levying a rate upon ground-rents. What in actual practice is going to happen? The two persons concerned in the lease are going to put their heads together and strike a bargain by which one may lose a little and one may gain a little, but the local authority will get nothing.

Nor will any difficulty arise in finding the necessary capital sum to buy the ground-rents, since the landlord would take his tenant to the bank and would guarantee a loan to the tenant, the bank taking as security a mortgage on the property. The ground-rent income would thereby be converted into mortgage income. The landlord indeed need not even trouble to go to the bank. He can lend his tenant the money to buy back the ground-rent from himself, converting the ground-rent into a mortgage which would not, under the terms of this motion, be subject to a levy. If he does not want to part with the fee-simple, he can convert the greater portion of the ground-rent into mortgage and reserve merely a nominal rent the levy on which would be negligible.

It will be seen that if ground-rents can be transformed into mortgages, or abolished altogether, the basis of the proposed new tax will be quite unsubstantial. The yield, in fact, would never be sufficient to justify the cost of endeavouring to collect it. It is clear that the local authorities could not be given power to levy a rate on mortgages of real property in their local areas, nor could the Legislature by any device compel ground landlords to create and maintain in existence large ground-rents on which a rate might be levied. That is a point that Deputy Anthony will have to grasp. There is no power in the State which would be effective to compel any person to keep a ground-rent in existence if he did not want so to do. You may wipe out ground-rents; you may change their name, though you will not, in fact, change their character; you may compel ground-rent owners to evade the law, but you cannot do anything to compel them to keep their ground-rents in existence.

Does that apply only to ground-rents?

Deputy Norton, in the case of his speech supporting this motion, saw this difficulty and, on the spur of the moment, tried to work out a plan by which ground-rent would be kept in existence by being transferred to the local authority. That plan is quite impracticable. It would require every local authority to become a dealer and a speculator in land values on an enormous scale and would compel it to secure finances adequate to undertake the task. In any case, even if Deputy Norton's proposal could be given practical effect, it would not achieve its object, as no revenue could be secured by a local authority levying a rate on ground-rents which were its own income. Such a proposal would be equivalent to a man taking in his own washing and paying himself a laundry fee for returning it to himself clean.

Before I sit down, Sir, it may be desirable to advert briefly to a number of incidental points that were raised in the course of this debate. Deputy Anthony, in proposing the motion, said that considerably over £1,000,000 per annum is collected in the Saorstát in the way of ground-rents, and he added: "We all know that most of this money goes out of the country." Deputy Corry spoke of absentee landlords, and generally the opinion of speakers supported the view that the rents collected were very large and were mainly remitted abroad. It is necessary to repeat what I have already said and that is that there is no information whatever in the possession of the State about the aggregate amount of ground-rent income, whether that ground-rent income be paid out to absentee landlords or to person domiciled and resident in the State, and there is no machinery for getting such information. The very fact that the tax is levied at the source shows that it would be quite impossible and impracticable, with any reasonable expenditure of public money, to set up machinery which could secure that information. Again, in so far as these ground-rents are being paid to persons resident in Great Britain or Northern Ireland, they could not be subjected to any special tax or levy without involving the termination of the present double income-tax agreement with the United Kingdom. That agreement was entered into by our predecessors. I have considered it very carefully indeed and I think it is a fair and just agreement as between the two countries. I think it is an agreement which is of great convenience to our citizens, because it must be remembered that we have a considerable investment income and our people of all classes and of all opinions—I might say of all shades of opinion and all classes of society—derive a considerable income from investments abroad. It amounts to something in the neighbourhood of £11,000,000 a year. If that double income-tax agreement were to be smashed, we would find ourselves considerable losers—not because we get more than we are entitled to get, but because of the inconvenience and the loss it would mean to our people who do derive this income from such investments, and, again, I say that we must remember that that is not confined to one class of society or to one shade of opinion. I do say that, in my view, it would make budgetary conditions here exceedingly difficult if that double income-tax agreement were to be broken.

Now, there is no question of the State's permitting that agreement to be upset, having regard, as I have said, to all the inconveniences, dislocation, and probable loss of revenue, that would be caused, in order to try out a highly-uncertain new tax on the ground-rents paid to persons resident in Great Britain or Northern Ireland. This is the more obvious as it would be the local authorities, under the resolution, and not the State which would secure the proceeds, if any. If this levy were to go on, it could only go on residents in the Saorstát and in countries other than Great Britain or Northern Ireland. Therefore, all the talk and misleading propaganda that has been going on in the newspapers in regard to these ground-rents has no merit whatever except to show that the proposal would be an impracticable one. There is a considerable number of other points that were raised in the course of the debate——

Oh, do not skip any of them.

——but I do not propose to detain the House very much longer except to refer to cases cited by Deputy Corry. He spoke of certain cases of hardship, of which he had knowledge, in Cobh, but he did not tell the House that these cases occurred before the passage of the Landlord and Tenant Act of 1931, which has made a substantial change in the situation and under which it is no longer possible for a person who has a proprietary interest in the lease to lose all right and title in the lease once it has run. Under the Landlord and Tenant Act, the first person who can establish a proprietary lease has a right to a new lease upon certain terms. It may represent an increase in the rent formerly paid by him, but, if so, that increase is based upon the occupation rent which he enjoys on the property held under the old lease, and accordingly if there is an element of increment, it is shared between the person who owns the structure and the person who owns the site. I am not concerned to enter at length into the merits or demerits of the manner in which this increment is based, or into the merits or demerits of the matter in general. I am merely giving the House that information so that it may not be misled by the citation of cases which took place before the passage of that Act and to which, possibly, the old law, in all its rigour, applied.

Deputies Anthony and Morrissey might reasonably be congratulated upon the contribution which has just been made by the Minister in support of the motion. This is Private Members' Time, and there is an hour to run for the private member. We listened to quite a number of fallacies this morning—more, perhaps, than were ever uttered in a single speech that has been delivered in this House. Let us take just one example. We are told that this is a deliberative Assembly. What exactly is meant by a deliberative Assembly? Immediately after we have been invited to consider the House as a deliberative Assembly, we find an indictment of the chief Opposition Party because it does not regiment its members. A member of the chief Opposition Party put his name to this particular motion in respect of his right as a member of the House, but before he had done that he should have come to the Party and enquired whether or not he would have the Party support! The Minister goes on to say that, in the first place, the Opposition was wrong in not having regimented one of its members and, secondly, that the member is getting out of control by exercising his own discretion with regard to this particular motion.

The Minister spoke of confiscation. Is there confiscation in this motion? The motion seeks to make ground-rents one of the items which would be assessable for rates for local authorities. House property is an item on which the Minister himself, in recent years, has increased the taxation derivable from that particular possession. He is at liberty to increase taxation in any way he pleases, at any time he likes, and regardless in every way possible of any rights that the people have who own that particular property —without any regard to the ethics of the case, and utterly ignoring whether the possessor of that property is a widow supporting orphans, or a person who has perhaps put his whole life savings into that particular property and who had regarded it as a means of providing for himself in his old age.

We are next invited by the Minister to consider the position of a widow in receipt of £100 a year, who, if this motion were passed would be assessable to the extent of £17 or would be liable to pay that £17, whereas a rich shopkeeper, who has all the benefits of his wealth, would be relieved to that extent of £17. In the same breath we are asked to consider that ordinary taxation, at the present time derivable from persons who own ground-rents and who pay in one case 10/- in the £, in income-tax and super-tax and 32½ per cent. of his estate when it falls in. He pictures the possessor of ground-rents paying super-tax and in another case the widow, having nothing else but that. He ignores the fact that in connection with the taxation he has imposed here in the last five years, he has penalised the widow, the orphan and other people in connection with the income-tax codes which he has elaborated.

On the contrary, we have increased the children's allowance considerably, the consequence being that, at present, people with small incomes—widows and the like— are paying less at the standard rate of 4/6 than they were paying under Cumann na nGaedhael when the standard rate was 3/6.

The case the Minister cited was the case of a widow with nothing but £100 a year out of property. We will take it that the particular widow has a sister who is, also, a widow and is in receipt of £100 a year out of business which the Minister has saddled with corporation profits tax, and which had not been subjected to that tax before he came into office. Will she get back the ? in the £ that he imposed? She will not. He told us that for children she would be allowed £50 each but her income will not allow of the deduction and that unfortunate person is subjected to one hundred one-and-sixpences.

Would the Deputy take the difference between corporation profit tax and income tax, and this motion which proposes a flat rate without any relief. Both in income-tax and corporation profit tax there is a margin for relief.

There is no margin for relief in the case of the person I mentioned. Taking the first duty, I say there is no relief there. If one of these has shares in the company that the Minister has put the corporation profit tax of 7½ per cent. on would she get it back?

That would depend upon two things. Whether the company is, as most companies have been since the change of Government, prosperous, and what proportion the exemption limit bears to the total profits earned by the company. She might in fact get exactly the same dividend as before.

There is the £100 a year that I have mentioned. I could mention a good number of companies paying a smaller dividend than before. In the case of the corporation profit tax and income-tax and so on there has been an increase. This year we have the position that £7 10s. on that £100 and the Minister has no sympathy with that widow. He is utterly indifferent to the merits of the case. On the question of the right of the State to tax the local authority, what is the position with regard to the City of Dublin?

Dublin 50 years ago had no main drainage, had only a very restricted lighting development, had practically no housing policy, and its public health was only in its infant stage. It had none of the legislative proposals inaugurated by this Government and its predecessors in office; it had to carry these things out at its own expense. Its work related to what I might call rates, water, and so on. There were only three special items that municipalities had to deal with. Now these responsibilities are retained and education, public health, the provision of school meals, and so on are all added. The life of the citizen and his well-being are improved. The amenities provided are far out of proportion to what they were 50 years ago. This motion asks that certain people should be saddled with some of the responsibility for them, and the Minister's chief objection is that that would be allowing these people to get it out of persons in the possession of property and wealth which is reserved to the State. The municipality has done three times as much for the citizens as the State, and the Minister's sole objection is that if there is any means by which taxes can be imposed it is the State that must get these taxes.

It is rather interesting to observe how very meticulous the Minister is in regard to what he calls public credit. He is concerned for insurance companies, banks and other institutions of that sort. Five or six years ago that was not his mentality. He has learned all these things in a few years. He is more conservative than his predecessors in office were. He is ignoring the important cause operating in the minds of Deputy Anthony and Deputy Morrissey in putting forward this motion. This motion really brings into light again the puzzles that were brought forward and ventilated in Dublin 25 years ago. There was, at that time, amongst people just as much interested as the Minister is in connection with the safeguarding of public rights and so on, a strong agitation to tax ground-rents. For the very same reason that the Minister has in increasing taxation in connection with income-tax they wanted to relieve the citizens as far as possible of the burdens piled upon them. This motion had no appeal to me when I saw it on the Order Paper. But if for a very considerable time a system is in operation is it not fair to have it investigated? The Minister's Party is as responsible as any Party in this State for the agitation which has grown up in this matter. Publications have been issued in all directions; one to the effect that £6,000,000 a year is leaving this State and going out of the country. People publish these things, going on to show that if this money was retained in this country it would be liable for 4/6 in the £ income-tax. That was the line; that was the sort of propaganda the Minister's Party engaged in before the responsibility of office was thrust upon them. They are now reaping the wild oats they sowed when they sat in opposition, on this side of the House. They are in a mess about this business, and they want to know are we going to help them, or are we going to allow them to fight these people alone. We again see from the Minister's statement that he is going to be candid and very candid on the economic war in order to enable him to make a case against the motion. The motion, to my mind, puts up one concrete proposition to the Government and that is to institute an inquiry.

That is not in the terms of the motion.

I know quite well, but it is in every speech made on the subject though I did not read many of them. It has been suggested here that this is a matter which calls for inquiry. Why? There is a very simple reason for it. The Minister's policy, particularly in regard to agriculture, has resulted in such a state of affairs that in certain towns people are unable to pay their rents, and as a consequence public disorder occurred in certain places with a tragic result in one case.

That in itself ought to induce the Minister to consider whether or not there is a problem to be examined in connection with this matter. If there is a problem to be examined, the Minister paid no attention to that aspect of the matter in the course of his speech. He has made up his mind about this without having inquired into it. He has got most of his information, I believe, from the Revenue Commissioners, and the Revenue Commissioners can be simply judged in connection with this matter from the point of view of what there is in this proposal that is likely to operate against the State getting the last penny out of property in this country.

The Minister spoke of confiscation. What is his own position with regard to property? Up to three or four years ago, an owner of property was entitled to deduct one-sixth from his assessable valuation for income-tax in respect of property. Then the Minister got the most fantastic fraction that anybody ever heard of. Owners of property are now liable for income-tax on five-fourths of their valuation. The sum and substance of it is that a person paying income-tax in respect of property is now paying 50 per cent. more than he paid three or four years ago. I shall give a simple example. Take property with a valuation of £60. Formerly, a person was entitled to deduct one-sixth from that £60, leaving him liable for income-tax on £50. He paid income-tax on the £50. What does he pay now? One-fourth is added to the £60 and he is liable for income-tax on £75. That is not confiscation—not at all. That is quite legitimate. That is perfectly ethical.

Examining one portion of the Minister's speech this is what emerged from it. Suppose an individual owns a certain portion of land and lets it to another at £5 a year. A thousand pounds' worth of property is put on that land. Certain industry, certain resources were necessary to put that £1,000 worth of property on that land, and certain savings were perhaps necessary before the person got that £1,000. The Minister rewards that person by taxing him 50 per cent. over and above what he was taxed at three or four years ago.

At its very worst, what does this motion mean? To follow the Minister's example. What is wrong in that? You can only weigh up what are the advantages which the municipalities provide as distinct from the advantages provided by the State. From my own experience there is no doubt whatever that a person living in the City of Dublin to-day gets more than twice the value that he got 50 years ago. If, by reason of that fact, there is a greater security in respect of the payment of ground-rents, then there is a prima facie case—I will not put it further— for seeing whether or not the ground-rents should not be liable for some portion of the taxes. I am opposed to it personally.

That is not the motion. Read the motion.

The motion is:

That the Dáil is of the opinion that local authorities in towns and cities should be empowered by legislation——

by legislation, by their own right, not by the right the Minister has got by his own interpretation of what this deliberative Assembly is for, to regiment his Party into the Lobby in support of any proposal he makes

——to supplement their revenue by levying a rate upon moneys received by ground landlords in respect of ground-rents.

There is as good a case for it as there is for the Minister's increasing the liability for income-tax. There is certainly as good a reason.

What is the situation with regard to ground-rents, let us say, throughout this municipality? There was one very prominent public representative both Parliamentary and civic, in the City of Dublin many years ago who invested his life savings, or most of them, in ground-rents. The district in which he bought the ground-rents deteriorated. Although there were premises built on the site, it is now practically derelict, and he has lost the money he invested. That is one of the disabilities of ground-rents. Ground-rents are not a gilt-edged security. In the public estimation they approach towards that.

The Minister dealt with this matter in the most Party manner possible. It is an extraordinary thing that after the three or four years they have had of responsibility the Government have never got away from the Party atmosphere. Take one instance that the Minister mentioned. He dealt with the part of the country represented by Deputy Anthony. There are five representatives from that particular part of the country, three of whom vote mainly with this side of the House, and two with the other side. It will not require any great mental agility on the Minister's part to add up the wealth of Deputy Anthony, Deputy Desmond and myself and compare it with the wealth of the two Deputies who support his Party and see is there is not a difference very much in favour of his Party in this respect.

We should ignore these personalities, but the Minister raised them, and he must be answered. Deputy Anthony and myself were in disagreement in this House, generally speaking, on political matters. Deputy Anthony took the line in connection with public affairs that we should have gone farther than we did. He criticised us quite honestly, openly, and honourably in public. But he never sought, as Ministers and their Party sought, to shake public confidence in those responsible for the Government of the State during a certain period. While he might have agreed with 90 per cent. of what we did and disagreed with us in regard to the other 10 per cent., he did not try to upset the 90 per cent. of good work done. Now he is in the same position with regard to the present Government except that he is prepared to say, and I am sure does say, "As between those two Parties, while I am in agreement with neither, I certainly have more respect for the judgment and commonsense of one Party than I have for the administration of the other." Is he not entitled to do that?

You would expect that.

This is a deliberative Assembly. Is this matter not of sufficient importance to warrant its being brought before the Dáil? There is an agitation in respect of it. I am charging the Government and their supporters with being largely responsible for what has occurred in connection with it. The agitation is there. If four or five years ago a similar agitation had started what would have been the position of the Party opposite in connection with it?

They would be on the hustings.

You would find them either on the hustings or advising them to go on with it. Have we done that? I never attended any of these meetings.

I did not attend either.

Deputy Anthony and Deputy Morrissey tell me that they have not attended any of these meetings.

I refused to attend.

Look at the difference between the two. For political support that Party would have been willing and delighted to say, "Yes, anything is good enough to hammer those people." That is not the line we take, but we nevertheless admit, and have to admit, that there is a problem here. I believe those people are wrong when they say that £6,000,000 is leaving the country. If the Minister four or five years ago had made the same statement which he made this morning with regard to the double income-tax agreement which we made with the British, and about which Deputy Mulcahy spoke to me, we would have a different mentality with regard to that sort of thing than we have now. If I become a little irrelevant for a moment, I do so to pay tribute to the last administration which was responsible for bringing about that double income-tax agreement.

May I point out that that agreement was confirmed by this House without a division in 1929?

The double income-tax agreement was arrived at in 1926.

It was modified and amended in 1929, and was accepted without a division.

The Minister can take the salt and the mustard; we will take the material things in this matter. The agreement was made in 1926 and it is an agreement which no other Dominion has with Great Britain. It was announced in the House of Commons and never boasted of here. The first information that was got about it was got from the Chancellor of the Exchequer in Great Britain, and, from recollection, he said that the first cost to the British Treasury would be £250,000 a year and that he believed that sum would grow. In essence, what it comes to is that: we have more money invested in Great Britain than people in Great Britain have invested here. Where was that statement about this sum of £6,000,000 leaving the country learned except from that Party over there? There is the same thing with regard to insurance.

Deputy Corry and Deputy Victory—every second back bencher of the Fianna Fáil Party.

Nothing of the kind.

There are several— even social credit.

Is it admitted that there is a problem in this connection? I think it must be, and if it is, that problem ought to be examined. That proposal has been put forward by Deputy Anthony.

That is not the proposal on the Order Paper.

I quite agree, but is Deputy Anthony prepared to put this motion to the House and to challenge a division on it?

I would not like to put too many of those people opposite in the cart.

I could not vote for this motion if it were put to a division, but, nevertheless, I say that in my judgment the local authority has a better right to money from ground-rents than the State has to increase the income-tax on it for the last three or four years, and a very much better right. Take one particular item— zymotic disease has practically disappeared from municipalities all over the country. To what is that due? To the attention given, and the expenditure incurred, by local authorities and the costs that have been put on them by legislation passed here, and in another place to which we succeeded is responsible for the enormous increase in the costs which have fallen on local authorities. Some 50 years ago, in the City of Dublin, the death rate was very nearly twice what it is at the moment.

Having heard nothing from any member of the House except the Minister, I am convinced by that speech that there is a far stronger case for this motion than he made against it. I think that in the interests of public order, and in order to educate public opinion, the Government would be very well advised to have an inquiry into this matter. The Minister had to introduce here this year a Bill to amend an Act which he passed a couple of years ago. He will remember it. It was "to remove doubts" and so on. Certainly the present Government's predecessors never had to introduce as many amending Bills as this Government, and I hope and believe that no Government that succeeds them will have to do the same thing.

Did the Deputy never introduce a Bill to remove doubts?

I believe I must have, but, while doing that, I can say that I would not try to pillory two private members of this House who have no legal knowledge by asking them what do they mean. It is quite plain, on the face of this motion, with all its doubts, what were in the Deputies' minds. They were not inaugurating legislation; they were simply putting a proposal before the House against which the Minister took a very decided and prejudiced line from the beginning, and no other reason than that which I have stated, that he wishes to preserve for the State the last penny in taxation that could be got out of property.

Is it the Deputy's contention that we are taking the last penny that could be got out of property?

You are, the very last.

And if we are doing that there is nothing in this motion so far as the local authorities are concerned.

The Minister is not quite so simple as that. Has the Minister got his eye on the taxation of ground rents himself? Is that his objection to this motion? The Minister talks about the double income-tax agreement and the danger of interfering with it. There is very grave danger that some objection may be taken in respect of certain matters in connection with double income-tax. I should very much like to avoid that, but I think it is certainly going too far to put up here as the excuse for the preservation of ground-rents that an estate when it is being wound up is liable for 32½ per cent. and that the person who owns that estate is paying 10/- in the £ super-tax. I do not believe that 1 per cent. of the people in possession of ground-rents are in that position. There is a case for inquiry in connection with ground-rents and other rents. I should very much like to compare a democratic institution in this city, the Dublin Corporation, and its administration of its ground-rents over the last three or four years, with an estate just outside in the county, to see whether or not the tenants in the case of the Dublin Corporation have not been much more harshly dealt with than the tenants of the privately-owned concern operating in County Dublin.

The private owner was the juster landlord?

Much juster.

Deputy Morrissey wants to tax the just landlord for the benefit of the unjust.

Do not let us misunderstand one thing in this connection. There are very just private landlords, and there are private landlords who are not very just. I have mentioned the case of one particular estate, the management of which compares most favourably with that of the Dublin Corporation, even when the Dublin Corporation had its own discretion in that connection. If the Minister wants any information about that, he can get it from the chairman of the Town Tenants Commission which we set up somewhere around 1929 or 1930. Can the Minister tell us in connection with these matters if, when the valuation has been fixed by the Dublin Corporation and then forwarded to the Department of Local Government, the Department has increased the rent in those cases? Does he know anything about that?

The Minister has cited the question of ground-rent, head-rent, and so on. Will he tell us whether in those cases ground-rents or head-rents are not in themselves matters that it would be advisable to inquire into. The Minister on a prima facie case indicated to us his desire to do something that was ethical. He indicated his desire to see justice done. Assuming that that is so, what is his objection to inquiring into this matter and ascertaining whether a solution could be found or whether such evidence could be brought before the inquiry as would satisfy the people who have grievances in connection with these matters that these grievances will be inquired into, and that if shown to be grievances they will not be allowed to continue? Will the Minister stand for such a case as this, that for any reason, in certain places, in certain towns throughout the country, the people there complain that, because of the drop in business during the last two years, they are unable to meet obligations into which they entered and were bona fide trying to carry out? Will the Minister say that there is any case for inquiry in this matter, or is he going to take the line that after there has been sufficient local agitation stirred up, and perhaps bad blood drawn into it, then when it comes to the point when political capital is to be made out of any settlement or solution of the matter, he will take action?

I regret that I did not hear Deputy Anthony or Deputy Morrissey speaking on this motion. I would be sorry to think that Parliament was so regimented that no member would be allowed to do anything unless he got permission first from the leader of his Party. That would bring about a state of things in which this House would not be a deliberative assembly at all. It would be only a House of "yes" men and "no" men. I hope that idea of this House will not last beyond the present Dáil. It is true we have Party government, but Party government does not mean that Deputies must in every matter coincide with the views of their Parties.

Then Deputy Morrissey had not the authority of the Fine Gael Party when he put down this motion? Let us be clear on that.

What does the Minister want to be clear on, or is it possible to make him clear on anything?

Even to make him clear out.

I gather from Deputy Cosgrave's speech that he has been devoting himself to throwing over Deputy Morrissey in the matter of this motion.

Perhaps Deputy Morrissey is as good a judge of what "throwing over" is as the Minister.

Deputy Cosgrave has been at pains to make it clear that when Deputy Morrissey put down this motion he did not put it down with the authority of Fine Gael behind them.

When Deputy Morrissey put down this motion he had no necessity to get the authority of the Fine Gael Party for his action. Is the Minister satisfied now?

I would prefer the Deputy would answer the question I put—whether Deputy Morrissey, when he put down this motion, had or had not the authority of the Fine Gael Party behind him?

Deputy Morrissey did not need to ask the authority of the Fine Gael Party.

I am asking the Deputy a question—did Deputy Morrissey ask for the authority of the Fine Gael Party before he put down the motion?

Deputy Morrissey did not ask for any authority. The Minister is apparently astonished at that.

It could not happen in the Fianna Fáil Party.

Did he ever ask for the authority for the Fine Gael Party?

He never asked for it; I do not think it was ever considered by the Party.

The Fine Gael Deputies are not tied to apron strings.

Is there anything wrong with that? Must this Party be regimented according to the rules governing the Fianna Fáil Party?

That accounts for the change in leadership.

Is not that a matter that concerns us? Does it keep Deputy Donnelly awake at night? I would be very sorry to interrupt the Deputy's sleep, or to give him trouble of any kind. Is that an objection on the part of the Deputy to the putting forward of a motion here? Is there such a difference between the pronouncement of people on this or any other subject that the Deputy does not know where he is? Very well, now we are perfectly satisfied. The motion put down in the names of Deputies Anthony and Morrissey raises a matter of considerable importance to this House. It is well known to Deputies of all Parties that there is here a problem which ought to be dealt with. Does the suggested method of dealing with it commend itself to Deputies as a good one? I will say this that even 25 years ago this question gave rise to popular agitation in the City of Dublin. At that time we had not got double income-tax. We had not got our own State. Now we have, and we are responsible for dealing with persons in this State who draw dividends or dealing with persons outside this State who draw dividends. We have to consider the problem of dealing justly with all people so as to compose the public mind and to satisfy the public mind that there is nothing likely to be done which would damage the value of property. Is it fair to say in connection with this proposal that it is confiscation? Is not that an exaggeration on the part of the Minister?

Has not Deputy Cosgrave said when we were levying taxation that we had confiscated property. We did confiscate for the use of the State some part of people's property. I made it clear in my speech that I was not prepared to contend that that would not be justified. The point I was making was this, that while I would admit there was an element of expropriation and confiscation in all taxation, that Deputy Anthony and Deputy Morrissey denied that there was any such element in their proposal.

I take it that the Minister in abolishing the allowance of one-sixth on the valuation of the property when assessing income-tax on houses and increasing that income-tax to a further extent by one-fourth was confiscating property. I take it the Minister admits that he was?

In so far as taxation is confiscation.

It is only in so far as taxation is confiscation that this would obtain? The Minister admits that?

I do not go any further.

The Minister in this debate talked so much about confiscation that, though I read this motion several times while it has been on the Order Paper in the last two or three years, I looked it up again to-day to see where the confiscation came in. It is within the competence of the Legislature, assuming this was to pass, to specify to what percentage such a charge was to be made in connection with the local rates.

Having said that they would take so much of the people's property, they have been confiscating so much of it.

There is more than that point in it. If my income happens to be £200 a year, I am charged income-tax on that. I am charged that income-tax in common with every other citizen of the State. But if at a precise moment the Minister for Finance comes in here and says that in respect of persons who have £200 a year, income-tax only on one particular class will be raised by one-fourth, how can he justify it? The increased charge will be imposed on their incomes and not on others. That is the position as I see it in the matter of income-tax on house property. What is the meaning of that discriminating taxation? The Minister had better learn there are no ethics that will justify that—none whatever. There are much less possibilities of the invasion of ethical principles in this motion that we are discussing than in the one I have stated. But the Minister breaks his code of ethics in the one case while he is condemning the other here. I have no hesitation whatever in saying that when a certain item of property is regarded as a marketable asset over a long period, to my mind —and I am open to persuasion on the point—such property should not be removed from that particular category. To that extent I cannot subscribe to the motion. I can, however, say this, that the question that is raised by this motion is one that ought to be examined if for no other reason than to educate public opinion on it, to compose the public mind, to stop disorders that are occurring and to remedy the injustices that have arisen from whatever cause in connection with the matter. I advise the Minister carefully to consider that, in order to see whether the Government cannot meet the Deputies who have sponsored this motion.

I would like to put a question to the Minister. The Minister has put a number of questions regarding how I came to be associated with the motion. I would like to ask the Minister if Deputies belonging to his Party from Longford, Westmeath, Cork and Western counties were speaking the mind of the Party, or acting under his direction, when they associated themselves with this movement throughout the country, or were they simply speaking through their hats and without any authority? Will the Minister answer that?

I put no question to Deputy Morrissey.

Are we to take it that the Minister's speech to-day is a repudiation of Deputy Corry and other Deputies who were responsible for starting and spreading this movement —not the movement covered by the motion, but nevertheless one which would merit many of the things the Minister said about this motion?

I thought there was a time reserved for questions?

That was a rather awkward one for the Minister.

I thought the discussion on this motion would conclude to-day and I cannot be blamed, anxious though I was, and am, that it should conclude, if it does not finish to-day. I thought the Minister would discuss this motion in a business-like way, in the manner that we would expect a proposal of this character would be treated and discussed in any deliberative assembly. At the beginning of his speech the Minister appeared to be more concerned with the silence of certain members on the front benches of the official Opposition and of some Opposition back-benchers. He seemed entirely more concerned with the silence of those people than, in my view, at any rate, he was with the terms of the motion. Much more significant was the silence of the occupants of the Front Bench of the Government Party; the silence of the Ministers and of many Fianna Fáil back-benchers who, before this motion was introduced and even after it was introduced, made themselves very vocal throughout the country at all kinds of meetings, indoor and outdoor, not asking, just in the way I have asked, that some of the money derived by way of ground-rents should be subject to a rate for the benefit of local authorities, but advocating the abolition of ground-rents altogether. I wonder had that the authority of the Minister for Finance?

I would like to substantiate what Deputy Cosgrave said when he referred to the fact that some of us here had the moral courage to do certain things. Let me inform the Minister that within the last couple of months a letter has appeared in the Press on behalf of a very large number of leaseholders, and in that letter they pointed out that my absence from their meetings had been taken note of and that it would be taken note of by 2,000 persons in my constituency. In other words, it was a deliberate threat that, because I did not advocate the policy they now advocate, the policy of abolition, of confiscation, the support of 2,000 persons in Cork would be withdrawn from me. I have taken no notice of that, but I wonder what effect it would have on the Minister for Finance if he were subjected to such a threat. I will continue to wonder.

Almost in the same week as that letter appeared in the Press, a meeting of the leaseholders was held, and the congratulations of the whole of the organisation in Cork City were extended to Deputy Corry because of his advocacy of their cause in Dáil Eireann and thanking him also for his presence at the meeting and his activities in their behalf, and they again commented on my absence. In order to make a case against this motion the Minister misinterpreted my speech when I was introducing the motion. I took a note of his words and he said that I admitted I had given no serious study to this question. I never used such words and the Minister should be more particular. For a Minister who pretends to be so meticulous and careful in regard to whatever he says, he might be a little more careful about reading into the speech of an Opposition Deputy a meaning that was never intended, and he should also be careful in his quotations and should not use words that a Deputy did not make use of.

A complaint has been made by the Minister that extraneous matter was introduced into this debate. I am not responsible for any extraneous matters being introduced. Indeed, the Minister was responsible for introducing more extraneous matter than any Deputy who took part in the discussion. When introducing the motion I pointed out that I realised its importance and complexities and, though I may not have indicated it very clearly, I did feel that it should suffice in the case of any man of common intelligence, not to talk of a Minister of the State, that when I asked for authority to be given by legislation it was implied that before that legislation would be introduced an inquiry of some kind was necessary. That certainly was implied, and I am rather surprised at the Minister trying to make so small a point.

If the Deputy drafted the motion, why did he have to put it in that form?

It is in that form that I am supporting it. Almost with reverence the Minister spoke of the credit and the structure of the State. My God! The credit and the structure of the State! Has the Minister forgotten his activities against the credit and the structure of the State?

Cut that out.

Not likely, though perhaps you would like it to be cut out. Has the Minister forgotten his activities against the State?

Have you forgotten your wooden gun?

Have you forgotten your murders? I will give you a wooden gun or any kind of gun you wish and I will meet any of your Party with a gun in his hand. That is what you would be afraid to do, unless the other fellow had not got a gun.

The Deputy may not accuse another Deputy of murder. That word must be withdrawn.

Well, inciting, if you like.

The word must be withdrawn.

Well, I withdraw it. As I said, the Minister spoke almost with reverence of the structure and the credit of the State. I will repeat it. Has the Minister forgotten his activities against the structure of the State?

They are not relevant to this debate.

Well, the Minister used the words. Again, the Minister has spoken about the credit of the State. Has the Minister forgotten the manner in which he tried to repudiate the National Loan? Was that damaging the credit of the State?

When did I do anything to repudiate it?

The Minister's Party did it in regard to the First National Loan.

The matter is not relevant to this debate.

The Minister spoke about the credit of the State and the stability of the State.

I should like the Deputy to show how any Party to which I belonged did that.

The matter, being out of order, may not be further discussed.

The Minister made two unhappy allusions, at any rate, when he spoke about gilt-edged securities and the stability of the State. Has he forgotten also the movement for the retention of the land annuities? I am taking the Minister's own two or three sentences in which he spoke of the structure and the credit of the State, and in which he spoke of ground-rents as being almost gilt-edged securities. Those are very unhappy allusions for the Minister and his Party. The land annuities, of course, were not a gilt-edged security. The first portion of the Minister's speech was mostly histrionics. The only things absent from that from bench to-day were the footlights. The first protion of his speech, at any rate, was the greatest lot of play-acting I have witnessed in this House for some time. I sat here from 10.30 until after 1 o'clock to-day, and the Minister occupied about half of that period with a display of histrionics, and the other half with giving the House a number of posers which one would have to read and study—and which one will be unable to read or study until one sees the Official Report—before being able to give an adequate answer. The Minister himself would be the first to acknowledge that. The Minister's admonitions about the sacrosanct nature of gilt-edged securities and the stability and credit of the State remind me of the poacher turned gamekeeper. However, I am glad of the conversion, because it will do something to lead to the greater stability of the State about which he rants so much now, but did very little about before, in a structural way in any case.

It is usual on such occasions, when replying to criticisms offered or opinions given during a discussion of this character to single out one, two or three speakers, because, as we all know, there have been, and I suppose will continue to be in discussions of this kind, many repetitions about various matters. One Deputy may be out of the House while another Deputy is speaking, and consequently he is not aware of the fact that much of the matter which he would like to cover has already been covered by previous speakers. I do not propose, therefore, to deal exhaustively with all the points raised during the debate, but I do intend to deal with a few of the important points raised. Deputy Belton left me in considerable doubt as to his attitude towards this motion. He referred, at considerable length, to the revenue by way of ground rents derived by the Dublin Corporation. He appeared to think that if effect were given to this motion the Dublin Corporation would suffer thereby. I cannot follow that kind of reasoning at all, because I am aware that any revenue—whether it be by way of ground rents or otherwise— earned by the Dublin Corporation will in turn, and does I believe in turn, go back to the community by way of improved social services, such as improved sewerage and more building under the various Working-Class Dwellings Acts. That was Deputy Belton's only attempt to make a case against the motion.

The Minister appeared to attach a lot of importance to one or two sentences in the course of my speech introducing the motion, in which I repeated that this motion was not designed or calculated to confiscate the property of any ground landlord. I made that quite clear. The Minister, of course, wanted to pretend that that was a sort of saving of faces. That is an art in which the Minister is so proficient that he appears to think certain Deputies, particularly some of his own back benchers, should lose no time in emulating his tactics. However, I can assure him that I have no desire to emulate that art which he himself has practised so frequently. Again, the Minister referred and I think Deputy Cosgrave also referred to the sum mentioned by an organisation of leaseholders as representing the amount that is paid by way of ground-rent in this country. I think the Minister did not at all appreciate the fact when I said I wanted to be a bit conservative and to estimate the amount at £1,000,000. I know very well it was not an accurate figure. The Minister himself admitted the difficulty of arriving at an accurate figure. I thought it better to be conservative in estimating the amount than to indulge in a lot of wild and extravagant statements as the Minister's back benchers have done. Not alone do they say that a sum of £6,000,000 was collected by way of ground-rent, but they go further and say that the greater part of that £6,000,000 goes to some rack-renting landlords outside the country. Everybody knows, without being able to have any definite information from the Minister's Department, that that is not true. I have asked some of those people how they arrived at that estimate, £6,000,000, but they could not tell me.

Would it not be a wise thing on the part of this Government to set up the inquiry which I will ask them to set up at a later stage, and ease the public mind in that respect? It would get rid of all those wild rumours. Deputy Norton appeared to think that I had gone astray and had gone over to the Minister's side because I agreed with a statement he made at the Fianna Fáil Ard-Fheis. I agreed with him that a prolonged inquiry was necessary. I believe so still. Personally, I should prefer to have a prolonged inquiry no matter how long it took, so that the just and right thing would be done, rather than inflict an injury on the humblest individual in the community. I am not a member of any leaseholders' association, neither do I attend any of their meetings, and consequently any contribution of mine to this discussion must be taken as the contribution of one who is entirely detached from the organisation, and entirely uninfluenced by anything that is said at any of its meetings.

Debate adjourned to Wednesday, 22nd April.
The Dáil adjourned at 2 p.m. until 3 p.m. on Tuesday, 21st April, 1936.
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