I move:—"That the Dáil agree with the Committee in Financial Resolution No. 1."
Financial Resolutions—Report.
On a few occasions these Financial Resolutions have been taken in globo. I assume, however, that it is the desire of the House that they be taken separately now.
Does the Minister for Industry and Commerce intend to be present at the discussion on the tariff Resolutions?
I think so. They may come on shortly.
Resolution No. 1 will fall to be further discussed on the Committee Stage of the Finance Bill, and it will be, therefore, appropriate to discuss it in lesser detail to-day than otherwise, if that opportunity were not forthcoming. But there are two points in regard to this Resolution, to which, I think, the attention of the House should be directed, because they are points that seemingly escape the attention of Deputies, who, in regard to other matters seem to be exceedingly well informed. Many people seem to think that when you increase income-tax by 1/- in a given year, or super-tax by the amount described in a subsequent Resolution, you spare the poorer section of the community from any part of the burden provided by that tax. I want to remind the House that that is very far from being true, and that this 1/- on income-tax is going to strike far harder at the wage-earning community than it is on anybody else. The person who is paying this tax, if it hits him really hard, can go and live in the Isle of Man, or somewhere else, such as the Channel Islands, where his income is relieved from tax. Remember, that it is by no means impossible to the class of persons who are here caught, because the person who is paying this tax is a person who is getting the bulk of his income from investments. That is the person who is hardest hit.
That is Resolution No. 2.
There are substantial concessions to the married wage-earner and, in fact, a very considerable number of married wage-earners are not going to experience any substantial increase in their burden at all as a result of this extra 1/- on income-tax. This 1/- of an increase has been, so to speak, telescoped into a very narrow margin but, on persons in that category, it is going to be immensely heavy. How is it going to affect the wage-earner? It will affect him in two ways. The first I propose to explain by illustration, and the second by personal experience. Deputies may have recently read that the Duke of Northumberland closed Alnwick, one of the ancestral homes of that family, and he did so because taxation had reached a point which made it impossible for him to maintain all the establishments he has in Great Britain. That meant that possibly hundreds of people living at Alnwick were thrown out of a job. We all know that no ordinary man requires six or seven houses, that any reasonable man cannot keep more than one, but the rich have indulged themselves with certain luxuries which involved employment for their neighbours, because they were rich and their employees benefited from the employment created. We all know the situation which exists at Cong. There you had a great landowner recently closing up the place and throwing 200 people out of employment. That has nothing to do with this Resolution. Other things contributed to that. These big individual cases catch the public eye. We can appreciate that, while we have very few people with great fortunes, they can close big establishments and make radical economies, and the resulting sensation attracts the eyes of all.
There are hundreds of people who will be hit by this tax, who have seven employees, but who could do with five, but they never bothered to throw two men out of a job, whose wages, perhaps, came to no more than £4 a week between them, but they are now notified that on their income is going to be placed a burden by this Resolution of from £1 to £500, and they are going to cast about to see where economies could be made to meet that added burden. That is going to result in a number of people being thrown out of work and, in most cases persons who will find it difficult to get employment elsewhere. These people are of the retainer type, with no special skill, who were kept by well-off people because their employers did not want to put them on the dole, and they will now have difficulties when looking for work. The result of this imposition of 1/- on income-tax, is that it is going to mete out substantial suffering, not for the person who can economise to meet the tax, but for the person at whose expense the economy is made in order that the tax can be paid. In short, we are taking from the worker who is dismissed the money that we are giving to the Minister who levies the tax, and those who imagine that this tax is going to fall exclusively on the rich, should open their eyes to the fact, that what we are, in fact, doing is sequestering the wages of certain men now getting wages, and paying them to the Minister for Finance who is using them for such purposes as were outlined in the Estimates which this House has passed. That is one thing I would like the House to remember.
The second is that there is no shopkeeper in Ireland but knows that the result of the extra 1/- on income-tax is going to be that certain persons are going to buy less in the coming year than they did the year before. We know that anyone who has to pay an additional tax, or to meet additional expenses can do without a suit that he would otherwise buy, or can make last year's overcoat do for a year longer. The net result in the case of the average shopkeeper is that inevitably he is going to cast about for economies, and the readiest economy that can be made is to reduce his staff. Any man in business will tell you that that is so. If he has to pay additional taxation and if, as a result of the taxation of his customers and his business, the turnover is reduced, and he finds himself with a staff larger than he requires, his natural inclination is to bring his staff down to the level of the minimum requirements of his business, and that means further unemployment. Those are facts that Deputies should keep in mind when they imagine that no one is being hit but the rich man when income-tax is raised. It is true that you may increase employment in the Civil Service by employing additional civil servants, but the measure of employment you are going to create in the Civil Service, numerically, does not compare with the number of persons who will be thrown out of work as a result of the tax. That fact, I believe, is absent from the minds of Deputies. It is almost impossible to prove because the unemployment here created is not consciously or deliberately created as a result of the tariffs, but a series of events is put in motion which, in the experience of those who are in business, or who are employers, ends in certain individuals losing their employment who can ill afford to do so. I believe it would be of assistance if the Minister could now say that he regarded this burden of taxes as quite unthinkable for any protracted period, and that he had reason to look forward to its reduction next year. In the absence of that, the House should know that they are striking, not at the rich, but at the most vulnerable wage-earners in the increased rate of income-tax proposed by this Resolution.
This additional 1/- on income tax is the real red light of danger in the economic situation here. The Minister comes before the House and imposes another 1/- income tax for the reason that there is not another source of taxation he can think of, until he gets his Valuation Bill through the House. Local authorities cannot stand the pushing over on their shoulders of taxation that should be shouldered by the Exchequer, but it has become the policy of the Government to shove taxation on to the backs of the local authorities, just as it has become their policy to shed taxation in support of wheat, butter and bacon into obscure balance sheets of one kind or another throughout the country. This is the red light and it is burning here with a very dangerous brilliancy.
Deputy Dillon has pointed out one objectionable aspect of this increased income tax, but there is another. The suggestion is that, as a result of this increased income tax, many of the people earning more modest incomes will not have to pay much more because they will not have anything on which to pay. They will, in fact, pay less under a régime which has a 5/6 rate of income-tax than they would pay under a régime with a 4/6 rate. The Minister for Industry and Commerce has recently published figures showing the position with regard to industrial production in 1937. Additional persons to the number of 7,324 were put into occupation, and a net increase of 7,315 persons were put into occupation by Government departments and local authorities, including work on relief and constructional work carried out by the Government or local authorities, so that a net increase of nine persons in 1937 found employment over the whole gamut of our industrial production as compared with 1936. The year 1938 has passed since, and if the Minister knows anything about 1938, he must realise that industrial firms in this country during that year found much greater difficulties in carrying on than in 1937. The British Board of Trade Journal the other day contained the statement that, in the first three months of this year, 13,600 persons left this country by sea to take up permanent residence in Great Britain. That figure does not include the people who crossed the Border. The Minister for Industry and Commerce, in his publications on the Census, estimates that for every four people who cross the sea from this country to Great Britain, one crosses over the Border. In the case of Dublin City in the last two years, half the increase was in the last year, and persons to the number of 4,900 odd have been forced to seek unemployment assistance so that they can get some kind of subsistence in the country.
These are some of the indices of the financial condition of industry and business during the year 1938 which the Minister for Finance now expects to bear another 1/- in income-tax. There are many people who paid income-tax last year who will not pay it this year because that additional burden of 1/- is put on the firms which gave them their employment. The Minister knows very well that you cannot increase income-tax substantially and leave it on the backs of the big people who pay income-tax. It inevitably slips back on to the people who have to buy the commodities to keep their households and their families going. The Minister need not be told that by us. He is in much closer association with his Parliamentary Secretary than we are, and his Parliamentary Secretary, only two years after the Minister had added his three 6d.s to the income-tax, thought it better to inform the House that these taxes could not be kept off the working man and that they found their way down on top of the working man, so that not only are you going to have the position which Deputy Dillon describes, but you are going to have the position which I describe and you are going to get less income-tax from the people with the more moderate incomes under this increase of 1/- than you would get without it.
Deputy Dillon asked the Minister if he would promise that this would not continue next year. It does not matter whether it continues next year. If there was any hope in the Minister's mind that it would be possible to reduce income-tax next year, he would not have raised it by 1/- this year; but if the Minister thinks he can put an extra 1/- on income-tax this year and take it off next year, and get the income which might normally be expected from a reduced income-tax, he is making a mistake, because the 1/- on income-tax this year is going to damage the very source from which any income-tax would come. Deputy Cosgrave has already pointed out that although the Minister put 1/6 on income-tax in 1932, he never got as much super-tax as he got in the year before the 1/6 was put on. Repeatedly, it has been pointed out that 6d. on income-tax at that time should bring in an additional £500,000. What did happen? In the year 1932, super-tax brought in £789,000 and income-tax, £3,820,000. The extra 1/6 was then put on. We will skip the next year, when the Minister perhaps did not get the full value of his 1/6 increase. In 1934, super-tax brought in £635,000—a decrease of £154,000—and income-tax, an extra 6d. on which should have brought in an additional £500,000, brought in an additional £878,000, when increased by three 6d.s.
I should like the Minister to repeat the amount which he stated he expected to get this year from the increase of 1/- and the amount which he stated he expected to get in a full year. The Minister must know, unless he is completely blind, the condition of affairs in the country, the difficulties under which industry is suffering and the precarious nature of a large amount of the employment at present afforded. He must know that he is not going to get from this tax this year the amount which he says he expects to get from it. Yesterday we heard that £880,000 was received into Treasury last year as a tax on sugar. The amount of customs duty received on sugar had——
This looks like the resumption of the debate on the General Resolution.
No, it is not. I am telling the Minister he cannot reasonably expect to get the amount of money from the 1/- increase that he states to the House he expects to get. I want to know what windfalls he hopes for or what great expectancy he has of receipts from customs duty on such commodities as sugar to get him out of the very serious financial dilemma into which the Budget, as presented in its present form, is inevitably getting him and the country. An additional £500,000 was collected in taxes last year as a result of the decline in beet production and in the production of sugar derived from that beet. The general position of the country is serious enough to necessitate frankness here, and the main thing that is driven home, to my mind, by this increase of 1/- in the income tax is that the Minister is not prepared to be frank. The Minister is facing the present financial year hoping that something may turn up. He puts a tax on the only other thing on which a tax can be imposed after the financial operations of the Government for the last seven years. It is simply put there because it has to be put some place. The statement has to be made that the revenue must be increased by a certain figure, and the easiest thing to do is to put 1/- increase on income tax. That 1/- is going to have the effect which Deputy Dillon mentioned, not alone on people of greater means. It is going to have an effect also on the people of lesser means, and I warn the Minister it is going to have an effect, thirdly, on people who are dependent for their employment on those who will have to pay that tax directly.
I do not think it is necessary for me to say anything on this Resolution. I listened to the very reasoned speech of Deputy Dillon and I am not prepared to controvert what he said, that the incidence of the tax is not limited to those on whom it is first imposed.
He said no such thing.
I am not prepared to controvert his statement, that the incidence of this tax is not limited to those on whom it is first imposed.
I did not hear the "not."
The Deputy has heard it now. At the same time neither Deputy Dillon nor Deputy Mulcahy has indicated to us how it would be possible to maintain our existing services unless we found revenue to pay for them. I am not in a position to do it. I do not know whether Deputy Dillon is in a position to do it. I am perfectly certain that Deputy Mulcahy is not in that position. Until we can find some person who is in a position to show us how he can eat his cake and have it, I do not see how we can maintain our existing services unless we can find the money to maintain them.
What about your Belfast speech?
When it comes to a question of finding the money, even allowing that there are certain disadvantages in the way in which we have taken to find it in this year's Budget, nevertheless I think, on the whole, the disadvantages attached to the method which we have chosen, are much less than those attached to any proposal that I have heard coming from the other side of the House to solve the problem which confronted me when I was preparing the Budget.
Does the Minister suggest that it is better for a man to eat his cake even though the Government may not have an opportunity of getting anything out of it?
Question put and agreed to.