Financial Resolutions. - Resolution No. 13—Turnover Tax. – Dáil Éireann (17th Dáil) – Tuesday, 23 Apr 1963

Financial Resolutions. - Resolution No. 13—Turnover Tax.

Dr. Ryan

I move:—

THAT—

(a) with effect on and from the 1st day of November, 1963, there shall be charged a tax, to be called turnover tax, in respect of the sale of goods and the provision of services, within the State and in the course of business, and in respect of such other activities as may be specified in the Act giving effect to this Resolution;

(b) turnover tax shall be at the rate of two and one-half per cent or, in such circumstances as may be specified in or under the Act giving effect to this Resolution, at such lower rates as may be so specified.

Mr. Corish

The Minister devoted a lot of time to discussing the turnover tax. Further explanations are due to us, particularly in view of what has been said by Deputies who spoke immediately after the Minister. The Minister describes this tax as a turnover tax but no matter what fancy name it is given—sales tax, purchase tax, retail sales tax—it means in effect that there will be a tax paid on practically everything by the purchaser or consumer. I think it is well it would be made abundantly clear now that while the evening newspapers have stated there is no new direct taxation or specific tax on cigarettes, tobacco or beer, in fact there is a tax imposed through this turnover tax.

I should like the Minister to say whether or not this tax provides for circumstances in which taxes were abolished in the last two, three or four years on cinemas and dance-halls. If we are to have regard to the list of exempted goods, this means that practically everything one can buy in any shop or store will be subject to this turnover tax of 6d. in the £. We in this Party are concerned as to how the direct purchaser, the consumer, will fare because while the tax is described as being 2½ per cent, or 6d. in the £, we want to be assured by the Minister, if such an assurance is possible, that there will not be a certain amount of profiteering by those who sell the various commodities subject to this tax.

The question was posed to the Minister as to what would happen in regard to the purchase of articles costing 1/- Naturally, the shopkeeper will charge something extra but it cannot be one-fortieth because we have no coinage of that sort. It could be a farthing or a halfpenny. I suspect that in cases like that the consumer will be asked to pay much more than what he would be expected to pay in accordance with the provisions of this Resolution. This turnover tax is designed, so the Minister says, to get £3½ million in a matter of four or five months. Accordingly, I assume that in a normal year it will get something like £8½ million to £9 million.

Do we take it also from the Minister and the Government that this is to be a permanent form of taxation? It has been described by the Minister as being a modest tax at the present time, but it seems to me that if the same Government are in power next year, and they find themselves financially embarrassed, this 2½ per cent tax may go up to 5 per cent, 7½ per cent or even to 10 per cent. Could the Minister say in his opinion, or from the advice he has got, what effect this tax will have on the cost of living index figure? Has he calculated, or have his advisers calculated, what it will mean by way of increase in the cost of living? Our main concern about this tax, which we oppose very strongly, is the effect it will have on the consumer.

Mr. Sweetman

When we have had the opportunity to calculate the effects of this tax we will find, despite what the newspapers say about there being no new direct taxation, that this means another penny on the glass of whiskey, a penny on the packet of cigarettes——

Mr. Corish

More.

Mr. Sweetman

——1½d. on the lb. of tea. What is that if it is not a direct tax? It means ld. on the lb. of butter, 1½d. on the gallon of petrol, and I seem to recall Fianna Fáil Deputies waxing most eloquent on the effects which an increase in the price of petrol would have on the entire community since it would involve increased transport costs and, consequently, increases in the prices of commodities. We have heard talk about competitive reduction of prices to aid productivity and here we have 1½d. added to the price of petrol without a sigh from the Deputies over there. This means in effect ld. to 1¼d. extra on cigarettes, 1d. to 1¼d. on the glass of whiskey, 1½d. per lb. on tea, 1½d. on the lb. of butter and so on. The Minister for Transport and Power is fond of rolling out statistics as if from a drum. I invite him to work out what 6d. in the £ means on the articles included in the cost of living index figure. If he does that—he has had time in the past 24 hours since, presumably, he was told the details of the Budget—he will be able to tell us what percentage increase there will be in the cost of living as a result of this new tax once it comes into operation. Is it not going to be more serious than perhaps a tax of ld. on cigarettes and ld. on the glass of whiskey because it will have a cumulative, snowball effect? Will it not, in fact, mean that the licensed premises will come off worse than anybody else in any other business because they are also hit by the existing taxes, which, as I said already, have caused a reduction by one-sixth in the consumption of spirits and home-produced whiskey this year? The Minister's Budget last year lowered consumption, and therefore profits, by one-sixth, and now they are being attacked in the corporation profit tax—the small businesses we spoke about—and will have to bear another 1¼d. on every glass of whiskey.

Because it is called a turnover tax does not make it any more pleasant to the person who must pay it. It does not mean that it is not a tax on tobacco; it does not mean that it is not a tax on whiskey or beer, or even on the pint, which will be also hit, with petrol and distribution all along the line. Fuel oils, about which we had such a song and dance some time ago, will suffer and so will every single thing one uses every day. They all get this crack from the Minister. Even the children going to school are affected; every time the child walks to school, he knows he is wearing out a pair of shoes and this tax will have to be borne when they are renewed. The Minister should have another look at this and not bring in a tax that will hit the everyday necessaries of life like this.

Dr. Browne

I am somewhat confused and surprised by the interjection of the Parliamentary Secretary to the Minister for Finance to suggest that the workers should welcome this Budget. It is conceivable that one or other of us must misapprehend the position. Would the Minister say whether it is a fact that the family on £10 a week will pay approximately 5/-a week in tax which in a year would amount to between £12 and £13? If the family has an income of £8, out of which £4 a week is spent on food for the family, would this not amount to approximately £5 a year in increased tax on food alone?

Mr. Dillon

I want to direct the attention of the House to the real nature of this tax. Those of us who have some experience of legislation here have a vivid recollection of the distinction we have always made here between a hard tax and a soft tax. It has been a good tradition in this House that if it were regarded as a necessity to increase taxation, we sought to suit the burden to the back that had to bear it. I want to ask the House: if we are going to put 1½d. a lb. on tea, who is going to bear that burden? Will it press heavily on the man with £2,000 a year or on the small farmer whose weekly income is something between £5 and £7 a week? Will it press heavily on the person whose income is so low as to make tea and bread and butter constitute the bulk of his diet? What equity is there in levying a tax of 1½d. on tea when members of this House are peculiarly equipped to know the difference it makes to the different people in the community?

I do not blame the officers of the Revenue Commissioners or the economists for putting forward the proposal that a flat turnover tax is the way to raise the revenue and to depress consumption. Surely our function in this House, as representatives of the people, is to correct the statisticians' approach or the bureaucrats' approach by our particular knowledge of the impact of legislation on the people we represent? We have always regarded a tax on a food which constitutes a considerable part of the diet of the poorer people as a bad tax and in fact, since long before the war, we had ceased to levy taxes on tea and sugar, a favourite source of revenue 25 years ago. We have abandoned them on the ground that they were not equitable taxes because they bore most heavily on those who could least afford them and that it was a statisticians' illusion to suggest that 1½d a lb. on tea meant the same to everyone who bought tea. For some people, it was a material tax; for others, it was a microscopic matter for which they had no regard. What we are doing in this motion is putting a tax of 1½d. a lb. on tea.

General MacEoin

Even the light beer is getting "a rattle".

Mr. Dillon

Yes, but I am talking about things that constitute the bulk of the purchases of our people, the things we ought to care about in Dáil Éireann. We are putting a tax of 1d. a lb. on butter and everyone who buys a lb. of butter will pay a 1d. more for it. We are putting 6d. on a pair of shoes.

Mr. Corish

Sixpence on a pair of shoes?

Mr. Dillon

I am thinking of child's shoes, the pair a child gets to make his first Communion or Confirmation.

Mr. Corish

Even for that, the Deputy should go a little higher.

Mr. Dillon

When we come to wearing boots, that is another story, but I was talking of children's shoes—well, an extra shilling, I suppose. These are the things that matter. They do not matter to most people who are members of this House but matter very grievously to the people who will have to pay them. They are the people we should think of, the people of whom statisticians are not allowed to think. The statistician is preoccupied with the average man who does not exist. The only man who does not exist in any society is the average man but he is the obsession of the statisticians. It is our job as politicians and members of this House to keep constantly present to our minds that there is no such person as the average man among all the different people who constitute the society for which we are responsible.

If this Budget had been presented to the public as a Budget that put a 1d. on the packet of cigarettes, a 1d. on the lb. of bacon, a 1d. on the glass of whiskey, 1½d. on the gallon of petrol, 1d. on the lb. of butter, a 1/- on a pair of shoes, 1½d. on a lb. of tea and 1/-on a boy's suit and a tax on everything that the citizen has to pay, what would its reception have been in this House even among the daftest of our colleagues? The new picture of legislation says to everybody in Erris, North Mayo, for example: "Every time you go to the town to buy anything whether it be bread, shoes, clothes, a drink or anything else, every time you put your foot outside the door to do anything except to drive the cattle home, you will have to pay a tax. But do not be upset. The residents in Ballsbridge will be paying exactly the same tax." Have we all taken leave of our senses?

Mr. Corish

A man can wear only one pair of shoes at a time.

Mr. Dillon

Is it really proposed it is justice and equity to say to the people of a four-acre farm or on a ten-acre farm that they are being asked to pay no more on their food and clothes than a resident of Ballsbridge or Montenotte? Do members of the Fianna Fáil Party know the nature of their own proposal? Do they think it is right at this stage to levy not the figure mentioned most ingenuously in the Minister's speech as a yield of £3½ million turnover tax in this year without any corresponding calculation of what he expects to get from it in a full year? One of the reasons why he has elected to use the balance of £2 million in this year to bridge his deficit was because he looked forward to the full yield of this tax in the years ahead.

This tax will yield between £8 million and £9 million. The Government Party in this House are drifting into the state of mind that it is a source of joy to them if in this year they can squeeze only £3½ million out of the people but next year it will be £8 million or £9 million. But who are you to squeeze it out of? What is the merit of this tax from the point of view of the tax gatherer? Its merit from his point of view is that everybody must pay it. It is not confined to the well-to-do. It is a tax which bears in equal vigour on everybody. But that, in my submission, is a tragic disparity of burden on those who have to pay it.

I wonder if the Government are dead to all sense of responsibility? Do they feel no obligation at all to try to meet the essential requirements of the public service without taxing tea, butter and the clothes that all our people wear? I do not think anybody here today has made the slightest effort to defend an omnibus tax of this character and the burden it will throw on those who have to pay it. Until the last ten minutes, I do not think anybody has adverted to the realisation of the fact that this turnover tax in effect means a 1½d. on a lb. of tea, 1s. on a pair of shoes——

Dr. Ryan

We heard it before.

Mr. Dillon

Yes, and I think the Minister is shocked to hear it now.

Dr. Ryan

I am not a bit shocked. Why depart from the usual procedure by making speeches this evening? Why not tomorrow? There were never speeches before——

Mr. Sweetman

Indeed, there were and there will be now, do not worry.

Mr. Dillon

Is it not an incredible state of mind that when a proposal is brought before the House, phrased as this is, with the casual announcement of a 2½ per cent turnover tax which in fact means 1½d. on the lb. of tea, a shilling on a pair of shoes——

Dr. Ryan

Say it again.

Mr. Dillon

——1d. on the lb. of butter, 1d. on a package of cigarettes, ld. on a lb. of bacon, and so on, the Minister for Finance protests against anybody telling the people what this tax will mean?

Dr. Ryan

Will the Deputy have the next five days to tell them?

Mr. Dillon

This is the time.

Dr. Ryan

Not at all. The Deputy cannot help talking.

Mr. O'Sullivan

The Minister wants them to vote against it without knowing the truth.

Dr. Ryan

Vote——

Mr. Dillon

There is no doubt that we shall vote against them but we want the Minister and his supporters in these benches to know, just as we want the people to know, why we are voting against them.

Mr. Leneghan

They know Deputy Dillon well enough.

Mr. Coogan

The Deputy rubbed his nose in that, too.

Mr. Dillon

It is an interesting reaction that the Minister for Finance who brings in this tax and informs the House it may be expected to yield £3½ million—without reference to the fact that if it is maintained it is calculated to raise £8 million or £9 million in a calendar year—should protest loudly that any Deputy of this House would proceed to examine the exact nature of the impact of this tax on the people who have to pay it.

Would anyone tell me how any shopkeeper is to collect 2½ per cent on a loaf of bread? The present price of a loaf of bread is something of the order of 8¼d. I am thinking of those fancy loaves that have a farthing on them. What will happen if he has to collect 2½ per cent? How is the 2½ per cent to be collected by the tax gatherers, who will henceforth be the shopkeepers of this country? I cannot help believing that if they are to recover this tax—which, of course, many of them will not be able to do but, in so far as they will—it must be recovered in a way which will increase substantially the burden borne by the people who have to buy the goods.

Can anyone tell me how you are to recover 2½ per cent on a reel of thread, on an ounce of wool, on a wide range of goods? The Minister has told us how he suggests it should be done. "Do not collect it," he says, "on the inessentials. Sock it all on the essentials and they will have to pay that." Is that not so? The Minister has pointed out that it is manifestly physically impossible to collect the tax on every individual item sold but that the Revenue Commissioners will collect it on total sales. It is the shopkeeper's funeral how he will go about it and the way he should go about it is: do not try to collect it on the inessentials but make sure you collect it on the things people must buy.

I think we are entitled to expect from the Minister an estimate of the effect of the imposition of this tax on the cost of living. The cost of living figure at the present moment is the highest at which it ever stood since the State was founded. The Minister must have a pretty accurate estimate of what change is likely to take place in the cost of living index as a result of the impact of this tax. Before this Resolution is put to a division, the Minister has the duty to give us a far more detailed indication as to how the tax will be collected in globo. Will it be levied on the essentials and remitted from the inessentials? What effect will this tax have on the cost of living figure? Last but not least, what is the effect of levying the same tax on the purchasers in Bangor Erris as is levied on the purchasers in the most well-to-do areas in Ireland?

Mr. Leneghan

Monaghan, as well as Bangor Erris.

Mr. Dillon

Yes, Monaghan, too, or Mayo. Wherever our small farmers are, this question is apposite and relevant and ought to be answered before this House is asked to pass a Resolution of this kind.

Mr. Mullen

It is not my intention to make a speech on this Resolution. I am just looking for information. The Minister should answer the questions asked by Deputy Corish because it is imperative that we know what is meant by this Resolution. Is it intended to have a tax on medicine and drugs?

Mr. Dillon

Yes.

Mr. Corish

We want to make that clear.

Mr. Mullen

Is it intended to have a tax on medicine and drugs? How is it intended to collect tax on the sale of a bottle of milk, a quarter pound of tea, a loaf of bread and other commodities of that kind that are essential to poor people, old age pensioners, unemployed persons? How is it intended to collect tax from the old age pensioners? Is Deputy Norton right when he suggests that it could result in a tax of 1/8d. in the £ instead of 6d. in the £? If that is correct, does it not mean, in effect, that instead of getting an increase of 2/6d., they will get only 10d.? In part of my constituency, there are six shops serving thousands of people, working-class people. I would be more than anxious to ascertain how the sales tax will apply to them.

When questions of this kind were asked earlier today and when Deputy Blowick was speaking, the Parliamentary Secretary to the Minister for Finance said there was an answer to them. Deputy Noel Lemass interjected and said the answer was in the Minister's speech : "Read the speech." There is nothing in the speech answering these questions and we are entitled to know the answers. Has the Minister or anybody in his Department estimated the effects of this tax on the cost of living? Is he satisfied it will not trigger off a ninth-round increase? I believe it will. We are entitled to an explanation as to how this tax will be applied.

Mr. Cosgrave

I want to ask the Minister a specific question somewhat similar to what has already been asked. One of the advantages of taxation as we knew it in the past was that when the Minister announced in the Budget a change in the rate of tax on tobacco, on petrol, on beer or on spirits, he varied the tax according to recognised standards. The tax as changed, meant, say, a rise in the price of the pint, a rise of 1d. or 2d. on the packet of cigarettes, a rise in the price of petrol of so much a gallon. In all these cases, it was clear to the consumer what actual change was imposed by the Budget and he knew in advance the appropriate change the retailer or wholesaler was entitled to make in prices.

This sales tax alters the basis entirely because it imposes 6d. in the £ on each sale. The Minister for Finance complained a moment ago about the unusual trend of this debate compared with other Budget debates but this is a very unusual tax. I have here a list of the commodities included in the consumer price index. The consumer price index includes not merely food items but a variety of other articles that are purchased by the public. I do not intend to weary the House by reading this list but Deputies can see that there are almost three pages of commodities ranging from beef, meat, butter, bacon, ham, oatmeal, potatoes to flour and other articles of food; finally there are clothing, durable household articles, fuel and light.

What the public are entitled to know is how much the retailer will be entitled to charge on each individual item. Very many consumers do not buy all their commodities together. If they did, it might be possible to share 6d. in the £ on the total bill but where commodities are bought as they are bought, in small quantities, where there is no specific rate of charge laid down——

Mr. J. Brennan

On a point of order, are we departing from the usual procedure——

Mr. Sweetman

No.

Mr. J. Brennan

——in having a full scale debate?

Mr. Cosgrave

The Parliamentary Secretary is only prolonging it. I have only a few comments to make.

Mr. J. Brennan

Surely every member of the House may not speak?

Mr. Sweetman

Certainly—we are in Committee.

Mr. J. Brennan

There is no precedent for that.

Mr. Corish

There is.

Mr. J. Brennan

Nobody is trying to stifle debate. We have weeks to debate this as is usually done, but are we to have a full scale debate——

Mr. Corish

Fianna Fáil debated the Budget Resolutions of 1955-56.

Mr. J. Brennan

The usual procedure is one short speech or a long speech from the leaders of the different major Parties.

Mr. O'Sullivan

On the Budget— we have done that.

Mr. J. Brennan

You are creating a precedent in this Budget.

Mr. Corish

You created many precedents. Let me put this to the Parliamentary Secretary. Originally, there were two short speeches addressed to the Minister for Finance putting certain simple queries to him. He refused to reply. He has walked out of the House. He has not given details of this proposal and we are trying to get information from him in order to give the public whatever information we have.

Mr. J. Brennan

He has been longer in the House than any Minister for Finance.

Mr. Sweetman

Nonsense.

Mr. J. Brennan

Surely he is entitled to leave the House for a few minutes?

Mr. Cosgrave

I have no desire to prolong this but the House is entitled to know what arrangements will be made to ensure that profiteering does not occur in the operation of this turnover tax and that the increase will be known in each case. The other query I want to put to the Minister is this: does this tax apply to betting? If so, is it in addition to the existing tax in respect of both course betting and betting in turf accountants' offices?

Mr. Tully

I should like to know if this tax should not be called an income tax on the poor. It means that the farm worker earning £6 a week, who has to spend every penny of that on food, will now be required to pay on that £6 a tax of at least 3/- a week. From the Minister's speech here today, he expected we were going to discuss tomorrow or the next day, after the vote had been taken, a tax definitely aimed at people who at present cannot be caught by income tax because they are not receiving sufficient income. It is a shameful thing that the Minister should attempt to introduce a tax of this kind.

The question of whether or not it is one penny on a lb. of tea or three halfpennies on a gallon of petrol is something we can work out for ourselves. Deputy Dillon has repeated it so often, and rightly so, that we should all know what it is. But is it not true what Deputy Norton said earlier, that the real cause of the trouble is that the shopkeepers down the country will be told at the end of each month that they must make a return of the amount of tax they collected on the goods they sold? Is it not a fact that the Minister for Finance is saying to them: "So long as you return the amount which represents sixpence in the £ for every £ worth of goods you have sold, it does not matter a damn what you have collected"?

Mr. Donegan

Have the Government departed completely from the principle that farmers are to be exempt from direct or indirect taxation? Will fertilisers and seeds sold to farmers be exempt from this tax? I cannot see that they are. The only possible way fertilisers could be exempted would be to consider them as a capital investment by the farmer. In his Budget the Minister is putting in fertiliser subsidy as a capital item. Is he going to exempt the amount the farmer pays for fertilisers from this turnover tax? If not, on a ton of high grade fertiliser the farmer will have to pay a tax of 10/-. On a barrel of seed, he will have to pay a tax of 3/-. On an acre of grass seed, he will have to pay a tax of approximately 3/-. I cannot see how the sale of beet pulp back to the farmer is exempt. Half a ton costs the farmer £20, and he is now liable to pay a tax of 10/- on the beet pulp he must feed to his cows?

An Leas-Cheann Comhairle

These details will relevantly arise in the general debate.

Mr. Dillon

We certainly are entitled to discuss the Financial Resolutions. There is nothing under Standing Orders which limits the detail into which we may go in considering the application of Financial Resolutions.

Mr. O'Sullivan

And there is no Minister for Finance present to reply to the questions.

Mr. Donegan

I want to know from the Minister—I hope my colleague from Louth, the Minister for External Affairs, is taking a note of this— whether or not the purchase of machinery by a farmer will be treated as a replacement and be subject to tax or whether it will be treated as a capital investment and be exempt. We will try to get this information, but it appears that we will not get it. If these items are liable to tax, is it the position that a factory which buys raw materials for processing is not liable to this tax but the farmer who buys his seeds, fertiliser, machinery and so on for processing by using his land to produce the finished product is liable to be taxed on the purchase of his raw materials, even though he is not liable to the tax on the finished product? I want to know is it an offence not to collect the tax on small priced items and is it an offence to collect more than the two and a half per cent. These are things we must find out.

Mr. O'Sullivan

I should like to ask the Minister in regard to the subsidised footwear scheme under the Department of Social Welfare whether the balance of that amount will have to be paid by the parents of these children subject to this levy?

An Leas-Cheann Comhairle

That will be a matter of detail for the general debate.

Mr. O'Sullivan

I should like to know before we vote. It is well that Deputies supporting the Government should appreciate when they go into the lobbies—if the Minister returns to the House—what they are voting for. They are voting to impose a levy on the mother of the child whose footwear is being subsidised by the ratepayers of Cork and every other county. Our experience in Cork has been, as Deputy Meaney knows, that the amount allocated for the footwear scheme has not been taken up because the parents have not been able to pay the increased amount demanded by the Department of Social Welfare. In addition, the parents are now to be obliged to pay this levy of two and a half per cent.

Mr. Meaney

What about the increase in the children's allowances?

Mr. O'Sullivan

What about the increase in the rates? I want to know what was the purpose this year of the advance announcement made in relation to this levy? I want to know why the Taoiseach took himself to Limerick to announce this so far ahead of Budget time. I want to know whether the Minister for Finance took these Budget "leaks" into account in estimating he would get only £3½ million for five months of this year. He is aware of the fact that since the Taoiseach "shot his mouth off" in Limerick, every garage in the country has been flooded with orders for new motor cars, every electrical dealer has been flooded with orders for refrigerators, cookers and every type of equipment in order to jump the Minister's gun. Because he is aware of the fact that every household will be stocked up for a considerable period, he is allowing only £3½ million income from the levies in this year. But it must be made clear to those Deputies who intend to support the Minister, if they do intend to support him, that the figure for a year will not be a figure in the proportion of five months to £3½ million. What will be the ultimate cost per annum in the levies it is proposed to exact from every member of the community on everything they eat, on every mile they travel, in respect of every single thing they do, except that they can still dance without a tax.

An Leas-Cheann Comhairle

The Deputy may not discuss that point.

Mr. O'Sullivan

Except, Sir, that we are looking for additional moneys to-day, despite the buoyancy of the revenue. We cannot forget that the Minister had to redeem his promise to the ballroom proprietors and give them back what they had subscribed by way of an election subsidy.

An Leas-Cheann Comhairle

The Deputy will relate his remarks to the tax under discussion.

Mr. O'Sullivan

I am discussing the alternative to the tax now intended to be imposed.

An Leas-Cheann Comhairle

We are not discussing alternative taxation; we are discussing Resolution No. 13.

Mr. Donegan

It is unlucky 13, so far as Fianna Fáil are concerned.

Mr. O'Sullivan

I want to know why it was necessary this year to reveal the Government's intention to introduce this tax at some later time.

Mr. Colley

It was announced in the last Budget.

Mr. O'Sullivan

Was it announced last year that there would be imposed this year a penny a lb. on butter, 1½d. on tea and 1½d. on petrol? Was that announced in the last Budget? I will tell you what was announced in the last Budget—that the ratepayers could not be asked to continue to carry the present level of rates and that they would have to get relief. They have not got that relief in this Budget.

An Leas-Cheann Comhairle

Deputy O'Sullivan must relate his remarks to the tax under discussion.

Mr. O'Sullivan

I want to know from the Minister why it was necessary to leak the intention of the Government regarding this tax over the past couple of months.

An Leas-Cheann Comhairle

That does not arise on this Resolution.

Mr. O'Sullivan

I am entitled to ask why it was possible for one of our daily newspapers, the Cork Examiner, to announce in its Dublin letter this morning the precise terms of this 6d. in the £1 tax. The Irish Times also did it. I want to know if the Minister will not be seriously affected regarding the inflow of the revenue he expects to get from this tax in view of the fact that the Government found it necessary to leak their intention about it prior to the Budget.

Mr. Sherwin

I will support this Budget. I contend that the real poor will profit from this Budget because they can only spend what they have to spend. If an old age pensioner gets 35/- a week he can only spend 35/-. The 6d. in the £ will only cost him 10½d. and he will get back 2/6d. He will have to hand out 10½d. because of this tax, but he will benefit to the tune of having an extra 1/7½d. If an unemployed man gets only £3, he can only spend £3 which means 1/6d. in tax. He is getting 2/6d. extra and he is also getting children's allowances, so, no matter how you take it, he is going to benefit by this Budget. If a family man has £10 a week and young children, he can only spend that £10. That will cost him 5/- in tax but he will get that back in increased children's allowances. It is only the people who can afford to pay extra who will be asked to contribute in order to provide this £8 million or £10 million. The real poor will not lose.

Mr. Barrett

I was wondering, if this tax is to apply to the sale of newspapers on street corners, how it is to be levied. Could the Minister tell me how he proposes to deal with the difficulties which health authorities will now find themselves in when, having already decided on their budgets, they find that these budgets are inflated as a result of the Minister's proposals?

Mr. P. O'Donnell

It has been customary in the past, prior to Budget day, to send to customs and excise officers throughout the State a sealed envelope containing these Financial Resolutions so that if increased taxes are to be imposed immediately, they will take effect from the moment the Minister gets on his feet in the House to make his speech. We were led to believe that there would be a purchase tax on motor cars but today no customs officer received a copy of these Resolutions and it was quite evident to all people in contact with these officers that there would be no motor car tax. That is definitely a leak and perhaps the Minister would explain it.

Mr. Coogan

Would the Minister indicate the number of extra civil servants who will have to be employed to enforce this tax? Since the Minister has now turned the employer into a tax collector, will he let us know the number of inspectors that will be necessary for that purpose?

Dr. Ryan

I do not like to break the rule of having no speeches at this stage of the Financial Resolutions but it is hard to keep Fine Gael from their little bit of demagoguery if they get the chance at all. They have done their best by asking questions that do not arise on this Resolution at all, but I wish to reply to the serious questions that have been put to me. I want to correct Deputy Corish. This is not a five months tax. It is only for four months. It is for November, December, January and February, because the March tax will not be collected until that month has closed. I am calculating on £3½ million for the four months which would be £10½ million in the full year.

Mr. O'Sullivan

What about jumping the gun?

Dr. Ryan

I am answering the questions put to me and I do not want to be put out by the Deputy. Deputies will have the next two or three weeks to discuss these matters and I am sure they will make some pretty long speeches on them. If we take 2½ per cent of the national income, it works out at about £10 million a year.

There are certain difficulties. Deputy Barrett raised the question of the newspaper boy. He gets his newspapers from the newspaper office and whatever they charge him, he knows what to charge his customers. That does not concern us. I assume the newspapers will give him his papers at the same price. Take the question of the bottle of milk. If the farmer delivers the milk direct to the householder, there is no tax.

Mr. Donegan

What about the fertilisers and seeds?

Mr. Dillon

Surely the Minister knows that bottled milk is not ordinarily delivered by farmers?

Dr. Ryan

I was going to come to that. You will have the bigger men and they will be taxed. I do not know what they are going to do about it.

Mr. Dillon

Presumably they will collect the tax.

Dr. Ryan

If the Deputy will allow me to speak after his one hour speech —I am going to take only two minutes.

Mr. Dillon

I am only asking——

Dr. Ryan

The loaf of bread, the lb. of tea, the lb. of sugar—will I repeat them all?

Mr. Sweetman

The Minister will hear them again and again.

Mr. Dillon

Bottled milk is delivered by the pasteurisers who will be liable to the tax.

Dr. Ryan

They will be taxed.

Mr. Dillon

How will they collect the tax?

Dr. Ryan

We will see how they will collect it. This is a turnover tax. The retailer will pay tax on his turnover. It is for him to decide how he is going to recoup himself. I am quite sure there is no retailer in this country, be he ever so poor, who will have the same mentality, the same, if you like, ridiculous mentality, as Deputy Dillon, to think that he must put one-fortieth on this or one-fortieth on that. I am sure the retailers will be much more sensible than Deputy Dillon or the Fine Gael Party. They will do their own business and they will do it in a sensible way and not in the Fine Gael way, I hope. The turnover tax will be there. They know they have to pay it and they will decide how to recoup themselves. I have been talking to retailers because a lot of retailers thought this was coming. I was talking to one to-day and he said that as far as he was concerned, it was not going to cost very much. We do not oblige him to say that he must add 2½ per cent to everything. He can recoup himself.

Mr. Donegan

He can add five per cent. to one thing.

Mr. M.J. O'Higgins

Is that not an invitation to profiteer?

Dr. Ryan

I have always said this: I love to deal with intelligent interrupters but when you get that sort of Fine Gael interruption nobody could deal with it because it is all "bunk".

Mr. Norton

Is there anything to prevent the retailers from charging the tax? Can the retailer charge the tax?

Dr. Ryan

He recoups himself, or perhaps he does not, I do not know, but there is one thing certain, no retailer is obliged to say that he must put, say, 6¾ per cent on that——

Mr. Donegan

Can he put 10 per cent. on one thing and nothing on another?

Dr. Ryan

He can put 40 per cent on anything at present.

(Interruptions.)

Dr. Ryan

I must say I admire the simplicity of Fine Gael. The simplicity of their minds surprises me. He will probably increase the price of some items and not of others. Deputy Dillon will agree with me on this, I think, that the retailer now is in a very competitive position and he will not be allowed, if he wants to stay in business, to put up prices more than he has to.

Mr. Coogan

Many of them will be out of business now.

Dr. Ryan

I think Deputy Norton spoke about the person getting £10 a week. If the man earning £10 a week spends £10 a week, as I suppose he does, if he does not save any of it, he will contribute 5/- a week. If he has children, he will get back part of that. I do not know if any Deputy referred to what the children's allowances are. The increase is 1/- or a little bit more, but take it at 1/- a week, and the man with £10 and with two or three children—surely no Deputy will claim he is spending more than £2 a week on them; he could not afford to have them if he was—will be recouped by 1/-. He is all right as far as his children are concerned but it will undoubtedly cost him something for himself and his wife. If it did not cost somebody something, we would not get anything out of it.

The Committee divided: Tá: 72; Níl: 61.

Tá.

Aiken, Frank.
Allen, Lorcan.
Bartley, Gerald.
Blaney, Neil T.
Boland, Kevin.
Booth, Lionel.
Brady, Philip A.
Brady, Seán.
Breen, Dan.
Brennan, Joseph.
Brennan, Paudge.
Breslin, Cormac.
Briscoe, Robert.
Burke, Patrick J.
Calleary, Phelim A.
Carter, Frank.
Carty, Michael.
Childers, Erskine.
Clohessy, Patrick.
Colley, George.
Collins, James J.
Corry, Martin J.
Cotter, Edward.
Crinion, Brendan.
Crowley, Honor M.
Cummins, Patrick J.
Cunningham, Liam.
Davern, Mick.
de Valera, Vivion.
Dolan, Séamus.
Dooley, Patrick.
Egan, Kieran P.
Egan, Nicholas.
Fanning, John.
Faulkner, Padraig.
Flanagan, Seán.
Gallagher, James.
Galvin, John.
Geoghegan, John.
Gibbons, James M.
Gilbride, Eugene.
Gogan, Richard P.
Haughey, Charles.
Hillery, Patrick.
Hilliard, Michael.
Kennedy, Michael J.
Kitt, Michael F.
Lalor, Patrick J.
Lemass, Noel T.
Lemass, Seán.
Leneghan, Joseph R.
Lenihan, Brian.
Lynch, Celia.
Lynch, Jack.
MacCarthy, Seán.
McEllistrim, Thomas.
MacEntee, Seán.
Meaney, Con.
Medlar, Martin.
Millar, Anthony G.
Moher, John W.
Mooney, Patrick.
Moran, Michael.
Ó Briain, Donnchadh.
Ó Ceallaigh, Seán.
O'Connor, Timothy.
O'Malley, Donogh.
Ormonde, John.
Ryan, James.
Sherwin, Frank.
Smith, Patrick.
Timmons, Eugene.

Níl.

Barrett, Stephen D.
Barron, Joseph.
Barry, Anthony.
Barry, Richard.
Browne, Michael.
Browne, Noel C.
Burke, James J.
Burton, Philip.
Byrne, Patrick.
Casey, Seán.
Clinton, Mark A.
Collins, Seán.
Connor, Patrick.
Coogan, Fintan.
Corish, Brendan.
Cosgrave, Liam.
Costello, Declan D.
Costello, John A.
Coughlan, Stephen.
Crotty, Patrick J.
Desmond, Dan.
Dillon, James M.
Dockrell, Henry P.
Dockrell, Maurice E.
O'Higgins, Michael J.
O'Higgins, Thomas F. K.
O'Keeffe, James.
O'Reilly, Patrick.
O'Sullivan, Denis J.
Pattison, Séamus.
Reynolds, Patrick J.
Donegan, Patrick S.
Dunne, Seán.
Dunne, Thomas.
Esmonde, Sir Anthony C.
Everett, James.
Farrelly, Denis.
Gilhawley, Eugene.
Harte, Patrick D.
Hogan, Patrick (South Tipperary).
Hogan O'Higgins, Brigid.
Jones, Denis F.
Kenny, Henry.
Kyne, Thomas A.
Lynch, Thaddeus.
McAuliffe, Patrick.
MacEoin, Seán.
McLaughlin, Joseph.
McQuillan, John.
Mullen, Michael.
Murphy, Michael P.
Murphy, William.
Norton, William.
O'Donnell, Patrick.
O'Donnell, Thomas G.
Rooney, Eamonn.
Ryan, Richie.
Spring, Dan.
Sweetman, Gerard.
Tierney, Patrick.
Tully, James.

Tellers: Tá, Deputies J. Brennan and Geoghegan; Níl, Deputies O'Sullivan and Tully.

Question declared carried.

Dáil Éireann díospóireacht - Tuesday, 23 Apr 1963

Financial Resolutions. - Resolution No. 13—Turnover Tax.

Tá.

Níl.

Dáil Éireann díospóireacht -
Tuesday, 23 Apr 1963