Committee on Finance. - Resolution No. 14—General (Resumed). – Dáil Éireann (17th Dáil) – Wednesday, 24 Apr 1963

Committee on Finance. - Resolution No. 14—General (Resumed).

Debate resumed on the following motion:

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.—(Minister for Finance.)

Mr. Dillon

I submit to the House that this disastrous Budget not only has in it grievous and inevitable consequences for the country but is itself evidence not merely of the irresponsibility of the Parliamentary Secretary to the Minister for Lands to which I propose to refer in some detail later, but evidence also of the complete confusion of mind that has descended on the Government. Heretofore, the Government have professed to base their policy for economic expansion very largely on what is commonly known as the "Grey Book" and their own pronouncements from time to time arising therefrom. In the Grey Book, ordinarily known as Economic Development, Mr. Whitaker is on record as saying that a general purchase tax would have an immediate reaction on sales of Irish products and probably in the end would have an inflationary effect on wages and salaries and the cost of living.

The Government in their White Paper two years ago on direct taxation said the introduction of a purchase tax, as recommended by the Income Tax Commission, bringing in about £6 million a year would be socially undesirable. If employed as a partial substitute for income tax, its economic effects might also be adverse. The prices of taxed goods would be increased and, through compensatory raising of money incomes, costs might be increased and the competitive capacity affected, with risk to export and employment. That was their view two years ago of a sales tax designed to offset a substantial reduction in income tax. But the proposal now before the House is for a sales tax with the full maintenance of income tax and a substantial increase in corporation profits tax.

I have a more recent quotation. This is Deputy Lenihan, the Parliamentary Secretary to the Minister for Lands, speaking in his constituency as reported in the Roscommon Herald of March 23, 1963:

Mr. Lenihan in his address stressed the necessity of every member of the cumann having the arguments and policy of the Party at his fingertips to meet the criticism which was bound to come. He said that in the next few weeks and months, the Budget would be the main topic of conversation and he wished the members of the cumann to have all the facts at their fingertips. There would be no increase on those items which were already perhaps overtaxed, items such as beer, cigarettes, petrol, spirits and so on. The increases would be on luxury goods and semi-luxury goods such as jewellery, furs and expensive motor cars, and these items were already taxed in Britain and on the Continent. The increases would go towards increasing agricultural grants, tourism and other things, including vocational education, which was very important in this day and age. The taxes, he assured the meeting, were being imposed on luxurious and semi-luxurious goods. There was increased expenditure, but he had no objection to spending money so long as it was being spent on the economic development of the country. They could not tax agriculture or industry any more, and the tax was being put on these luxury items that were already taxed elsewhere. Mr. Lenihan said he was telling the members these things so that they could act as propagandists for the Party. They would meet criticism but he wanted them to remember that most, the vast majority, of the people from whom criticism would come were anti-national.

The purchase tax which it is proposed to impose in this Budget covers, it is true, furs, jewellery and expensive motor cars, but it also covers perambulators, butter, boots, tobacco, spirits and everything else anyone has to buy. In case the Parliamentary Secretary finds some difficulty in returning to the Boyle comhairle ceanntair, I should like to give him this assistance. Boyle comhairle ceanntair are entitled now to know that, in addition to the furs, the jewels and the expensive motor cars, they will be required to pay a tax on prams, to pay 1½d. per lb. on tea, 1/- on a pair of shoes, a penny on a lb. of butter, a 1½d. on a gallon of petrol, a penny on a glass of whiskey, a penny on a packet of cigarettes and a penny on the plug of tobacco.

It is a remarkable illustration of the confused mind which seems to have descended on Fianna Fáil and which is typical of the gambler who has plunged pretty heavily already and determines he is now prepared to let the tail go with the hide in one mighty effort. I always remember the story of Joe Lee, the old bookmaker. He once told a friend of mine that he was laying wagers at Aintree racecourse when a man asked him what his price was for a particular horse. He said "40 to one." The man asked: "How much will you take about it?" and he replied, "More than you can afford to lay." The man handed him £10,000 in notes. And he paid the bet, because the horse won. Joe Lee was asked what was the explanation of a man of such poor attire and aspect being in a position to lay such a wager. He said it was the man's last wager, that if that money filched from the till did not come home, they would have found him in the Mersey. He was one of the very few lucky ones.

That is the road we are travelling now. We are engaged in an unparalleled gamble, but what concerns me is that the gambler does not seem to have control of the direction in which he is travelling. We are committed in the OECD to collaborating with our fellow members there to attempt a 50 per cent. expansion in our gross national product in the decade from 1960 to 1970. Half of that decade is gone. During the first half of that decade, the expansion in the gross national product in certain countries in OECD fell short of the annual increase requisite to achieve the goal. Countries as powerful and as great as the United States of America and the United Kingdom, faced with that situation, came to the conclusion that the burden of taxation must be lightened if industry and business were to have a chance of providing the expansion requisite to play their part in achieving the common goal. We are all aware that the Federal Government of the United States at present have proposals before the legislature of that country for an immense relief of taxation. We are all aware that Mr. Maudling, Chancellor of the Exchequer in the British House of Commons introduced a Budget recently designed to give vast relief to the tax-paying public, individual and business, and very large additional reliefs to stimulate output there.

In this country, having gone on record in 1961 as saying that a purchase tax, or a substantial increase in direct taxation such as provided for here in the extravagant increase in the corporation profits tax, was inimical to expansion, we find ourselves in 1963 making our contribution to the common target of an expansion of 50 per cent of the gross national product by levying the very two taxes which it was stated only two years ago were absolutely fatal to any prospect of achieving that objective which we have internationally committed ourselves to seek. What are we to say of a Government who in 1963 do exactly what they declared it would be inexpedient to do in 1961 when junior members of that Government were prancing around the country and assuring their constituents less than a month ago that whatever else would happen, the Government of which they were members would introduce no proposals for a general increase in prices such as is now provided in the Government Budget Resolutions?

It is time to ask ourselves who is right: the Governments who believe that, to secure a general measure of expansion in the gross national product, it is requisite to reduce taxation, or our Government, professing to have the same end, who introduce in this Budget proposals for an increase of £12 million per annum, an increase of nine per cent in the total taxation burden on our people which I believe must come closely to a record in the history of this State.

That is not the only record to which this Government can lay legitimate claim. This Government have it to tell that for the first time in the history of this country, the London County Council is now in a position to tell us that five per cent of the population of Greater London were born in Ireland. There are, after seven years of Fianna Fáil Government, more Irish-born people living in Greater London than in the entire province of Connacht. That, I believe, is an historical record. I do not believe that could be matched immediately after the Famine. The cost of living has reached the highest level ever recorded since statistics were first kept. When Fianna Fáil first came into office, the index figure was 135. It stands today at 160 and as we all know, when the provisions of this Budget begin to operate—if they ever do, if the people ever allow them to— it will go higher. That was confidently forecast both in Mr. Whitaker's volume Economic Development and in the Government's comment in the White Paper on Direct Taxation when they foresaw that the application of such a tax measure as this would result in a substantial increase in the cost of living.

Our adverse trade balance for the first time in the history of this country is now substantially in excess of £100 million per annum and the national debt stands at substantially more than £500 million. Both of these are records never before established since this State was founded. Government expenditure this year is a record for all time and the taxation it is proposed to raise under the proposals submitted by the Minister for Finance in a full year is greater than has ever been suggested by any Minister for Finance since the State was founded. Local rates payable by the ratepayers of this country—and I am not talking about local expenditure which includes a Government contribution; I am talking about local rates levied on the ratepayer and paid by him—stand at the highest figure ever established since the Local Government Act of 1898 was passed.

The deficit on the current Budget is £4,857,000 and that is all in the context of the fact that our imports are steadily rising and our exports are declining. Not only is that true but the rate of increase in the gross national product at constant market prices is steadily declining. The increase in 1959 was 4.9; in 1960, it was 5.9; in 1961, it was 3.8; and in 1962, it had declined to 2.5. If these facts do not give the Government pause, then I suggest this Government are no longer fit to govern this country and ought to get out.

The Taoiseach, when he was Tánaiste and Minister for Industry and Commerce in the previous Government, with the full authority of that position and when appealing to be returned to office, solemnly declared to the people that he had a plan in his hand which if he were given a chance to implement it, would produce 100,000 jobs for our people. Largely on that representation, the present Government took office and I ask the House to note this astonishing fact: seven years after that undertaking was given, for the greater portion of which Fianna Fáil enjoyed a clear majority in Dáil Éireann—which they do not do now—there are 58,500 fewer people at work in Ireland in 1963 than there were on the day the Taoiseach gave his undertaking to provide 100,000 new jobs. There are 58,500 fewer people working in Ireland than there were then.

Did anyone in this country, or in Clery's Ballroom, or at any of the byelection meetings at which he spoke, believe that when he gave that undertaking to provide 100,000 new jobs, he meant that the 100,000 jobs would be in London, Birmingham and Glasgow? Because that is what happened. Since those words were uttered, nearly 300,000 of our people between the ages of 18 and 30 years have emigrated from this country to the industrial cities of England. They form a large part of the five per cent of the population of Greater London to-day but they are to be found in every other industrial city in England and Scotland.

We are told by Fianna Fáil to-day that they rejoice in the fact that the rate of emigration is going down. If they knew rural Ireland, they would realise that it must go down, unless they are prepared to provide perambulators and bathchairs to take the emigrants out. Three hundred thousand have gone. Where would we be in this country to-day if the 300,000 had stayed at home? We tried to keep them at home. We would have over 300,000 unemployed. Is that a record of which any Government in this country can be proud and is that a situation which the proposals in this Budget will make any contribution to resolve? Not if we accept the view expressed by the Government themselves in their own White Paper and adopted by the Government in their approbation of Mr. Whitaker's Economic Development, to which I have already referred.

Naturally, attention was largely concentrated yesterday on the proposal to tax everything, not only furs and jewellery and expensive motor cars but everything—everything that anyone has to buy.

Mr. O'Sullivan

That was an unfortunate remark of the Parliamentary Secretary's.

Mr. Lenihan

Nothing is being taxed.

Mr. Dillon

I want to direct the attention of the House to the proposal to increase corporation profits tax. That is one of these taxes that legislators too often are prepared to accept as something about which nobody should complain. I want to warn the House that that increase in corporation profits tax strikes at the very foundation of our hopes for expanded production in this country and it is one of these irresponsible things of which a Government may be guilty because they think that the bulk of the people will not appreciate or understand the significance of what is being done.

Consider what the situation is. A small company, providing employment, whose profit is less than £2,500 a year heretofore paid no corporation profits tax. It paid its income tax and then, if it was sensibly managed, it distributed one-half or less than one-half of its profits in dividends and it ploughed the other half back and that other half went to keep the equipment and business up-to-date and equal to the increasing demands of competition. Today, that company will be faced with the fact that it has to pay income tax on its profits and then pay £100 corporation profits tax. A company that earns £20,000 a year will now pay £3,000 corporation profits tax, after it has paid income tax on its profits. A company that makes £200,000 a year will pay £30,000 corporation profits tax, after it has paid its income tax as well.

Only those who have some knowledge of business realise the iniquity of these proposals. There never was a time when Irish industry and Irish business should be more encouraged to plough back their profits in improved equipment and modernisation of their methods and facilities than this time and this is the time we lay upon them a fresh taxation burden which makes the adequate repair of their facilities that much more difficult. It is profoundly inimical to the interests of the expansion in gross national product to which we have committed ourselves in so far as it impinges on the larger firm; it is a cruel and unjust imposition on the smaller firms who are brought within the range of corporation profits tax for the first time this year.

When I think of small shopkeepers in this city and in Cork, Limerick, Waterford and in towns and villages throughout the country who are faced with the arrival of large international combines to set up, without any regard to capital cost whatever, the most modern and attractive self-service stores that their experience and capital resources will allow, in competition with people whose whole resources are invested in their relatively small establishments and who are now told that the money they so urgently need to bring their premises up to some degree of competitiveness with these financial mammoths that are arriving with the express intention of wiping them out, I find it very hard to be patient with a Government guilty of such irresponsible indifference to the interests of hard-working people in their own country.

Now I want to say a word to put this problem of the turnover tax in true perspective. The Parliamentary Secretary says it taxes nothing. If that is the criterion the Government are really applying to this, this proposal becomes even more iniquitous than it first appears because, if that is the line of country he is travelling, what it really means is that the Government proposals are that in the case of the retail distributive trade of this country, which, after all, is one of the biggest employers of labour in the country— let us not forget that—they are going to say to a firm with a turnover of £100,000, such a firm as would employ 10, 12 or 15 assistants, that they must pay a turnover tax of £2,500.

To many minds, when you speak of £2,500 in the context of £100,000, the inclination is to say: "Well, that is not much" but do not forget that the profit on the turnover of £100,000 is in the order of £5,000 net.

Mr. A. Barry

Four thousand pounds is the average.

Mr. Dillon

I am allowing them £5,000 after expenses have been paid. What we are, in effect, saying to that firm is: "When you have made £5,000 net, you must pay income tax first on your £5,000 and then you must pay corporation profits tax on your £5,000 and then you must pay £2,500 which we call sales tax but which is the same as corporation profits tax but we give you leave to get it back from your customers".

The Parliamentary Secretary to the Minister for Lands tells the Boyle comhairle ceanntair that it is not going to put a tax upon anything. Either he is right and the shopkeeper is wiped out; on his turnover of £100,000, he will be left with a net profit of substantially less than £2,000, or else he can put his hand to the task of raising the price of butter, tea, cigarettes, whiskey, and petrol, if he sells it.

The proposal is designed to secure for the Exchequer £10½ million per annum. Someone must pay it: either the consumer will be successfully assessed for it or else the medium-sized business man will close his doors because he will not have it if he cannot get it back, and if he does, the men and women who work for him will be out of jobs and will presumably be offered the opportunity of joining their brothers and sisters, uncles and aunts, in London, Birmingham and Glasgow.

I view the prospect of this levy with profound alarm, and every authority that has considered it in anticipation, and particularly objectively out of the context of the proposals here before us, has condemned it. Their opinion has been endorsed not only by the economic experts but by this very Government themselves because at that time they had not seen the Nemesis that was advancing upon them. They were living in the Utopia of belief that the Common Market would resolve all their problems and that in any case, if it did not, it would be a useful scapegoat on which to hang the blame. That gamble has not come off and now we are going back on all the detached estimates that were made when the Government were not a panic-stricken mob abandoning all their principles.

When I look across at the Tánaiste and think of the things I have heard him say, think of him then subscribing to the proposals now before the House, it astonishes me that a man who entertained the convictions he once claimed to have could have the audacity to remain in public life and sponsor the proposals now before the House. He knows it. We used to speak of the man who sold his soul for a penny roll and a lump of hairy bacon, but I would not like to be in the Tanaiste's position today. I hope if I were, I would have the courage to do the right thing.

We quite casually accepted in yesterday's division the principle that the prerogative enjoyed by the co-operative societies for 65 years in this country is to be swept aside. I do not believe that proposal has been given adequate consideration or a true estimate made of its impact, but I suggest to the House that the imposition of income tax on certain of the activities of these co-operative societies will subtract from the farmers in many areas throughout the country more than the penny a gallon conceded to them recently under the increased price for milk announced by the Government in the past three months. I suggest that a change of that kind should not be made without reasonable consultation with the co-operative movement and a true assessment of the probable repercussions on the whole structure of agriculture. Prior to such a radical departure, I do not believe any such inquiry was undertaken and I charge the Government with irresponsibly embarking on this without notice to anybody and without adequate investigation of what the consequences of that decision will be.

I have already referred to the dimensions of the adverse trade balance. It now stands at £102 million, but, turning to Economic Statistics provided prior to the Budget of 1963, I want to remind the House of certain facts to which I saw fit to draw its attention on more than one occasion and which were indignantly repudiated by the Government when I first brought the attention of the House to them. These preparatory papers speak of the gap in the trade balance and of the deficit in the balance of payments and comment on the capital movements that are taking place between this country and the outside world which we have to cloak for the time being, the fiduciary reaction of the balance of trade on the net external assets of the joint stock banks, the Central Bank and the Government funds, and point out that our invisible exports make a substantial contribution by way of tourism, emigrants' remittances, pensions and so on and say there is a balance of £24 million which is made up of external subscriptions to Government loans. If that is not hot money, would I be exaggerating if I described it as warm money? That investment could be thrown on the market with very uncomfortable consequences at a moment's notice. Bank deposits of external customers is the next category. That is the most polysyllabic example of hot money I ever saw because the boys who deposit that money here could take it out at the drop of a hat.

The third category are purchases of buildings and land by externs. It is hard to find out what the Government's view on this is. The Minister for Lands says it does not amount to £500,000, the Minister for Finance says his latest information is that about £1 million worth of land was purchased here in the past 12 months. I believe the figure to be substantially higher and I believe it to be substantially increased by a new invasion—the land speculators and the property speculators who are moving in and now buying up house and office property and renting it to nationals of this country. Some of them, short of liquid capital, are glad to sell out to international financiers and are glad to become rent-paying occupiers of the property. There are two aspects of this matter to which I want to draw attention. One is that I believe the sound basic instinct of our people will say: "This must stop; what we did not allow them to take by force we will not now allow them to buy with money. We fought long enough to get this country back into our own hands and we will not sell it now."

That happened in Canada. There has been bitter feeling in Canada over an excessive import of foreign capital, expressed through purchase of property. That is a very different cup of tea from the import of capital for the establishment of industry, but over and above that, leaving aside altogether the social aspect, let us not forget that none of these international operators puts his money here for the love of our lovely blue eyes. He puts it here in the anticipation that he will get a profit out of it and, taking one transaction with another, you may assume that capital of this character invested here is designed to bring home a seven per cent return. That means that for every £10 million of this money that finds its way in here by the purchase of our property and land and by investment in our industry, they believe they are creating a charge on our balance of payments of £700,000 per annum in perpetuity. It must be carried in perpetuity, and so the relief at present enjoyed by the balance of payments is a benefit at the expense of our ability to meet a charge in perpetuity of £700,000 for every £10 million invested.

While the money is coming in, that is lovely. If our gross national product is expanding at a rate which will generate exports on a scale sufficient to meet the certain charge upon us, well and good, but we are in a situation in which our exports are falling and our imports rising and in which the rate of expansion of our gross national product is declining—it stands now at 2½ per cent —and in which we have an adverse balance of payments this year of something of the order of £13 million. It is time we had some regard to the future. Whether that does any good or not with this Government is hard to say because two years ago they examined the future with detachment and deliberation and they declared most categorically that the things they must never consent to do are the things they themselves propose to do in 1963. If they were right in 1961, they are wrong in 1963: if they are right in 1963, they were wrong in 1961.

The fourth element in this item of £24 million is the revaluation of external securities held by banks—in fact, the changing of figures in a book. The fifth element is the investment by foreign firms in their subsidiaries here and that fact, while it can be of excellent value to the country in so far as it provides good employment for some people in their own country without imposing on them the obligation of emigrating, still has an economic element in it in that it means a charge in perpetuity on the balance of payments and if there is not a corresponding increase in our exports, we are purchasing a temporary benefit at the expense of a permanent charge which with the present trend in our resources, we shall have little prospect of being able to meet when it may be vitally necessary to this country that we should be more than adequately covered.

I believe this Government are floundering and what fills me with consternation is that I believe they can drag us all down with them. I believe they do not know where they are going but they are hoping and praying that something will turn up. I do not underestimate—I never have done so—the difficulties with which an agricultural country such as this is confronted in finding advantageous markets in which to trade. I know the difficulties at this time of finding profitable markets in which to dispose of our creamery products and certain other products of which we have or could have an abundance to send abroad. I rejoice that we still have for our people what no other country in Europe has to so great an extent, a viable and invaluable market in Great Britain for our livestock and for a large proportion of our industrial output. I hope that this Government will have the nous and capacity not only to keep but to expand that market.

I get the impression strongly that although there are a number of people in this House who strongly advocate that this country should negotiate an association with the Common Market in lieu of membership and point to the achievement of Greece in having secured such an arrangement, if my information is worth anything, that agreement of association is not proving the boon that Greece thought it would be. I suggest to our Government that if they will not get out—so long as we have Deputy Sherwin and a few more of them there, we cannot get them out by a vote of this House——

I would not like you to go; I would not like either of us to go. I do not believe the Minister gives a damn but the country gives a damn and when the people feel the full impact of these proposals, they will understand them better. I want to point out to the House and to the country this interesting feature. The Minister for Finance is portrayed in the morning papers as a smiling, babylike, innocent person. Somebody even described the picture as that of the glaxo baby. Nobody could look more benevolent or kindly but he is neither one or the other. He is a very astute old operator.

It used to be a virtue in Government in this country that the Minister for Finance felt he had an obligation to come before the House and lay his proposals honestly and clearly before us. Can anyone describe the Minister's present proposals as honest or above board? Can anyone describe as honest or above board a Minister who announced that he hoped to collect £3½ million from these proposals this year? He did not consider it necessary to say what he would collect from them in a full year until a member of the Labour Party put the question to him and then he said that they would produce £10½ million in a full year.

How many people in the country today really appreciate that this Budget contains proposals designed to raise increased taxation to the tune of approximately £13 million in a full year, the largest increase ever proposed in a Budget in this country? He has presented proposals, not for a tax on tobacco, or beer, or spirits or clothing but for a tax on nobody knows what. Those who will have to pay it will feel it and will know that serious consequences must inevitably follow for the whole economic life of this country. These consequences may be postponed for a time but they are certain and inevitable.

This country does not belong to any one of us or to any group. It belongs to us all and if it goes down, unfortunately the great majority of us will go down with it. I think the policies of the present Government put us in the gravest possible jeopardy of becoming the sick and poverty-stricken nation of Europe at a time when all the countries associated with us in OECD and the other organisations have a high prospect of achieving a greater measure of prosperity than ever before. It would be a regrettable humiliation for those of us who love this country if it should have to go begging and looking for charity hat in hand to Denmark, Holland, Belgium, France, Germany or Britain. If the policies of the Government are persisted in, that is the danger which faces us. It is a danger which I do not think this country is fit to face, but which, if I were called upon, I would face with reluctance but sincere in the conviction that I could avert the consequences of what this Government have done.

Mr. Corish

To me, there is one outstanding feature in this Budget. As far as we can see, it defines very clearly what is the attitude of the Government towards taxation. In page 53 of the Minister's speech, he clearly defines that attitude and may I say straight off that it is a policy with which the Labour Party violently disagree. He said:

Government policy with regard to taxation, as stated on many occasions, is that it is a good principle in the circumstances of a developing country to place the emphasis of taxation on expenditure rather than on income so that earning and saving will be encouraged rather than spending.

He goes on to say:

It is not contrary to equity that those members of the community who can afford to spend most should pay most, as will be the position secured by the new tax.

I would like to know from the Taoiseach or from the Minister for Finance what is good about the principle that was stated here yesterday by the Minister for Finance. Theoretically, as far as the economists are concerned, a 2½ per cent tax on expenditure will get them a certain amount of money. It will get them the money they require this year, £3½ million, and, in an ordinary year, £10 million. That is all right in theory. What the Government seem to have neglected this time is to think in terms of ordinary people, to think in terms of the capacity of individuals to pay this tax, and not so much in terms of the capacity of the country as a whole to bear a tax such as this. The distribution of the tax burden as far as the Labour Party are concerned is all important. The Minister for Finance had a relatively easy task when he said to himself: "I require £3½ million this year; £10½ million in a full year. The simplest thing to do is to put a 2½ per cent tax on "—what is described in this Budget as a turnover tax.

We are told, again in the same words—the words I have just quoted— that this is to encourage people to save rather than to spend. It seems to me to be somewhat contradictory. Apart from the fact that it is a tax which the poorest person in the country will have to pay, a tax on such a person is designed, according to the Minister for Finance and the Government, to make him save rather than spend. Such people are supposed not to spend money on food, clothes, medicines, footwear and such things so that they may save.

I did not read Deputy Lenihan's speech in the Roscommon Herald. I just heard the quotations by Deputy Dillon who read extracts from some of the local newspapers. I think Deputy Lenihan's attitude was probably right and it is what I am sure the members of the Fianna Fáil Party expected, namely, that such a tax would not be imposed on practically every item one can think of that is purchased by the people of this State.

I can and the Labour Party certainly can, agree with something the Taoiseach said here when he spoke on the Vote on Account. On that occasion he said that the level of taxation was relatively lighter in Ireland than in most European countries. He described it in Ireland as being 23 per cent. He quoted Britain, Italy, Holland, US, France and Germany as having a higher level of taxation related to gross national product. He says, and rightly so—it cannot be contradicted—that the relationship between tax revenue and gross national product has remained somewhat static over the past ten years or so at 22 or 23 per cent. Our concern is how the taxation is levied and on whom.

We have in this country, as there is in most countries, two types of tax—the indirect form of taxation and the direct form of taxation. The Taoiseach, when announcing to some extent the new programme for economic expansion was wont to quote—I suppose for the benefit of the Labour Party—the practice of Labour Parties and Socialist Parties on the Continent. He said that the Labour Party in Britain and other countries favour a purchase sales tax or a turnover tax. I do not think he can have it both ways.

As far as most of the European countries are concerned, the burden of direct taxation is far heavier than that of indirect taxation. In this country, the level of indirect taxation stands at about 70 per cent. Indirect taxation— that hidden form of taxation—is designed to fall on consumer goods rather than to be levied on wealth or income. In the US, a country to which the Taoiseach referred, indirect taxation is 34 per cent, of gross national product; in Sweden, 37 per cent; in Western Germany, 43 per cent; in Holland, 44 per cent; in Britain, 48 per cent; and in France, 50 per cent.

I do not know how economists form and frame their views on indirect versus direct taxation. The House might like to hear a recent comment by an economist in France especially in regard to indirect taxation. He is Monsieur Pierre Uri who, I might say, is regarded as one of the architects of European integration and French planning. He said that France had the highest indirect taxes in the world and that these were among the main factors to which he attributes the blame for the present inflation and social unrest there.

We are a country with indirect taxation to the tune of 70 per cent. I would say, as far as this Budget is concerned and the further burden of indirect taxation, that the repercussions will be very widely felt when this turnover tax is implemented. I think it must generally be accepted that a tax on expenditure falls far more heavily on the lower income groups than on the higher income groups.

General MacEoin

Hear, hear.

Mr. Corish

The tax on income places the tax burden on those whom we regard as best able to bear it. It seems to be deliberate Government policy to reduce direct taxation and to increase indirect taxation. I congratulate them on their frankness on that but it is a policy with which we in the Labour Party violently disagree. They have demonstrated that in recent Budgets.

Direct taxation has been reduced since 1957 by the Fianna Fáil Government to the tune of £6 million and that extra £6 million has been pushed over into concealed taxes, into hidden taxes or, as it has been termed, indirect taxation. There has been a certain amount of brain-washing and propaganda in recent months, especially by the Taoiseach, in trying to sell this idea of a purchase, sales or turnover tax to the people. I think it was last Thursday night, when he spoke to some members of his Party in Dublin, that he said the Labour Party in Great Britain were contemplating—— as if they were in favour of—a purchase tax. I do not think such is the case; or, if such is the case, it is not the type of tax that has been proposed in this Budget—a tax which will fall on food and the other necessaries of life.

The Taoiseach wants to quote Britain and other countries in order to sell the idea of a tax of this kind to this House and to the people of Ireland. On the other hand, when we mention to him that there are better social services and better health services, more employment, and so on, in other countries in Europe, he says we cannot make any comparison. However, when he wants to take an example which he thinks will suit himself, he has no hesitation in doing so.

The Minister for Finance and the Taoiseach seek justification for the imposition of this turnover tax from the Income Tax Commission Report. I do not think it was fair, to say the least of it, that justification should be sought from that Report. In the first place, the Taoiseach must remember that the proposal to introduce a tax of this kind was carried by a very slim majority. On that occasion, the vote was six to five in favour of a tax merely for the purpose, of course, of reducing income tax. In those six, you had the Chairman; whether or not he used a casting vote, I do not know. The Taoiseach should remember that, whilst the personnel of the Commission were not strictly deemed to represent any group, those among the five represented very substantially more than those who could be termed to be members of the six.

It would be no harm, therefore, for me to refer again to the Income Tax Commission Report and to quote not the comments of the Income Tax Commission but the views that were given by the Government at the time the Report was issued. In April, 1961, the Government had this to say with reference to a sales, purchase or turnover tax:

It is clear that to reduce income tax by 2/- in the £ and to make up the revenue by a sales tax at a rate or rates between 7½ and 15 per cent would be a major change having important effects on the incidence of taxation. It would shift so markedly the burden of taxation from single to married taxpayers, especially those with children, and from the higher to the lower income groups, as to be, in the Government's view, socially undesirable.

The Taoiseach may say in regard to the Budget that income tax is not reduced. It has not been reduced this year but surtax has been reduced in the past three or four years and income tax was reduced. It is to fill that gap caused by the reduction in surtax and the like that it has been necessary to introduce what is described here as a turnover tax. I do suggest that the burden has been shifted from the single person to married people and those who are less able to afford to pay this turnover tax. Surtax was reduced in 1959. The level at which it begins was increased from £1,500 to £2,734. Income tax was reduced in 1961 from 7/6 to 6/4d. Somebody might say: "Surely you do not want to see income tax increased." I would say that if it is a choice between a tax on income and a tax such as is proposed in this Budget, I would vote for a tax on income all the time.

These reductions in income tax and surtax have been of much more benefit to those in the higher income groups than they have been to those in the lower income groups because, as was demonstrated in this House when the change in surtax and in income tax was effected, it meant that as regards people with higher salaries, they saved substantially more than those earning £11, £14, £15, £16 a week or people with even lower incomes.

It is abundantly clear, even though income tax has not been reduced in accordance with the proposal of the majority of the Income Tax Commission, that one of the reasons for the imposition of the turnover tax is that there has been a change in the burden of direct taxation as against indirect taxation. In any event, the propaganda that has been made over the past few weeks, especially by the Taoiseach, has resulted in what is described as a turnover tax and despite the heavy burden of indirect taxation, this Budget will further increase indirect taxation. At the present time the proportion of indirect taxation to gross national product is twice as much as it is in most European countries.

The Government, I am sure, very deliberately gave this tax a name they hoped the ordinary people would not understand. They called it a turnover tax. A sales tax or purchase tax would have a certain significance for the ordinary consumer. Last night, the Minister for Finance tried to give the impression that this was a tax on retailers only, that they could collect it in whatever way they liked. It is true, as far as the mechanics of the matter are concerned, that the retailer's responsibility is to the Government and that the initial demand is made on the retailer. While it is said a rose by any other name may swell as sweet, a poison by any other name is just as deadly. Nobody can suggest that the retailers will pay this £10½ million. Is anybody suggesting the shopkeepers and storekeepers of this country will pay this amount? We know that this will be and must be passed on to those who purchase the goods. The net point is that an expenditure tax has been imposed to the tune of £10½ million per annum. Therefore instead of being a sales tax, a purchase tax or a turnover tax, it is a tax on living. Deputy Lenihan assured his constituents that food would not be taxed.

An Leas-Cheann Comhairle

The Parliamentary Secretary.

Mr. Corish

I beg your pardon, Sir. The Parliamentary Secretary assured his constituents that food would not be taxed. He assured constituents that petrol, cigarettes, beer, footwear, medicines, all those items, would not be taxed, but this turnover tax will tax every single thing except those which have been listed as being exempt in the Minister's Budget speech and which are very insignificant indeed as far as the ordinary people are concerned.

The Taoiseach may say that it is only 2½ per cent or 6d. in the £1, that it is a very small burden to impose on the Irish people. I suppose to some people it might not be of any great significance but I want to be clear about this, as far as the Labour Party are concerned. What we are concerned about, and the sinister thing we see in this Budget, is the introduction at all of a sales tax. I trust I am as much concerned about the health and the well-being of the Minister for Finance as Deputy Dillon but I would venture to say that he has certainly not acquitted himself well, if this is to be his last year or his last term as Minister for Finance, in giving this stamp to Irish tax law, the introduction of a sales, purchase or turnover tax. It is the principle to which we object and object very strongly. If one thought of it in the terms of a sales or purchase tax, or in the same terms as the Parliamentary Secretary to the Minister for Lands did, on luxuries, on motor cars, on jewellery, on fur coats -granted they would not take in anything like £3½ million in the present year or £10½ million in any one year— it would not be so bad, but I do not think anybody in Ireland thought for one moment there would be a tax on bread, on the necessaries of life.

There was a great furore in this House in the initial stages of the granting of the food subsidies. Then there was a great furore about the withdrawal of those food subsidies by Fianna Fáil, first of all in 1952 and again in 1957. In 1947 and 1948, and for years afterwards, Governments thought that food should be subsidised. Afterwards, the food subsidies disappeared. We have now gone to the other extreme. Instead of giving food subsidies, we want to tax food. I wonder does the Taoiseach want to throw in the sponge? Does he want to make such a mess of affairs that the people will reject him at the very first opportunity? It is fantastic that an Irish Government should tax food. As Deputy Norton said, I do not think it has ever been done before in this country. Are there many other civilised countries in the world that tax food?

Medicines, about which the Minister for Health ought to be concerned, are also to be taxed. He knows the concern of this House in regard to health services and of the pressure in that regard from all Parties in Dáil Éireann. A Committee has been established and is sitting now to try to better health services and we all applaud that. That is being done because health expenses impose a great burden on many of our people. At a time when drugs are so necessary and expensive, it will mean that for every pound's worth of prescriptions bought, the purchaser will have to pay an extra 6d. because the chemists are not going to bear that 6d. in the £. It is a shame for the Government to tax food, medicine, clothing, footwear—to tax the necessaries of life. Therefore, I say this Budget represents a tax on living.

I will not say the Taoiseach gave away any intimate Budget secret when he made propaganda speeches about sales, purchase or turnover taxes. The ordinary individual buys things as he can afford to buy them. I do not know what amount the Minister for Finance expects to get from the purchase of motors, jewellery, furs and so on, but the purchasers of these articles got more than a hint from the Taoiseach that some form of purchase tax would be introduced. From now until November, such people have time to buy all they want. Will they not buy their Jaguars now rather than pay an extra £25 or £30 next November? Will those who can afford to lay down the money now not buy their washing machines and television sets? Will not next winter's furs be bought now, because if they wait until November, they will have to pay an extra 6d. in the £?

But the person who has to buy food must buy it from week to week. The man with a large family who needs winter shoes and clothing for his children will not be able to pay for them now. The agricultural labourer will certainly not be able to buy them on his £6. 2. 6. per week. He will only buy them when he needs them in November or December after this tax has been imposed. But those who have the money will be able to buy all they need now because they have five months in which to do so.

The Minister for Finance was very hurt last night when he was asked any questions. I concede he must have been pretty tired after a speech of one and threequarter hours, having to sit in here until 8.30 p.m. But, as Minister for Finance, he should have the information asked of him last night. Perhaps the Taoiseach has it now, or did the Government seek to find the information prior to their deciding to impose this tax? What effect will this tax have on the cost of living? Will prices go up? By how much will they go up? By how much will the cost of living index figure go up? It is quite clear they will go up, because retailers will pass on this tax and the consumers will have to pay the price.

Other Deputies asked what is going to happen in respect of a commodity costing, say 1/-. What tax will be passed on in that case? It may be said that the tax will be on the overall turnover and that shopkeepers and retailers will not charge an increase on that article but will charge a little more on another article. In any case, it must be clear that this tax will have an effect on the cost of living.

This comes at a time when the Government are shrieking for stability in prices. The trade unions and the workers were led to believe that price stability was now the most important aspect in the economic life of the country. They were told they should have regard to the possible effect of wage increases on the economy of the country. The White Paper Closing the Gap was issued—it was recognised by everyone as a pay pause—telling those under the control of the Government, of Government agencies and of local bodies that they need not expect any increase in present circumstances. That was done in the name of keeping prices stable.

Here we have the Government by their deliberate action increasing the cost of living, increasing the price, not of selected commodities, but of every single article one can think of sold in any shop or store. It seems to me extraordinary behaviour that we should withdraw the food subsidies, tell the workers that prices should be stabilised and that they need not expect any increase in their wages, and then on 23rd April, two short months after the White Paper was issued, say to them: "We are going to tax your food."

I do not know what relationship exists between the Taoiseach and trade unionists here, but in all seriousness, does the Taoiseach expect them to stand for that? Does he expect them to accept a pay pause in the light of the fact that everything they buy for themselves and their families will be taxed and increased in price? Bang goes your stability of prices. It will not be the workers' fault this time; it will be the Government's fault, who by their deliberate action in this Budget, will have in November substantially increased the cost of living.

Last Friday night, the Taoiseach, speaking to the cumann in Dublin North-East, referred to the new Programme for Economic Expansion. I know he has attempted to give a review of the last three or four years in relation to the first Programme for Economic Expansion. Can he now honestly say it has been as successful as he and the members of his Party pretend it was? There are two things to be remembered as far as I am concerned when one talks about economic expansion and progress. One can think in terms of national income and say it has gone up by such and such a percentage. One can talk about an increase in production and the state of our balance of payments. That is all right. By those standards, a country may be deemed to be prosperous. But we have to come down to the different sections and different individuals. We have to have regard to such things as employment and unemployment and emigration.

I do not think the picture is as rosy as pretended by the Minister in his Budget speech yesterday. There is no point in trotting out again to the Taoiseach the 100,000 new jobs. He would like to live that down. He described it as a blueprint to be considered. At the time nobody believed the Taoiseach had any intention of implementing it. I do not think he or his Government ever started to consider their plans for the provision of 100,000 new jobs.

The booklet Economic Statistics has not been produced in the same form as last year and, therefore, we cannot make the same comparisons as last year. I do not want to go back any further than 1958. This new booklet tells us that in the transportable goods industries in 1958 we had 150,300 employed. In 1962—again the Government's figure—we had 170,500 employed. Therefore, in five years in the transportable goods industries, there have been 20,000 new jobs. If other factors had not to be taken into account, that would not be a bad record but the Taoiseach has a responsibility not alone for those engaged or to be engaged in transportable goods industries but for all those who seek employment here. Therefore, he has to have regard to the situation in agricultural employment and agricultural employment is given pretty clearly in the booklet Economic Statistics published last week. That shows that, in 1958, there were 395,300 people employed in agriculture. In 1962, there were 360,800 which means that as far as agricultural employment is concerned, between 1958 and 1962 there was a loss of 34,500. Therefore, we had a loss in agriculture of 34,500 but in transportable goods industries, we had an improvement of 20,200 which means we had 14,000 fewer in employment.

We are twitted from time to time about inter-Party Governments and about what happened in 1955 and 1956 and Fianna Fáil allege that there was a mess made here and in this, that and the other place but Fianna Fáil should remember that they have been 25 years in Government, that for a quarter of a century, they have been the Government of this country and the employment position has not improved in all those years. People are still flying from the land but as far as the Taoiseach is concerned, the next corner we turn will be the end. We seem to be going around in a perpetual circle never reaching the corner of which the Taoiseach speaks. Everybody appreciates the difficulties of the Government and of the Taoiseach and of the Minister for Finance but I do not think that is a very creditable performance.

Again, taking what Fianna Fáil alleges were the bad years of 1955 and 1956, it is clear that the situation as far as employment is concerned was tens of thousands better than it is now and they are in far better circumstances than the Government were in 1955 and 1956. There is no doubt in the world about that. The lack of progress of Fianna Fáil has meant that between 1958 and 1962, there were 14,300—I think that is a very modest figure— fewer employed as between agricultural employment and employment in transportable goods industries.

You have to remember this when you think in terms of the Taoiseach's new announcement of a new Programme for Economic Expansion— that these are the first four or five years of his first programme and they have succeeded in reducing employment to the extent of over 14,000 in these two sectors I have just mentioned, I do not know whether the Government have seen any significance in what happened in agricultural employment last year. I have said that there has been an increase in employment in transportable goods industries of 20,200 between 1958 and 1962. Last year, as far as agricultural employment was concerned, that was practically wiped out, wiped out in one year. The efforts of this Government have been, in the transportable goods industries, to increase employment in five years by 20,000 but that was all lost by reason of the fall in agricultural employment of 19,200 last year.

I do not think that there is any cause for the complacency which appears to exist about the unemployment figures. There is a definite tendency for them to rise and they have been rising compared with last year and the year before, for the past six or seven months, but the Taoiseach and the Minister for Finance do not seem to see any major signal there. We were told in January and February, and the explanation was more or less accepted, that it was due to the bad weather that there had been such an increase as compared with a similar period in 1962. The Minister for Finance said yesterday that the figures were falling again. He is right when he says that they are falling again but it is a seasonal fall. Compared with the same period last year, there is an increase. Compared with the same weeks in 1962, we see an increase of between 3,000 and 5,000 and also compared with 1961.

Surely the Minister for Finance should not content himself by saying that the unemployment figures are falling again. They are not. We have an unemployment situation which is represented as seven per cent of the insurable population, much lower, one might say, than what it is in the Six Counties but recently, and again in the bad weather in Great Britain, their unemployment figure was represented as being four per cent of their insurable population and there was a near political crisis. In fact, there was a political crisis in that the British Prime Minister appointed a Cabinet Minister to look after the question of unemployment and he went around the north-eastern parts of England and Scotland and to other places, but it did demonstrate as far as the Government of Britain and the Labour Party Opposition were concerned, that they regarded this four per cent unemployment as being a near crisis. Here, we have been going along for the past five years with seven per cent or 8.7 per cent as against four per cent and we are saying: "Oh, it is not too bad at all."

The Minister referred to emigration. Somebody said recently that the population was rising again, that we were holding part of the natural increase in our population, but it seems to me that there is not a great difference between the rate of emigration now as against this time last year. The Minister announced that emigration was proceeding at the rate of 20,800 in 1962. That is 400 per week and it still means that that number of people are emigrating every week from our various ports, mainly because they cannot get work here and are forced to emigrate to Great Britain. There is no evidence of a further improvement in 1963. I do not think the Minister can produce any firm figure to show that there has been an improvement in emigration in 1963 because the figure he would get for the months of January and February would be false.

The Taoiseach when he was explaining away the rise in unemployment some time ago said in the Dáil that many of these workers engaged in building in Great Britain had not returned and hence the register of unemployed was swollen. I suppose that is true, but when one thinks in terms of emigration figures, one must also remember that these boys and girls, these men and women, were still in the country and did not return to Britain until the end of February and some of them did not return until March. The true figure could possibly be got now but for anybody to talk in terms of emigration for the year ending February, 1963, would be to give a false picture.

We naturally welcome the increases proposed by the Minister in respect of social welfare. It is about time the Government mended their hand in respect of social welfare payments as related to tax revenue. We have had occasion to complain that recipients of social welfare benefit had not been treated equitably by the Fianna Fáil Government since 1957-58. We were always told that if financial circumstances permitted more would be given to old age pensioners, widows, the unemployed and sick persons. We find—and again these are not my figures; I did not compile these figures —that, as a percentage of tax revenue, social welfare payments have been falling steadily from 1957-58 down to 1962-63. On 7th March, 1963, the Minister for Finance was asked for the percentage of social welfare related to tax revenue. He gave the figure for 1957-58 as 22.0 per cent. It had fallen in 1958-59 to 22.5 per cent; in 1959-60, to 20.9 per cent; in 1960-61, to 20 per cent; and in 1961-62, to 18 per cent. In 1962-63, it was between 18 and 19 per cent—nearer, I suppose to 19 per cent. I have no reliable figure for that. I have not yet had time to see whether or not there has been any increase in the percentage devoted to social welfare as related to tax revenue.

These new increases, we are told, will not be effective until November next. I can appreciate that the Minister for Social Welfare and the Minister for Finance would have difficulty in preparing the legislation to make provision for these increases. Many of us and many of the Minister's supporters believed that even the usual date of operation, namely, the middle of August or 1st August, was too far away but it is a little bit much that the date should be deferred for another two months, to November. The amount involved does not warrant the recipient being denied an extra two months' payment of the increase in old age pensions for this year.

It is extraordinary what can be done by the financial experts when there is a real desire to get money. The Minister for Finance in his Financial Statement yesterday posed the question: "What would you have done?" I could be smart and quote what the Taoiseach said when he was Deputy Lemass and Deputy Leader of the Opposition. I do not pretend to quote his exact words but they were to the effect: "It is not for us to give you the solution. It is for us here to criticise. You should provide your own solution. You are the Government of the country".

In respect of social welfare benefits, it is not today or yesterday that the Labour Party have advocated that more revenue could be secured from corporation profits tax. The Minister is doing it in his Budget to the tune of £3 million. How often have the Labour Party advocated that there should be a tightening up of tax collection? We pointed out that as far as the salaried worker or the wage earner was concerned, he could not escape a penny. His wages were returned by his employer to the revenue authorities and they assessed exactly the tax he had to pay, so that the wage and salary earner is paying down to the very last halfpenny. The Minister for Finance will admit that many people have evaded tax, that people who engage in cash transactions are not paying according to their income. The effort on the part of the Government to tighten up the laws or regulations in connection with tax evasion is welcome, though belated. It is amazing that when financial experts are put to it, when there seems to be urgent need for money, money can be got. It is estimated that £3 million will be obtained by way of corporation profits tax but if there were a question of another 2/6d. on top of the 2/6d. provided for in the Budget for old age pensioners we would be told the bottom of the barrel would be scraped.

As far as social welfare groups are concerned, we welcome the increase, even though it is apparent that the benefit of it will be offset to a large extent by the turnover tax they will have to pay as consumers. They will not get 2/6d. per week.

It may be said that when I was Minister for Social Welfare, all they got in so many years was 2/6d. but I venture to suggest that 2/6d. in 1954 was of more value than 2/6d. in 1963. As Deputy Sherwin said, they will not get 2/6d. They will be paying tax out of that 2/6d. Deputy Sherwin pointed out that all they will have to spend is 35/- but a big proportion of that will be spent in the tax on food and clothing.

It must be remembered that as far as old age pensioners, widows, home assistance recipients, unemployment assistance recipients are concerned, they do not buy Jaguar cars, Savile Row suits, furs, mink. Their expenditure is on tea, bread, butter, sugar, milk and, maybe, a bit of meat. They will pay tax every time they purchase these commodities, or I do not know the retailers in this country.

There is an increase provided for in children's allowances, which, again, we welcome. There is a provision for the first-born child of 10/- per month and 4/6d. in respect of the third and each subsequent child. This is an effort by the Government, they say, to offset the effect of the turnover tax, which is an admission that the turnover tax will affect the family person. This provision will compensate to some extent but, on balance, they will have to pay more. The turnover tax certainly will mean a tax on their expenditure over and above the 10/- and the 4/6d.

It should be remembered, also, that there is another class of people in our society, who, because they are in the minority, seem to be ignored. The Government have taken the initiative in declaring that the disabled person's maintenance allowance be increased by 2/6d. It is a pity the Minister for Finance or the Government could not ensure that these people will in fact get the 2/6d. It is a matter for the local authority, I know, but many local authorities have acted very shabbily in respect of past increases declared by the Government. As we all know, local authorities have taken off the increase in other allowances for which they are responsible—home assistance, infectious diseases maintenance allowances, and the like. If the Minister or the Government can do anything to ensure that there will be a real increase for these people, it will alleviate their circumstances to some small extent.

I want to reiterate the view of the Labour Party in respect of the general taxation policy of the Government. We do not believe that the heaviest burden of taxation should be by way of indirect taxation. We believe that wealth and high income should be taxed if the State needs this extra money. We believe that the necessaries of life that have been mentioned here in the last few hours and last night ad nauseam—food, clothing, footwear, medicines —should not be taxed. We believe that if more money is required, it should be obtained by a tax on wealth, a tax on high incomes, and not by means of a tax on people who cannot afford to bear the burden.

One newspaper in its leading article prior to the Budget said that one of the functions of the Minister should be to distribute the burden fairly and equitably, to place it on the shoulders of those best able to bear it. This Budget has not done that. On the contrary, it has introduced into the taxation code of this country a tax which I believe will have far-reaching repercussions on the economy, not least of which will be the effect on the cost of living, on prices. If prices are to be affected by reason of this turnover tax, it certainly will be reflected on the attitude of the workers who must compensate themselves for any extra prices they have to pay for essentials.

The Taoiseach

This Budget rests on the proposition that economic and social progress require increased Government spending. The stimulation of higher production, the realisation of higher levels of employment, the extension of health, education and social welfare services, the provision of more houses, the improvement of communications and similar public services which make for better living in town and country, all require to be financed in whole or part through the Budget. We can cut down on Government spending only by cutting back on economic and social improvement. This is a fact of political life which the Government accept and which the Opposition Parties still appear to be reluctant to face.

This is a fact which Deputy Dillon ostentatiously avoided in the whole of his speech as Leader of his Party this afternoon. One beneficial effect of this Budget and of the debate on it now taking place is that it will help to clarify the really fundamental differences in approach to national problems between the Fine Gael and Fianna Fáil Parties about which there may have been some deliberately fostered ambiguity in the past. The Fine Gael approach, as disclosed in Deputy Dillon's speech this afternoon and in speeches made by him and his colleagues yesterday, is negative, deflationary, timorous, political in the extreme. The Fianna Fáil attitude is, and I hope will always remain, positive, constructive and national.

The Government believe that it is good for the nation to have a continuing extension of our social welfare arrangements, better health services, better schools and houses, rural electrification, rural piped water supplies and so forth. In our judgment, the country can now, because of the growth of national production under the Programme for Economic Expansion, afford them. To make them possible, it is necessary, however, through taxation to get the money required made available to the Exchequer. We think it is good policy to adjust our taxation system for this purpose.

Those who want lower taxes, or those who at least wanted to prevent any increase in the level of the taxes fixed in the Budget of 1962, must be prepared to argue in favour of doing without the better public services and the extended facilities which it is now intended to provide. That is the alternative, and Deputies who favour that course must not be afraid to spell out what it means. They must not be timorous about telling the people what it means. There is no method by which the country can get the benefit of improved services without paying for them. Those who want to avoid paying must be willing to advise the people to do without those services.

The Government's regret—and it is the only regret we have about this Budget—is that it is not possible to improve those necessary and desirable public services to a far greater extent than we are now proposing. We hope to improve them much more in the future. The present Budget is designed not merely for 1963 but for future years as well: it lays the foundation on which better social welfare, extended health, education and agricultural services can be erected in future years. As the country's economic progress continues, as we become better off as a national community by reason of the growth of our production, it is our intention that the State's revenue should also expand so that the improvements we desire to see, the greater improvements we hope to realise, will be made possible.

There is always room for argument as to the level to which taxation can safely or justly be raised. It would be possible to try to do too much at once, which would involve taxation so heavy as to cripple economic progress. It is not our view that this stage has been reached. We think what we have in mind can be done without altering very much, if at all, the proportion of the total national income which is taken for public purposes, relying on the growth of the national income to bring about consequential expansion of the revenue.

It is noteworthy that in the wealthier countries the proportion of the national income taken for public purposes is higher than in the less well off countries. That is understandable because a country can give itself better public services only to the extent that the total national income provides a margin over and above what is necessary to maintain reasonable living standards. As we get better off, we can spend more—we can spend more relatively as well as absolutely—for desirable public purposes, and it will be the policy of this Government to do so.

If there is another and contrary policy, let it be stated. It is just foolish to fulminate against taxation and to demand at the same time more spending for better public services. Nobody likes taxation and nobody is expected to like it. There were no taxation proposals capable of being conceived by the Government, capable of being introduced here by the Minister for Finance, against which some case could not be made. It is not the individual proposals that are made but the overall purpose they are intended to achieve that is important, and in so far as that is concerned, I do not want to be misunderstood regarding the policy of the Government.

We believe the country must spend more money to achieve economic and social progress, that it is good policy to do it and that we can afford to do it. If there is any alternative policy, I hope it will be stated with equal simplicity, with equal clarity. Recently in the course of a speech I made, and to which reference has been made here, I attempted to give in broad outline the Government's ideas for distributing the fruits of economic progress so as to ensure that all elements of our community—the farmers, the wage and salary earners, traders, State officials, pensioners and social welfare classes generally—will all participate in the benefits of rising national production, in a way that will ensure that future economic progress will be helped and so that the living conditions of our people will improve steadily and without interruption over the years.

We are not talking of a pay pause as Deputy Corish attempted to suggest. We have been trying to work out—and hope, indeed, to succeed in evolving—a regular and orderly system by which the benefits of rising national resources resulting from increased production will be fairly and evenly distributed among all the elements in the community, the wage and salary-earners no less than the farmers. In the fulfilment of any policy of that type, in so far as concerns the social welfare classes and State employees and State pensioners and all those who benefit from the different social schemes, all who are remunerated or helped out of State funds in one way or another, and in present circumstances so far as concerns the aim of keeping farm incomes improving in line with urban incomes, it is clear that the Budget must be the main weapon used.

In plain terms, that means this: when justice demands it, we must be prepared to level up incomes by taking away in taxation from some to give it to others whose circumstances require support in that way. I have expressed the view, and I believe this to be true, that our people as a whole, if assured that they will personally be better off in terms of the real buying power of their incomes or wages or salaries will not object to contributing something in taxation to sustain the policy which makes all this economic and social progress possible and which ensures that they are now, and can hope in the future to be, better off than in the past.

This, at any rate, in broad outline as I said, is the policy of the Government. Deputies could advance arguments against that policy on its merits. None of them has done so and I shall venture to forecast that in the course of this debate none will. What they are doing is refusing to look at it and instead are seeking for niggling arguments of a political kind against the proposals of the Government, defaulting in their duty as members in Opposition to the Government to consider that policy as an intelligent and constructive contribution to the development of national thought and particularly to consider its implications in relation to the Budget.

As I have said, this policy which I have outlined, has in large measure to be implemented through the Budget and so, therefore, the Budget must be framed to make it feasible. The tax structure must be such that, regardless of changes in public taste and habits, the inflow of revenue into the Exchequer will also expand in direct proportion to the improvement in national circumstances and in sufficient degree to meet the requirements of a developing social policy. It is clear that the old Budget stand-bys, tobacco, beer and spirits and petrol, will no longer suffice to sustain this policy. Indeed it is now fairly obvious that higher tax rates upon these commodities would not yield higher revenue in the same degree. That is the case for extending the range of the expenditure taxes by the introduction of a new system. We have tried, in framing this Budget, to think in longer terms than the problems of this financial year. We are coming up now to the second phase of the Programme for Economic Expansion and everything which we are proposing to the Dáil in taxation, no less than in legislation, is intended to make sure that so far as is humanly possible, the rate of national economic and social progress in the second phase will be no less than it was in the first.

The preparation of this second Programme for Economic Expansion covering the period to the end of the present decade, is proceeding. It has now been decided to publish it in two parts. The first part of the new programme will, I hope, be published before the end of the present Dáil session. It will set out the objectives of the second Programme, the main assumptions upon which it will be based and the conditions necessary for its fulfilment. Following publication of that first part, it is intended to arrange a series of consultations with the principal functional organisations representing trade unions, industry, agriculture and other important sectors of economic activity.

The purpose of these consultations will be to secure, if we can, their participation and help in the preparation of the detailed programmes conforming to the objectives already defined. We hope for wide and informed consultations. Democratic government is essentially government by persuasion. We have not in mind any form of compulsion other than the compulsion of public opinion, except to the extent that it may be needed to secure that general effect is given to majority decisions. The measure of a country's material progress is the readiness of its people to co-operate in a development policy. Any plan for economic development must be comprehensive and coordinated. Nothing which can help or hinder it can be left out of account. Success assumes a wide measure of agreement. If we cannot succeed on a basis of goodwill, we are not likely to do it on the basis of compulsion. If we do not succeed, there will not be much satisfaction in naming those responsible for our failure.

The realisation of a pre-determined rate of economic growth will involve a whole series of important decisions based on assumptions as to population growth and movement, productivity, exports and our capacity to finance capital needs and will only in part fall to be implemented by Government action. The expectation is that these consultations will be completed before the autumn and that the full and detailed programme will be ready for publication before the end of the year. As this is our timetable, I have had to warn my colleagues in the Government who are directly concerned in these matters not to count on the prospect of holidays during the period of the Summer Recess.

I believe that the time has come when national policy should take a shift to the left. By this, I mean, first, more positive measures than have heretofore been attempted involving Government initiative to ensure the effective translation of the benefits of economic progress into the improvement of social conditions and specifically an equitable wage structure, wider educational opportunities, the extension of the health services and of our systems of protection against the hazards of old age, illness and unemployment; secondly, more direct Government intervention when necessary to keep the national economy on an even keel while maintaining the pace of our economic advance; thirdly, the maintenance of State investment activity at the highest possible level having regard to available resources; and fourthly, the more detailed planning of our economic activities so as to ensure the flow of resources in the directions where prospects are best, if necessary, diverting them from sectors where prospects are poorest. These ideas, in so far as they are developed during the consultations I have mentioned, will influence the character of the second Programme for Economic Expansion.

As in the first Programme for Economic Expansion, private enterprise will continue to be the mainspring of our progress. We have no plans for extending the area of State ownership so far as existing industries and services are concerned, and, indeed, we consider that there should be a periodic re-assessment of all State operations of this kind to ascertain if there have been changes in general conditions which would enable the public interest to be better served by leaving more scope for private initiative. The extent of State activity in the industrial field now taking place—in steel, in processed foodstuffs and in chemical fertilisers— is in directions where in our circumstances it offers the most practical method of speedy progress. Our approach to this matter is pragmatic and not doctrinaire.

State investment activity is planned for this year at the maximum level at which we think it is possible to finance it without seeking external loans. We have introduced a new procedure, as Deputies are aware, by which the Dáil and the public are being given fuller information about the capital programme and the methods of financing it. The extension of the State capital programme over and above the levels fixed this year will require a considerable rise in the level of savings. It is still the position that the proportion of national income saved for investment in this country is low by European standards. Deputy Dillon appeared to me to be talking about the prospects of balancing this Budget by deliberately planning a deficit. I can know of no more irresponsible suggestion at this particular time.

It is nonsense to compare this country with the United States of America. We are trying to make available for capital development every penny that can be procured. We could not plan for a Budget deficit without cutting down our investment for production. In the United States of America, they have no problem of that kind. If they wish, they can meet any problem of that nature while pouring out the hundreds of millions and indeed billions of dollars in loans and grants throughout the world. When we are as wealthy as the United States of America, we may be able to think along these lines but, as Deputies should know, there would be no possibility for us of meeting a deficit on current expenditure except by cutting down on our capital programme and that would be the worst possible policy to adopt at our present state of development.

I wish to draw the attention of Deputies to the statement made by the Minister for Education at Question Time today, when he said that he intends shortly to make a statement regarding Government policy in respect of the development and strengthening of the country's educational facilities. I do not wish to anticipate that statement but what I do wish to do is to congratulate the Labour Party on having produced a policy in that respect. I am always prepared to pay a tribute of respect to any Party in opposition which has the courage to lay on the line its own proposals with regard to matters such as this and whether I agree with these proposals or not, I would commend them for that activity. It is something I would commend to the Fine Gael Party but they are not likely to do it. They refused to reveal even the shreds and tatters of policy with which they went into the last general election until the Dáil had been dissolved and all possibility of criticism had been eliminated.

It is acknowledged that there are serious gaps in our present educational system. In the world of to-morrow, economic progress in this country as in others will depend more upon the education, training and skill of our people than on muscle power. That development is clearly to be foreseen. The time is not far distant when the unskilled labourer will be in diminishing demand and it is not too soon to start preparing the next generation of our people for this situation. But that cannot be done without spending money and you cannot spend money unless you ask the people to contribute it. I say this to the Labour Party also. It is all very well to produce a policy for education but they must go on to the next step and indicate quite clearly to everyone that they are prepared to take that policy out of the realm of theory and put it into the realm of practicability by proposals for providing the money to put it into operation. You cannot do that by voting against taxation.

We tried to make the first economic development programme as flexible as possible and the second economic development programme will be similar in design. Prior to 1958, when the first programme was being prepared, we could say that progress in any direction was all to the good. In conditions as we see them developing for the remainder of this decade, we must adopt a more selective approach, encouraging the forms of development from which we can expect the best results and discouraging those from which the results appear to be doubtful.

Deputy Dillon, on this occasion as on others, spoke about the external trade situation. He is hypnotised by this figure of £100 million difference between the value of our exports and that of our imports. In planning the nation's future progress, we must have regard to this aspect of it as well as to the aspects dealt with in the Budget, that is to say, we must consider how any development plan to which we may commit ourselves will affect the country's international payments. That is agreed. I have no desire to encourage any complacency about the reemergence of a deficit in our international payments, even if it is very small in relation to the volume of our international transactions which ran last year to a total of £700 million, and even if no loss of our external financial reserves was involved.

It would have been a much healthier position if our exports had been that much higher so as to eliminate that gap in our external payments but it is equally undesirable to exaggerate its significance. Here I am handicapped by Deputy Dillon's obvious incapacity to understand the position at all. This is certain, that while our economic growth is proceeding, while we are building up the productive capacity of our country, trying to get the development of our economy going ahead as rapidly as we would wish, there will be many years in which exceptional imports of capital equipment and materials for production are bound to create a similar pattern in regard to our external trade. We have at least the expert advice of the OECD, in their very recent survey of our situation, that this is something which we must be prepared to expect and to tolerate.

The acquisition of the means of increased production, of the equipment needed to enable us to increase our production, must always run ahead of the expansion of trade which it will make possible. Certainly nothing has happened and nothing seems likely to happen which would call for exceptional restrictive measures affecting imports. Nothing we can now foresee is likely to require from us measures of the disastrous nature which, in more serious circumstances, the Coalition Government brought into operation during their final year of office.

We can congratulate ourselves that we got through 1962, with all the inflationary pressures operating during that year, without a more serious deficit, without any loss of external reserves and without any need for restrictive measures by the Government. Nor is it true to say, as Deputy Dillon contended, that our exports are declining. In the first quarter of this year, they were the highest ever recorded for any similar period in any previous year. It is also true that our imports during the first quarter of this year were at an all-time high record. The import excess is higher than it was during the similar period of last year and indeed higher than it was in any year since the first quarter of 1956.

The growth in our external trade is a necessary consequence of our economic expansion. While it highlights and emphasises our need to pursue vigorously the expansion of our exports, there is nothing yet in that picture which would justify in any way any type of restrictive policy applying to our plans for the expansion of production in industry or agriculture. It is clear that if we are to realise our target of an average annual increase of national production of 4 per cent, the main contribution must in present circumstances come from non-agricultural activities and principally from manufacturing industry.

Deputy Corish asked me if we are satisfied with the outcome of the first Programme for Economic Expansion. As he well knows, we set ourselves, in the circumstances of 1958, the target of increasing national production at a rate of two per cent per year. We at least have so developed since then that we can now raise our target, elevate our sights and hope to achieve in the rest of this decade an increase of four per cent per annum.

Over the past three years, the volume of our industrial output rose in 1960 by 8.6 per cent; in 1961 by 8.7 per cent and in 1962 by 4.9 per cent—an average over three years of 7.4 per cent. The significance of the lower rate of growth in 1962 requires our attention. Looking a little further beyond these gross figures we see that, during these three years, there was an expansion of production at a reasonable rate, which appears likely to continue, in many industrial groups, particularly those classified as chemicals and chemical products, structural products, glass and cement, metals and engineering, foodstuffs, clothing and taxtiles. However, all industrial groups contributed something to this expansion of output. The construction industry is also expanding steadily, perhaps even expanding too rapidly, and certainly seems set for a protracted spell of high activity.

Yesterday, the Minister for Finance announced in his Budget Statement that arrangements have been made to set up a Building Advisory Council which we hope will be able to bring about a further expansion in the productive capacity of the construction industry which we shall certainly need if we are to keep up our present rate of development. If we are to realise our target rate of growth, the average annual expansion in manufacturing industry in the years ahead of us must not be less than the average achieved over the past three years and certainly must be higher than the rate achieved in 1962. A major aim of national policy must be to create and maintain the conditions which will make this growth rate possible.

The expansion of exports requires favourable conditions in export markets. In so far as our export trade is mainly directed to markets in Britain, all the present indications are that prospects there will improve during the year and that the signs of recession which seemed to characterise the British scene in recent months are now fading away. The opportunity for expansion is present if we go after it with sufficient energy.

A very large part of the tax revenue which the Budget is designed to yield will be devoted to agricultural price supports and production aids. The total Exchequer outlay for the benefit of agriculture, both on current and capital account, this year will be just around £40 million and that, in relation to our resources, is a very large sum, indeed. This policy of supporting agriculture in these ways and to that extent may not seriously be challenged in the Dáil. It may not require elaborate defence here but I think it has to be defended to the taxpayers. In this, as in all other countries, the rise in agricultural incomes has tended to fall behind the rise in urban incomes notwithstanding the fact that in every country situated like ours there is a decline in the numbers engaged in agriculture. This tendency of agricultural incomes to fall behind urban incomes is particularly true in countries like ours in which agriculture is a major economic activity and in which increased production is largely dependent on access to export markets in which the prevailing prices are frequently below economic levels.

It is not merely elementary justice that requires support from the whole community for agricultural incomes, in the circumstances which I have described, but economic policy also. With some 35 per cent of the country's manpower engaged in farming, any falling-off in their purchasing power must affect adversely levels of trade generally and the growth of employment in many urban occupations. Agriculture contributes 25 per cent of national production and its economic significance requires no stressing. A main difficulty about diverting resources to the support of agriculture is to find a way of doing it that will benefit the hardworking, efficient farmer more than the lazy or bad farmer. The fertiliser subsidy, the farm building grants, and so forth, are a good example of what I have in mind and already they are bringing about a marked improvement in agricultural productivity. The more we channel our help to agriculture in a way that will benefit the enterprising farmer the better will be the results and the less public questioning will there be of the wisdom of this policy.

It is to be expected that for some time yet the fall in the number of persons engaged in agriculture will continue and, while it has the effect of increasing the income per head of the remainder, it has social and economic implications for rural areas which we must try to counter by promoting other types of rural employment. The answer to the problem of declining population in the small farm areas is not solely more and bigger subsidies for farmers but the development of additional forms of economic activities in those areas. This is the policy of the Government and action to this end is being taken in accord with the recommendations of the Small Farms Committee.

The amount provided for agriculture this year represents a very considerable increase over the amount provided in the Budget of 1962. Our main concern must be to get farmers and farmers' organisations thinking in terms of what they can do for themselves by better farming methods rather than in terms of increased subventions from the Exchequer. Subsidisation always has the effect of killing initiative. The danger of increasing these subventions is that farmers will think of them as the only road open to them to better living. Surveys recently carried out have shown that there is an immense amount of work to be done before we can feel certain that our methods of producing and marketing agricultural products are as good as they should be, and show also that by better methods the position and the incomes of the farmers can be greatly strengthened, and strengthened to a degree that far exceeds anything which it is possible to do by increasing State aids. It is the duty of farmers' organisations to get these reports examined thoroughly by all their branches and to formulate their views upon the recommendations contained in them. They cannot be expected to be treated as serious organisations unless they do this. There is certainly need for a national effort along those lines and I hope that, with their help, we shall be able to create it.

When will the necessity for these various supports from the Exchequer to farming cease? The only possible answer is: when international management of agricultural markets brings prices for farm products passing in international trade up to economic levels. We had hoped for that eventual result in the European Economic Community and that hope has to be postponed, although it is by no means abandoned. There are prospects of international agreements in the context of the GATT but it would be, I think, unwise to place too much reliance on them. In this country, we cannot arrange for ourselves the conditions in international trade that would suit our circumstances, although we can and will support any and every prospect of international action. In the meantime, the Government have decided that it is to the national advantage that by the re-distribution of income by means of taxation for the purpose of price and other supports, the farming community will be given the chance of sharing fully in improving national circumstances.

May I at this stage say that in relation to certain statistics which appear in the book which has been circulated to Deputies and which has been quoted here that something seems to have gone seriously wrong with some of our national statistics? Estimates of the total number of people in employment and available for employment based on the census of 1951 became increasingly erroneous as the years passed and while we ceased a couple of years ago, suspecting that to be the cause, the provision of figures relating to a so-called total labour force, it is clear that the position cannot be put right in a statistical sense until the results of the 1961 census have been analysed. Let it be quite clear this is just a statistical matter. None of these errors in our estimates has put one person into or one person out of a job, but the statistics relating to the movement of people out of agriculture are completely inexplicable. That is stated in the brochure which was circulated and which Deputies who have quoted from the brochure did not apparently note. They do not just add up.

I do not believe that 19,000 relatives of farmers left farming in 1962, any more than I believe that in the previous year the number of relatives who assisted farmers increased by 5,000, as the statistics appear to show. With emigration in the past 12 months at the lowest level since the war, with the increase of employment in industry and other occupations capable of fairly exact measurement, with our population rising and with the number of those out of employment exactly counted each week at the employment exchanges, the recorded increase in the number of farmers' relatives leaving agriculture cannot be explained and those who are responsible for the preparation of these statistics and estimates have a job of work to do there.

The movement of people out of agriculture is certainly continuing. It is continuing in this country as in all other countries in Europe, whatever its dimensions here. The various proposals for reversing it, such as the development of vegetable processing industries, the operation of the county development teams now established in the western counties and the recent emphasis on rural developments of many kinds have not yet begun to grip with sufficient strength to reverse it. Personally I would regard this as the major economic and social problem now to be faced. I hope the Dáil will also agree to accept it as such and be prepared to support a policy of diverting financial resources into its solution.

There is a reference I think I should make also to the drop in the rate of emigration which was quoted by the Minister for Finance yesterday in respect of the twelve month period ended December, 1962, as around 20,000 and which in the twelve month period ended February fell to about 12,000. I do not think that that drop in emigration in that period of two months could be explained by any sudden increase in employment here. On the contrary we know that, because of adverse weather conditions in this country, these were difficult months so far as employment was concerned. Therefore, that substantial drop in the level of net emigration between the 12 months ended December and the 12 months ended February suggests that a substantial number of Irish workers who came back to Ireland during the Christmas holiday period did not return to England and that the outward movement of our people during these months was restricted. That may possibly be due to employment conditions in Britain during these months and the position may change again if and when these conditions improve.

I must confess, however, that it irritates me intensely to hear Deputy Dillon talking as if emigration were something this Government invented. I want to contrast that figure of 12,000, representing the net emigration in the period which ended in February last, with the 55,000 who had emigrated in the 12 months immediately preceding the time when the people were able to eject Deputy Dillon from office, although, at that time, on the day this Government took office there were 97,000 people registered as unemployed at our labour exchanges.

Mr. M.J. O'Higgins

That was to be solved by the 100,000 new jobs.

The Taoiseach

I am prepared to discuss this question on this low political level if Deputy Dillon wants to persist in it, but I would hope on an occasion like this to get a more constructive and intelligent approach to national problems.

The outstanding features of this Budget are, first of all, the introduction of a higher corporation profits tax; secondly, the inauguration of the turnover tax; thirdly, the increased provision for our social welfare services and children's allowances; and, fourthly, the increased provision in the Budget to raise the production subsidy to the creamery milk suppliers.

This increase in the tax upon company profits is a step on which the Government decided after very careful consideration indeed. While companies, as such, are long recognised to be legitimate subjects for taxation, we had to give much thought to the effect of a higher corporation profits tax on the realisation of our main national aim of expanding economic activity. The question was whether a tax of this kind would operate as a disincentive to higher efficiency, increased exports or growth in productive investment.

May I ask Deputy Dillon to take some advice regarding the existing circumstances of company taxation about which he knows very little? The income tax to which he is referring is not wholly borne by companies. It is, in part, offset by a deduction at the source of the tax that would be payable by the shareholders of the company in respect of the profits distributed by the company.

As regards the possible effect of an increase in the corporation profits tax on the general efficiency of our industrial and commercial organisation, it seems to me the consequences should be to increase the pressure to maximise efficiency and the incentives to company managements to secure the most economical working of their undertakings so that the effect of the higher tax on profits will in that way be offset. With the existing tax concessions in operation it should also encourage manufacturing companies to try to expand their export sales, to divert more of their products into exports if they can do so, and in that way escape the effect of the tax rise altogether.

As regards possible adverse consequences on the total level of investments, it certainly could have this effect in marginal cases in respect of projects of doubtful profitability. The view of the Government is that there is need at this time for more positive measures to direct or attract capital resources into the soundest type of commercial enterprise. Certainly, for sound concerns, a higher tax of this kind is unlikely to lead to any avoidance or postponement of investment decisions when one takes into account at the same time that the Government are prepared to offer to industrial concerns, planning to expand or renovate, substantial free grants or loans on favourable terms.

It is correct, as the Minister for Finance pointed out, that, even with this increase, our direct taxation of company profits is low by European or United States standards. Deputy Corish must not make too much of the apparent disparity between the proportion of revenue in the country secured by direct taxation as contrasted with other European countries. We just have not got here these enormous industrial and commercial combines which operate in Britain, France, Germany and elsewhere. We have not got that class of very wealthy people from whom taxation can be drawn to the extent it is drawn in these countries. Until we have developed economically far beyond anything we are now thinking of, we cannot hope to create a situation in which exactly the same distribution of tax burden between direct and indirect taxation can exist here as in the case of the far more developed countries in Europe with which he is contrasting us.

Mr. Corish

But there is a big difference.

The Taoiseach

I want to turn now to the turnover tax, which is the main innovation. Let me be quite clear as to its character. This is a turnover tax, not a purchase tax or a sales tax, as Deputy Dillon alternately called it. A purchase tax on the English model would be imposed at the wholesale level and would involve this disadvantage: that the retailer in charging his customers for the goods so taxed not merely adds on the tax but his profit on the tax and, therefore, prices are increased in a way which is of no benefit to the Exchequer. A sales tax, as it is operated in many European countries and in many of the States of America, involves the giving of a document to each person buying goods indicating not merely the price of the goods but the appropriate tax paid on these goods. The system of taxation is based on these documents and in some cases even stamps are used.

We considered and discarded all these ideas and decided in favour of a simple tax on retail turnover. This is not a tax on any commodity. Deputies can undoubtedly refer to individual commodities that people in the retail trade sell, but, basically, this is a tax on the total turnover of retail establishments. It is clear if there is to be no evasion of that tax—and I am quite certain some bright boys in the retail trade will find some method of minimising their liability under it— we must not attempt to differentiate in respect of the commodities sold over the shopkeeper's counter either in regard to the category of the commodity or the amount of tax attaching to each item.

If the principle is agreed, as I hope it will be, that our social welfare services and other desirable public facilities provided by the Budget should expand and if it is agreed that, for the time being, support for agriculture at the present high level must be maintained, then some such tax as this turnover tax is essential. It is the one certain way by which a continually expanding source of revenue can be opened up to enable this income re-distribution process to be carried out.

Deputies have asked what will be the effect of this tax upon the retail price level. That is not easy to forecast. Indeed, the effect on prices is far more likely to be exaggerated than otherwise. If the full amount of the tax is passed on in respect of all prices, if the general price level goes up by the amount of the tax, then an increase of around two per cent may be counted on, allowing that the tax does not apply to things like rents, transport services and so on.

Do not let us look on this as a sort of national catastrophe. In the past 12 months, the general price level went up by four per cent. All the indications are that even with this tax in operation, the rise in the general price level in 1963 will not be as high as it was in 1962.

Mr. Corish

Of course that is only for a couple of months in 1963, is it not?

The Taoiseach

Even if the tax were in force for a year. I would say that it is possible——

Mr. R. Barry

Will the Taoiseach give way for a minute?

The Taoiseach

No, I will not give way—it is even probable that the force of competition between traders will restrict the extent to which the tax is passed on. Certainly one of the consequences of the tax in other countries was that it increased the inducements to traders to revise their profit margins because part of the effect of the reduction of profit margins could be passed on to the Exchequer in reduced tax liability. One thing that also has to be kept in mind, because of its importance, is that the volume of retail sales is rising steadily and it is certain that this increase will continue. During 1956, the total turnover of our retail establishments increased in value by 7 per cent. That increase is continuing in this year as the figures published for the first two months reveal.

Traders generally can expect that a rising volume of business will help them to carry this tax in part, if not altogether. Every gain in national income and every beneficial consequence of our efforts to expand the country's economy and improve its social security is reflected in higher business for retail traders. I would urge Deputies to give careful consideration to the case made by the Minister for Finance in his Budget speech in favour of the type of low level, broadly-based turnover tax on which we have decided, against any of the other kinds of expenditure tax which we might have adopted and which are operated in other European countries.

There are details which have yet to be worked out. The Government's proposals will come before the Dáil in the Finance Bill and may I say that, subject to securing the revenue at which the tax is aimed, the Minister for Finance will be prepared to consider fully any representations that are made in the House, or may in the meantime be conveyed to him by organisations of retail traders, because it will be in all our interests to get this turnover tax working as smoothly and as harmoniously as possible.

Now I just want to say a few words about what the Budget contains in respect of social welfare services. I was proud yesterday, as I am sure were all members of my Party, when the Minister for Finance was able to say that every Budget during the past four years provided for increases in old age pensions and other pensions and for higher unemployment assistance. This Budget does the same. It is true that the individual increases in each year were not very considerable. I have said before that it will never be possible to have a great leap forward in respect of these social welfare services and we must aim at improving them step by step. I accept that the level of our social welfare services does not compare favourably with that of other neighbouring countries in Europe. We realise very well that these countries are much wealthier than we are but nevertheless the aim of policy must be not merely to improve these services in line with the improvement of living conditions generally in the country, but to do better than that and try to bring them up nearer to those prevailing in other countries in Europe.

The Minister for Finance announced in his Budget speech that he was setting aside a sum of money for an increase in the social insurance payments. Now, he did not indicate what that increase would be. May I say that in the Government's view the increase in these social insurance benefits should not be less than double the increase in the non-contributory benefits, but this is a matter which will be settled in consultation with workers' and employers' representatives. It will be appreciated that, under our system of social insurance, one-third of the cost is paid by the State, one-third by the workers through their contributions, and one-third by the employers. As the contributions of workers and employers must be increased in order to make higher benefits possible, they must be given the opportunity of expressing their views and, if they should wish to secure a greater increase in the rates of benefits than the 5/- which I have indicated and are prepared to accept increased contributions to bring that about, the Government would be prepared to consider it.

Mr. M.J. O'Higgins

I heard the remark which Deputy Harte made and I can assure Deputy Briscoe that he mis-heard it.

If the Parliamentary Secretary would look up his copy of the Budget Statement, at page 50, for example, he will find the Minister said:

That is just slick politics. Of course there is a tax on all of them. Let us hear what the Parliamentary Secretary had to say last month, and how good he is as a political prophet. A few weeks ago, on 23rd March, the Roscommon Herald had a report of the Parliamentary Secretary's speech to a Fianna Fáil cumann in Boyle. This is the report in that newspaper of what the Parliamentary Secretary said:

In the next few weeks and months, the Budget would be the main topic of conversation and he wished the members of the cumann to have all the facts at their fingertips.

The facts were to be at their fingertips. Let us see how the facts correspond with the facts as we know them now. The Parliamentary Secretary went on to say at Boyle:

There would be no increase on those items which were already perhaps overtaxed, items such as beer——

Does beer escape this?

Mr. Lenihan

The Evening Herald said so last night.

Mr. M.J. O'Higgins

I do not care what the Evening Herald said. Does beer escape this? Does the Parliamentary Secretary not know that this tax on turnover will be a tax on beer as it is on food, clothing and fuel?

Mr. O'Connor

The Irish Independent said this morning that there was no new tax on beer.

Mr. M.J. O'Higgins

I am delighted to know the Deputy has given up reading the Irish Press.

Mr. O'Connor

How does the Deputy know I read the Irish Independent?

Mr. M.J. O'Higgins

If the Deputy did not, presumably one of his colleagues did and gave him the benefit of his enlightened reading. The Parliamentary Secretary said in Boyle there would be no increase on items such as beer, cigarettes, petrol, spirits and so on. He is wrong there, of course. The report goes on to quote him as saying:

The increases would be on luxurious goods and semi-luxurious goods.

Mind you, these are the Parliamentary Secretary's words, not mine. He said the increases would be on goods such as jewellery, furs and expensive motor cars, items already taxed in Britain and the Continent. Now the Parliamentary Secretary uses the slick political argument that this Budget does not impose a tax on any of these items. It does not—it imposes a tax on all of them. If he wants to use the slick argument that identified articles are not specifically covered, will he tell me where in the Minister's statement this differentiation is made?

Mr. Lenihan

In 12 months' time——

An Ceann Comhairle

There is no licence for any Deputy in this House, it does not matter who he is, to interrupt another Deputy while he is speaking.

Mr. Carter

When the speaker is controversial, conversational——

An Ceann Comhairle

This is not a crossroads exchange.

Mr. M.J. O'Higgins

I am letting the House have the benefit of what the Parliamentary Secretary said behind the closed doors of a Fianna Fáil meeting at Boyle. He said he wanted all at the meeting to have the arguments at their fingertips. Listen to the arguments and, having listened to them and considered their full weight, lay alongside them the Budget Statement of the Minister for Finance. Then, if you are in the mood for such mental exercise, perhaps you could spend a couple of days, or better still a couple of weeks, trying to reconcile the two. You could even get the Minister for Finance and the Parliamentary Secretary into a room and have a discussion with them and see if the two will come back afterwards and sit on the same bench. The report says that the Parliamentary Secretary told the Boyle meeting:

The taxes were being imposed on luxurious and semi-luxurious goods. There was increased expenditure, but he had no objection to spending money so long as it was being spent on the economic development of the country.

The Parliamentary Secretary went on to say that the increases would go towards higher agricultural grants, towards tourism and other things, including vocational education. He also said they could not tax agriculture or industry any more. Why did he not whisper that to the Minister for Finance before he came in here yesterday?

I quite agree, but the Parliamentary Secretary wants us to have arguments at our fingertips and there is only one way to have them at your fingertips and that is to keep drumming them home. Then he went on:

They would meet criticism but he wanted them to remember that most, the vast majority, of the people from whom criticism would come were anti-nationals.

He was conditioning them in advance. If there was a breath of criticism against this Budget which was going to tax expensive motor cars, furs and jewellery, they could say that the man who was criticising was anti-national. That was their line and it is a very clever line. If you cannot defend the Budget to be introduced by the Minister for Finance, set up some ninepins to knock down. Try to get the people's minds off the Budget, off the fact that they are going to pay more for food and fuel and clothing and get them to call those who criticise the Budget or criticise Fianna Fáil, anti-national. They were to keep that at their fingertips. That was the recommendation given by the Parliamentary Secretary to his organisation.

Then he felt it necessary to stick out his chest a little, as the Taoiseach did here today. It was not enough to say that everyone who criticised the Budget, or the vast majority of them, to use the Parliamentary Secretary's phrase, were anti-national, but apparently he did some research and he gave the Party members gathered in Boyle the benefit of his conclusions. He says, in continuation :

One found that the people who support Fianna Fáil came from a national background.

So now you have the position that anyone who is in the room with the Parliamentary Secretary or who supports Fianna Fáil, can get from the Parliamentary Secretary a certificate as coming from a national background, but if anyone raises his voice against the Budget, if anyone protests against the Budget increases on food, fuel and clothing he is to be called anti-national and you should not argue with him but tell him that he is anti-national.

Mr. Briscoe

Would the Deputy quote that bit again?

Mr. Lenihan

It is true enough.

Mr. M.J. O'Higgins

An Ceann Comhairle

Deputy Briscoe is continually interrupting. I must ask him to desist.

Mr. M.J. O'Higgins

I do not think the Taoiseach dealt with the question of the 100,000 new jobs the Fianna Fáil Government were to provide. I missed portion of his speech but I did not hear him proclaim that his Government had achieved price stabilisation. I did not hear him claim that the Government have succeeded in effecting the economies which we were told about some years ago, nor did I hear him claim that they had brought about a reduction in the number of civil servants. But we did hear a lot of talk about unemployment and emigration. I do not know whether I misheard the Taoiseach or took him up wrongly but I understood him to express the wish that the Dáil would agree with him that two of the big national problems were still unemployment and emigration. This is six years after the Fianna Fáil Party spoke of a plan of 100,000 new jobs, spoke of having been elected to office for the purpose of ending unemployment and emigration.

On 14th May, 1957, in Column 144 of the Official Report, the Taoiseach said:

Deputy Costello referred to the mandate of the Government. I do not know if there is any purpose to be served by discussing what our mandate was but I and my colleagues have no doubt in our minds that we became the Government because the people expect us to work determinedly and intelligently to bring about a situation in which employment would be expanded and in which the twin problems of unemployment and emigration would be vigorously tackled.

The result of six years of effort in that direction is that we have fewer people in employment. I do not think the Taoiseach or any member of the Fianna Fáil Party can claim that emigration has been reduced since they came back to office in face of the preliminary reports of the 1961 census which show that in the census period 1956 to 1961, a total of 215,641 people left this country. At the end of six years of what the Taoiseach hoped would be determined and intelligent action on the part of the Fianna Fáil Party, we have fewer people at work in this country at the moment and between 200,000 and 250,000 people have left the country.

The Minister for Social Welfare came into the House the following day and on 15th May, 1957, at column 1283, he recorded his view of why Fianna Fáil were back in Government in this country when he said :

In my opinion and in the opinion of any fairminded person who, even now, goes back and looks over the speeches made in the general election, it is beyond all doubt that we were put in here as a Government to take the necessary steps to remedy the situation of mass unemployment and emigration brought about by the previous Government.

How did they do that? There are more people out of work today and there are just as many people going across the seas, if not many more. I may have misheard the Taoiseach but I understood him to say that today, six years later, the Taoiseach rightly regards the question of unemployment and emigration as a major national problem. Remember that when he and his Party were going before the people six years ago in the general election of that time, they went as the Party who were going to end unemployment, create 100,000 new jobs, and put a stop to emigration.

The Minister had dealt with the question of the selective tax already. I do not think the Minister for Finance was trying to hoodwink the House when he said :

It is because the tax will apply to all retail sales that it is possible to have a rate as low as 6d. in the £. If food, clothing and fuel were to be excepted a rate of up to 2/- in the £ would be necessary to produce the same result.

Mr. Lenihan

Because of the administrative cost of the selective tax.

Mr. M.J. O'Higgins

The Parliamentary Secretary is in agreement with me. The fact that the Minister for Finance has quoted those figures and put it in that way shows, I think abundantly clearly, that threequarters of the yield from this tax will come from food, fuel and clothing.

Mr. Lenihan

That does not follow at all.

Mr. M.J. O'Higgins

So far as the provisions of this Budget are concerned, it means, in the first place, that virtually all goods, including the basic essentials, will go up in price. The Fianna Fáil Government will deliberately put them up in price by means of their turnover tax. They are leaving it to the retailer to recoup himself and, as there is no price control machinery to operate in conjunction with this tax, there is nothing to prevent the retailer from evening-off any fractional discrepancy there may be in his own favour.

Unless I misunderstood him, I think the recommendation by the Minister for Finance in the course of the discussion yesterday was that retailers might find it more suitable to put larger increases on some commodities and a smaller increase on other commodities rather than to work out fractions for an increase of 6d. in the £ over all commodities.

Secondly, a major feature of this Budget for many people, particularly for many widows throughout the country, will be the taxation on rents. It could be argued that there was no reason other than a social one which possibly is not applicable today why a differential of taxation of rents should accrue from business lettings and from residential lettings. The fact is that, all through the years, up to now, there has been that differential in the taxation imposed on business rents and residential rents. If the letting was for residential purposes, the ordinary income tax schedule was not charged. The result of that has been that in a number of cases where a father of a family died, leaving a widow to fend for herself and possibly to care for some young children, it was often a worthwhile investment for that woman to let her house either entirely in one letting or to let it in residential flats and to secure for herself an income out of those lettings, secure in the knowledge that the income which she was getting in and which she required to keep herself and her family and possibly to educate some of the younger children would not be subject to income tax in the same way as income from other sources.

Let us recognise what we are doing now. With a few saving provisions, that is going by the board. There are some modifications. I think I am correct in saying that in some cases, up to a maximum of £200, only 60 per cent of the rent will be returnable and that in other cases of non-controlled lettings, a reduction of 20 per cent is allowed, subject to a maximum of £100. However, a very substantial alteration in the tax law and the tax code is being effected by this proposal. It will affect a great number of people who can least afford to be hit once more by the Fianna Fáil Party when they get cracking on taxation. It will affect people who deliberately, because it was an attractive type of investment and a source of income, put their money into those kinds of lettings in the past. Now, with little or no warning, that will be overturned, rather than turned over, in the new tax code that is being imposed. These people were entitled to expect a bit more from the Government because this is one of the matters dealt with by the Income Tax Commission.

I have not got the Report of the Commission or the Government comment here but I am quoting from an article in today's Irish Times under the title “Economic Comment” by Mr. Garret FitzGerald in which he says:

The other tax increase in the Budget affects income from the rents of unfurnished residential lettings, which are at present free of Schedule D income tax, and merely subject to a nominal tax on a notional rent under Schedule A. This tax change was recommended by the Income Tax Commission, on condition, inter alia, that the amount assessable in the case of rent-controlled premises be reduced so as to take account of the extent to which rent income is reduced by control.

Then he goes on:

This recommendation was rejected in strong terms by the Government two years ago, on the grounds that it would be quite impracticable to assess on a case-by-case basis the effect of rent control on rents, "and the adoption of a common multiplier would result in obvious inequalities of treatment. ... Accordingly—

this is a quotation, apparently—

the Government do not propose to alter the existing income tax position before control under the Rent Restrictions Acts is substantially relaxed or abolished.".

Now, within two years of that rejection by the Government, the whole thing is changed.

In the meanwhile, consider the position of people, particularly of the type I am referring to here—the widow who is suddenly bereft of the breadwinner of the family, who had to get some source of income to maintain herself and her children and who adopted as an attractive method this one of letting out the house either in whole or in residential lettings. She was encouraged to do that in the knowledge that the Government had specifically rejected any notion of altering the basis of taxation which applied in her case.

The third, I think, main provision in this Budget will affect the farming community. Take the farmer who carries on any other trade or business as well as the farm. He will now find—perhaps not certainly but very likely—that he will be assessed in the ordinary way with full income tax on his earnings out of the farm as well as on his earnings out of whatever trade or business he engages in. The Government changed their mind with regard to the purchase tax. Again, I refer to the same article by Mr. Garret FitzGerald in today's Irish Times. It is only a comparatively short while since the idea of a purchase tax —I do not think it matters whether you call it a purchase tax, a sales tax or a turnover tax—did not commend itself to the Government. Mr. Fitzgerald in his article says:

As for the retail tax itself it may be worth quoting earlier official views on this type of tax. In Economic Development Mr. Whitaker suggested that “a general purchase tax would have an immediate reaction on sales of Irish products and would probably, in the end, have inflationary effects on wages and salaries and the cost of living”, while in their White Paper on Direct Taxation just two years ago, the Government said that the introduction of a purchase tax, as recommended by the Income Tax Commission, bringing in about £6,000,000 a year, would be sociably undesirable if employed as a partial substitue for income tax, adding that “its economic effects might also be adverse: the prices of taxed goods would be increased and, through compensatory raising of money incomes, costs might be increased and competitive capacity affected with risk to exports and employment”.

Therefore, the Government have changed their mind on that also. One of the features of this turnover tax is that the Government intend raising approximately £3½ million by means of that tax this year, in four months, and that, according to the figures given by the Minister for Finance in the course of the discussion here yesterday, they expect to raise £10½ million in a full year. The Minister having gradually gone through the Budget Statement, dealt with the narrowing of the gap here and the increasing of the gap there, eventually arrived at a stage in his Budget speech where there was a gap to be bridged of £3½ million and the bridge to be used was this turnover tax. That is all right for this year but the incidence of taxation has been increased. A sum of £10½ million will be collected from that tax in a full year, £6½ million or £7 million more than the gap which the Minister wants to bridge. Therefore under these Budget proposals when they are implemented, the level of taxation is being raised unnecessarily by approximately £7 million and that is being done in respect of the necessaries of life, food, fuel and clothing. Once the level of taxation is raised, everyone will agree that it will be extremely difficult to bring it down again within—to use an expression which I do not like using but which is an appropriate one—the foreseeable future.

Fianna Fáil are deliberately raising the level of taxation. They are deliberately setting about the taking of approximately £7 million more than they require to balance the Budget. In return for the increased cost to the consumer in relation to the ordinary commodities being purchased each day, compensatory benefits are being given by way of social welfare and children's allowances, and so on, amounting to £4½ million in a full year. Do the Government think that will compensate the people from whom they are taking £10½ million through this one tax alone? A sum of £13 million or £14 million in the year in new taxation will be taken from people under this Budget and they are given back in return a compensatory provision of £4½ million.

In the context of the wage freeze policy in which this Budget is being introduced, do the Government seriously think that the people are so well off that they can afford to give a present of £10 million to the Government and not to seek some redress for it? That is what the Government are asking them to do. They produced a short while ago their White Paper Closing the Gap which, robbed of its finery, was simply a wage-freeze policy, the old wage-freeze policy of Fianna Fáil, that State servants and people of that description would not get increases. Having done that, they now load another £13 million or £14 million worth of taxation on to the backs of the people. Is it any wonder that the people will feel that Fianna Fáil are not giving them a fair crack of the whip in this Budget? I do not want to say any more here. I hope that the Parliamentary Secretary will take my advice and endeavour to reconcile his differences with the Minister for Finance in regard to forecasting Fianna Fáil financial policy.

Mr. Lenihan

There is no difference.

Mr. Mullen

We in the Labour Party believe that the number of people at work is the test of economic progress. Bearing that in mind, it is only proper that we should have regard to what progress has been made in putting people to work. In 1955, there were 1,181,000 people at work and in 1962, there were 1,119,000 people at work. That is a drop of 62,000. This year, we are told by the Minister for Finance that there is an increase of 7,000 in the number of people in nonagricultural employment. He did not mention that there was a drop of 19,000 people employed in agriculture, leaving a total drop in employment of 12,000 people. That does not give any ground for the Minister's boast in relation to the 7,000 people. Coupled with that figure must be the number of people leaving school and seeking employment. There were thousands of such people. We must bear in mind the Government's slogan at the last election appealing to wives to get their husbands out to work and promising 100,000 new jobs.

Speaking this afternoon, the Taoiseach said this Budget was designed for future years. He indicated it was planned to have better social welfare benefits, educational, health and public services. Having regard to the operations of the different Ministers and their Departments, there is no indication that that is on the horizon. The absence of liaison between the different Ministers is to be deplored. The Taoiseach referred to the importance of teaching people their jobs. He indicated that the unskilled worker is on the way out and that we will have to teach more people their jobs. That brings us to the Department of Education and the plans in relation to that matter. It reminds me of the absence of planning in connection with vocational education. It reminds me of the lack of liaison between the Department of Industry and Commerce and the Department of Education in the matter of educating the worker for the job. The Department of Industry and Commerce is responsible for the operation of the Apprenticeship Act, but there are insufficient vocational schools to take all the apprentices released on a day release scheme. We have one Minister putting a plan into operation, while the other Minister is not ready for it. We must have regard to the extraordinary delay we have experienced in the matter of workmen's compensation.

An Leas-Cheann Comhairle

These details would be relevant on the Estimate but do not arise on the Budget.

Mr. Mullen

The Taoiseach referred to them. He promised many things. I feel I am entitled to point out they are not doing anything at the moment, never mind the future.

An Leas-Cheann Comhairle

It would not be a matter for the Budget debate. It would relevantly arise on the Estimate.

Mr. Mullen

There is an indication in the Budget that there will be an increase in non-contributory pensions and in unemployment assistance. There is no indication of any increase in the health services. I want to find out what will be the effect of the turnover tax on drugs and medicines. How will a chemist operate it? We know the chemists have their own technique for making up prescriptions and making charges. Does it not mean that the chemist will simply pass on this tax to the consumer, in particular to the person least able to bear it ?

The increase given to people on unemployment assistance will amount to 5/- in respect of a married man with a dependent wife. If he is living in a Dublin Corporation house, immediately he gets that 5/- a sum of 10d. out of it will be added on to his differential rent. Is the Minister prepared to make an arrangement with Dublin Corporation to ensure that that is not done? The increase in the non-contributory pensions means that 5d. of it will go in the differential rent. Is there any arrangement made to ensure that there will be no adverse effect on the benefits obtained by way of home assistance? There is no point in giving something with one hand and taking it back with two hands. On the occasion of striking the rate, we succeeded in preventing 5d. being put on to differential rents. Some attempt should be made to prevent its being taken out of this 2/6d.

Can the Minister tell us what exactly will be the effect of the turnover tax on people making purchases ? What will happen to the person who purchases ten cigarettes? Will it be left to the shopkeeper to determine whether he puts on the tax or not? What will happen to the badly-off person who has to buy a lb. of margarine, a loaf of bread, a quarter of rashers or a quarter of tea—all generally used in working-class homes ? Will this tax allow some shopkeepers to "go to town" on their customers? It is all very well for the Minister for Finance to say it is introducing an element of competition and that the tax will not be passed on in the way I fear. In Finglas West, portion of my constituency, there are six shops catering for thousands of people. They can charge what they like. How will the tax be collected ? Who will pay it? It is important that we get an answer to such questions.

Take the case of a married man with £8 a week. We are left to assume he will pay 4/- in tax. If he has three children, he will benefit by the children's allowances to the extent of approximately 3/-. He loses a shilling on the deal each week. This is a man barely eking out an existence. I would venture to say that no Minister could work out a satisfactory budget to show how such a man could live in reasonable comfort on £8 a week.

The Taoiseach said it was all very well to criticise taxation and not make any suggestions. We in the Labour Party have repeatedly made suggestions as to how taxation should be imposed. We have no hesitation in saying that the emphasis in relation to taxation should be on wealth. Fianna Fáil on this occasion have succeeded in doing something which is unique. They have brought every man into the orbit of taxes and people who never paid taxes before are now to be called upon to pay them. They have been paying them indirectly but now they are to pay them more directly. While the tax is described as a turnover tax, a more appropriate name would be the "twist tax".

One of the major complaints I have to make about it is in regard to the absence of information and the absence of clarity, the failure of the Minister to indicate clearly the effects this taxation will have on the ordinary people. One has been led to believe that the man on the lowest rung of the ladder will benefit as a result of this tax imposition but do we not all know that if it is to be a tax on purchases and the man in the shop has to account for it, he will pass it on? Prior to the Budget, there was talk about Closing the Gap, and some people called it a wage pause, but I feel that this turnover tax is an invitation to working-class people to start another round of increases. I feel they will be left with no option but to do that, in the absence of clarity and in the absence of price control. If there were price control in relation to this tax, one could have very little complaint to make about it.

I noticed yesterday when the Minister was being pressed for information that he shrugged his shoulders and did not express any concern about price control. Maybe it is not too late to ask for something to be done in regard to the control of prices. If not, surely we will have shopkeepers and other traders being afforded the opportunity to pass on the tax, and more than the tax, to the consumer. You will also find that it will be passed on in rent. I wonder will the ESB pass it on, or will the gas company pass it on? Can we not be told how exactly this is to be done? Are we correct in believing that under no circumstances will the ordinary man-in-the-street have to pay the tax but that in fact the man who has the business will be the taxpayer? I do not believe that. It has not been conveyed to me in that way.

Yesterday Deputy Sherwin said that the poorest people will benefit. I do not believe that. I believe that the poorest people will come out the worst because they can afford it least. If I am not correct, the Minister should explain to what extent the poor, the unemployed and the people in meagrely-paid employment can meet this increased taxation. Deputy Norton made a very good point yesterday to which he did not get an answer, although it was something which was crying out for an answer. He referred to the man who spends in shillings and not in pounds. He asked how the tax would be met and he said that if that man spent twenty single shillings, the tax would be 1/8. If it is 1/8, it will mean that the old age pensioner will get 2/6 to meet that 1/8 out of each £1 and along with that he will have to pay an increased differential rent.

Dáil Éireann díospóireacht - Wednesday, 24 Apr 1963

Committee on Finance. - Resolution No. 14—General (Resumed).

Dáil Éireann díospóireacht -
Wednesday, 24 Apr 1963