I realise the necessity for exports as well as Deputy Cunningham or anybody else. I never said that it would be a good day for this country if every ship was at the bottom of the sea. The Deputy now seems to be a very ardent convert to the idea of increased exports but he must remember that it was Deputy Sweetman who introduced the whole idea of tax-free incentives for exports. The wisdom of that action was such that Fianna Fáil decided it would be to their advantage and to the advantage of the country to retain it and to extend it. Was it not well for the country that Deputy Sweetman thought of that good idea? The Deputy's Party were in power for 20 years before that and they never thought of it. We know that many planks in Fianna Fáil policy have been abandoned but there are still a few left that it would be well for them to abandon also.
We know the value of agricultural exports to this country and we know that in consequence of the wisdom of the 1948 Government in obtaining a good trade agreement with Great Britain we doubled the volume and trebled the value of our exports. The Deputy must have thrown off his coat with delight at that achievement. In terms of exports, whether agricultural or industrial, we are ensuring that we have sufficient exports to maintain the imports which are necessary to maintain the standard of living which we all hope to enjoy.
Regarding the employment situation in the country, the Minister for Social Welfare described the position as one which made it extremely difficult to frame the Budget of this year. He dealt extensively with the operations of his own Department but he did not deal with the wider consequences of the budgetary provisions. Strangely enough, he never once referred to the employment situation. If he had he would have found out that there are 58,500 fewer people in employment in the country than when his Government assumed office. This may be the reason he was wise enough to keep off the subject. If he had anything to brag about he would have given figures to the House but it was because he was compelled to bring in a Supplementary Estimate a few months ago to meet the worsening situation that he made no reference to the fact that fewer people are now employed. It is regrettable that the figures recently provided by his Department show that there was a disimprovement of 4,412 since the corresponding date last year and 5,073 with the corresponding date of two years ago.
These figures show the present unhealthy trend and they fall far short of the promise made by the Taoiseach in Clery's Restaurant to provide 100,000 new jobs, a promise that helped to gain a certain amount of support for this Government and to put it into office. It is preposterous, having regard to that, that we should have to listen last night to the statements made by a "former Minister for Finance," as he is described in a newspaper today. The country has had many inflictions of different kinds put upon it but it has not yet had Deputy Childers as Minister for Finance. He was speaking last night as Minister for Transport and Power, although I prefer to describe him as the Minister without functions. He had the audacity to deny last night that his Party ever made a promise to give employment to 100,000 people over a period of five years.
That promise was accepted throughout the country and it was one of the main planks in the Fianna Fáil platform—that, and the advice to the ladies to get their husbands to work. The employment situation must, indeed, be bad when the Minister for Transport and Power goes to the extent of denying that they ever assured the people that if they got back to office, not only would they bring the exiles back from abroad but they would also provide full employment for the people at home and for those coming along. The 100,000 new jobs which they promised were to absorb the whole lot.
The Minister for Transport and Power had no doubt that, as a result of the Budget, business would be stimulated to re-equip with modern machinery, to consider exports of being of prime importance and to supplement sales at home by increased export facilities. That is too much. It would be bad enough if Deputy Burke had said it but when a person such as the Minister for Transport and Power says it, surely it is time for the Government to realise that they have not a hope on earth of getting away with that kind of duplicity?
He went further and said that this matter of the 100,000 jobs was nauseating propaganda on the part of Fine Gael. We wonder where the nausea is. His idea of promoting increased sales at home is to impose a levy of 6d in the £ on everything sold at home. This, according to him, is the way to extend home consumption. It is generally hard to have to listen to the Minister for Transport and Power but he certainly excelled himself last night.
Before I go on to refer further to budgetary matters, I should like to bring one particular matter to the attention of the Government, a matter that is continuing to cause the utmost concern in the country, that is, the purchase of land by foreigners. Deputy Dillon has repeatedly voiced the concern of those of us who reside in the country and who know the efforts many young men have to make over the years to get enough money together to purchase a holding and settle down. These boys now have no chance whatever of acquiring a holding in competition with the foreigners who are now coming in and buying up the land.
The Minister for Lands was compelled to make a statement that the amount of land purchased did not exceed in value some £500,000 but this was contradicted by the Minister for Finance who said, within a matter of a fortnight, that the amount was about £1 million. We do not know what the figure is now but, whatever it is, it is entirely too much. We cannot afford to deny these young men the opportunity of continuing to live in their own country and to invest the money they have saved, through their hard work and through the economies they exercise, in order to continue in the way of life their fathers and their grandfathers had won for them and for which they had worked.
It is regrettable that these young men should be in such difficulties because of the Government's desire to accumulate as much hot money as possible and to present it to us as being something of benefit to the country. These people are very welcome as long as they come here with the intention of giving employment. There is plenty of scope for their industrial activities if they wish to engage in them but we resent particularly the attitude of many of them after they come here towards people exercising rights they have held traditionally especially along the coastline. It would be better for the Government to quell this now rather than face the storm which could develop if it is allowed to expand much further.
Regarding the social welfare benefits, it is quite true there were expectations of increases in advance of those given in this Budget. We are told by the Minister for Finance they have been given to mitigate the effects of the turnover tax not, as the Minister for Social Welfare expressed it, to compensate for those effects. However, there are other facets of our social welfare code which require attention. It is true that, because of the impact of the reducing value of money, the cost of living, and so forth, we are still operating a means test that is very harsh in many instances. It is a matter of regret that there was not the slightest easing of the means test in its application to the social welfare provisions of this Budget.
There is another matter to which I referred on the Social Welfare Estimate and which I thought might have been dealt with in this Budget, that is, the reduction of the qualifying age of female workers for pension rights which is not in accord with the practice in other countries. When it suits the Government's purpose, they are fond of introducing references to conditions in Scandinavia and other countries to support their arguments but they should take example from the more favourable attention such countries give to these workers. Apart from the mitigation of the taxation effects of this Budget, there was no social welfare provision in the Statement this year which was worthy of much attention.
The House will recall that last year there was a song and dance about the provision of £2 million to ease the rates burden on the agricultural community. Absolutely no relief was given to the shopkeepers, to the persons who are particularly hit in this Budget. No relief was given to any other persons in the community, apart from the farmers who had secured that remission only because of the effective demonstrations they had made. Since then, in discussions and otherwise, it was implied that the Government had been very diligently reviewing the whole rates collection system and that the first £20 was being considered as being exempt from rates. It was expected that in this Budget the Government would have come to the rescue still further of the agricultural community in regard to the payment of rates but, far from that, they have not even maintained the status quo because the effect of increased rates in practically every county in Ireland has been almost to eliminate any reliefs that were given in the Budget of last year. The cottier is now as substantial a ratepayer when income in many instances is compared, as his better-off neighbours. The shopkeeper on the side of the street, the very small farmer, none of those classes got any relief last year and if there is a further imposition in regard to rates this year, their position will be still worse.
If there is a song and dance made by the Minister for Social Welfare in regard to increased disablement benefit —and indeed it was not before its time that that increase was given in view of the increased cost of living and the reduced value of money—it must be remembered that the State is not going to pay for it. They claim they have been the fairy godmother but they will pay only half of it and those of us in local authorities who have already decided on our estimates will be faced with supplementary estimates to meet the £300,000 it is proposed to levy on the local authorities to meet half the cost of this benefit in the coming months.
That is not the only way in which this Budget has upset the calculations of the local authorities, a matter with which I propose to deal when I come to the major provision in the Budget this year, the turnover tax. Before I come to this turnover tax, I want to refer to the other impost the business community have had to bear, the increase in corporation profits tax. The business community in recent years have had to suffer many increases in their production costs. One of the major increases has been the increased cost of insurance stamps for their employees. To give them their due, they did not grouse about it. There was very little said by way of criticism of having to meet that additional charge, but when it is put into the mosaic of other charges they have to bear, the whole pattern represents a heavy burden. There have been the increased postage charges, not bearing very heavily on the individual citizen but certainly very heavily on business; there have been increased charges in regard to telephones; and not alone have there been increased transport charges but there have been diminished services. In the constituency I represent, one whole railway line has been removed. What cause was there for the withdrawal of these services other than the intention to relieve the Exchequer of the burden of having to subsidise CIE in the operation of this line? The community have been denied this service completely. During the present bus strike, they have been denied a bus service. Consequently they are completely stranded. If the railway line had been left in existence, they would have had the alternative of travelling by rail.
The people engaged in business in our towns throughout the country have been very adversely affected by the provisions of this Budget. They are the people who will bear this corporation profits tax and who several times during the year, by deliberate action of the various Ministers in this Government, have been called upon to bear increased costs in the operation of their concerns. Surely if there was any class that should have been selected for relief, it was that class when one considers the activity of the Valuation Office in increasing the valuation on very many of these business people and when one considers the impact of increased rates on them—never getting any relief. Was this the time, then, for the Government to embark on the injection of the thin end of the wedge in regard to the turnover tax?
Any of us who were given the books of unfortunate people within the past three weeks who failed to pay their rates last year cannot but be aware of their plight. These are the people whom the rate collectors reported as not having been in a position to pay their rates last year. In the majority of cases, they were people engaged in small businesses in the small towns of rural Ireland. Those of us who are members of local authorities have plenty of time to go down through the lists of defaulters. The returns show 96 and 97 per cent rates payment. That is a remarkable response by the ratepaying public to the levies imposed on them.
Consider the small proportion of those who could not meet the demand. There was agreement between the local rate collector—who in most instances is a tough individual, who does not throw anything away and who carries out his job most effectively—and the staff officers responsible for the collection of rates that these were cases in which it would be impossible to collect, without the utmost penalties being imposed and without placing these businesses in an impossible situation. It was agreed that that would happen if the Rates Office were to persist in the exaction of the rates that had been levied on these people.
It is also true, of course, that most of the people engaged in these businesses have absolutely no recourse to Health Act reliefs. They have to pay rates and taxation but, if they have the misfortune to contract disease or to have an accident, they have no recourse other than to try to meet the hospital bills. Those of us who are in a local authority are continually approached by such people seeking some assistance, seeking some easement of the bills presented to them by hospitals and such institutions.
Taking the agricultural situation, there is nothing in this Budget apart from the 1d increase that the Government decided upon. They stated they would not consider it but eventually they decided it would be better for them to give some increase in the price of milk. Apart from that, there was no ray of hope in the Budget Statement regarding the farming community. We had the Common Market dangled before us for so long and over a period in which the main Opposition Party felt it incumbent on them, in the national interest, to refrain from over-questioning the Government. They felt they should refrain from any statements that would in the slightest way embarrass the Government in a line of policy with which we were substantially in agreement. Yet, we could have had much to say.
We could have referred to very many things that were left undone. We could have referred to the delay in making the proper approaches, in preparing our people for advent to EEC—many of these things. We refrained from doing so. There was never any word of appreciation that I can recall of the part played by Deputy Dillon as Leader of the Opposition in giving the lead in that to the House. A Deputy nods his head: I am glad to know there was. At any rate, during all that period, it was represented to the farming community that admission to Europe would be achieved and that there would flow to our agricultural community benefits unknown before to the farmers of this country.
It is true that our application has not been withdrawn but unfortunately it is in suspension. Some years may pass before Britain is admitted and, consequently, before this country can afford to revive its application for membership. If we wished to be political, we could recall many statements made some years ago regarding the death of the British market but, even at this late hour, it is a matter of consolation to us to know that the policy we have ever upheld regarding the advantages to be gained by proper utilisation of that market is now recognised by the Government.
We can assert with truth that this Government have failed to review our marketing arrangements with Britain. There was an announcement, with considerable sounding of trumpets, that Ministers were on their way to London to meet their counterparts there and that it was expected they would bring back to this country favourable and considerable marketing arrangements with Britain. Unfortunately for the country and for the Government, they came back on that occasion with their hands hanging by their sides. Since then no positive effort appears to have been made to review our marketing arrangements with Britain, to bring them up to date, to encourage our people to harder work and to engage more actively in the production of commodities that we could sell under the terms of such agreements.
Let me dwell on the effect of the Budget on the farming community. In The Kerryman of 27th April, 1963 there is a report of an interview which took place between a reporter of that newspaper and Mr. Jerome Buttimer of Glenville, County Cork, National Vice-President of the NFA and President of the NFA in County Cork.
Said Mr. Buttimer: This Budget will be a disappointment for farmers who expected devaluation on the first £20 of their valuations.
The benefits of the recent increase of one penny per gallon in the price of milk given to the dairymen will now be offset by the new turnover tax because raw materials needed by the farmer will cost more. Domestic requirements for the farmer's household will also go up in price.
There were other dangers attached to the provisions of the Budget.
He refers to the latest burden and says :
There is a danger that local government expenditure will increase as a result of this Budget—that it will increase beyond the estimate recently provided for those services in county council estimates. County councils will have to pay more for their raw materials of various kinds —cement, food, clothing, equipment, machinery and many other items. The effect of this will be felt in the local rates next year as a result of supplementary estimates that the councils may bring in
That will all add up, I am afraid, to a heavier load on the already overburdened farmer as a ratepayer.
There is no mood of optimism there regarding the financial policy of the Government facing the next 12 months and any other comments that have been made have borne out the views expressed by Mr. Buttimer.
Earlier, I remarked that the Government were in the happy position, from the buoyancy of revenue last year, to bring relief to the classes that have got some increased awards in their social welfare benefits. They could have provided the money needed to give the increase to the dairy milk suppliers out of existing taxation. The buoyancy in revenue seemed to indicate that that trend was likely to continue. Forecasts of expansion in the economy in coming years would also indicate that that buoyancy would be accelerated. Nevertheless that did not satisfy the Government.
This year, we have the most remarkable innovation, financially, the country has experienced for very many years in the turnover tax. We recall that the first time this was brought to the attention of the country was when the Income Tax Commission reported that they were in favour of some kind of purchase tax as an alternative to income tax, but very definitely as an alternative to income tax. Then we had the Taoiseach repairing to Limerick and announcing to the country at large it was the intention of the Government to consider the introduction of a purchase and sales tax. The immediate effect of that, in circumstances in which our level of imports had increased and in which our exports were not being maintained, circumstances in which we had balance of payment difficulties, was an incentive to people to get out immediately to buy the articles pinpointed by junior members of the Government as being the specific items to be taxed heavily in the form of a purchase tax. We had them set out by the Parliamentary Secretary to the Minister for Lands, who repaired to the West of Ireland and identified them as fur coats, luxury motor cars, refrigerators and so on. They expected the tax to be confined to those items.
Since the Taoiseach spoke in Limerick, retailers throughout the country have been bombarded with applications from people to purchase these items. No doubt between now and All Souls' Day, when this turnover tax is to be imposed, many people will "jump the Minister's gun" and purchase many of these items. They may not exactly need them yet but they will come by the price and make whatever terms they can with the person supplying them in an effort to avoid paying the increased turnover tax. Consequently, I believe the full impact of the tax will not be achieved until many of these items are worn out. But, even as it is, the Minister has decided to obtain £3½ million from the tax in the four months of the financial year that will remain.
The Dublin Chamber of Commerce had some comments to make regarding the turnover tax in their statement which was published in today's newspapers. I am not aware, however, to what extent it is published in "The Truth in the News". The newspaper report goes on:
The statement from the Dublin Chamber of Commerce points out that the commercial community was in favour of the partial replacement of direct taxation by indirect taxation which would spread the burden more evenly. But the turnover tax now proposed was in addition to, and not a substitute for, income tax. In fact, with the additional corporation profits tax the volume of income tax has been increased by the Budget.
In the current financial year the yield from the turnover tax was expected to be £3,500,000 from four months receipts, so that in a full year the tax would probably produce about £10,000,000.
That is a very conservative figure for them to mention. The Minister puts it in advance of that by £500,000. There are many other people examining the situation who feel it could be even ahead of that. If the country is to experience this expanding economy repeated ad infinitum one can expect, unless there is a diminution in consumption arising from heavier taxation, that more will accrue from it. We must remember the admission of the Taoiseach and the Minister for Finance that we had reached the point of diminishing returns in relation to taxation on the simple luxuries. A long time ago, when the Government were increasing taxation on tobacco and spirits, that fact was pointed out to them from these benches. Now we have the admission that the only factor on this occasion which induced the Government to refrain from taxing tobacco, cigarettes, beer, wines and spirits was the fact that as a revenue winner, it would be ineffective. It was not because it would impose a further burden on the consumer, but because “the lolly” could not be derived from it. Therefore, we had to embark on the turnover tax.
The Dublin Chamber of Commerce go on to say :
This was a most unsatisfactory situation as it might encourage the Government to increase expenditure unnecessarily, or, in any event, be less zealous in its efforts to restrict spending to a minimum. It was to be hoped this temptation would be resisted and that any excess in Exchequer Revenue would be passed back to the citizen in the form of lower income tax.
Again, we believe there is a deeper and more invidious reason behind the over—taxation that is proposed than to give relief to any particular section of the community.
The report goes on :
Strong exception must be taken to the basis on which the turnover tax is to be operated. In effect the Government has introduced a levy on sales and has left the retail trade to take the odium of passing on this tax to the public.
The implication that the retail trade would be in a position to absorb portion of this tax was entirely erroneous.
Would the Parliamentary Secretary to the Taoiseach pay heed to that? He informed us here, speaking on this resolution last week, that he knew of concerns in his constituency that could put up notices saying "Goods available at old prices."
The Dublin Chamber of Commerce report continues:
In practically every retail trade a levy of 2½ per cent on gross turnover would greatly exceed the net profit earned. Thus the retail trade would have no option but to recover the full amount of this tax from the public and the Government must take entire responsibility for the wide repercussions this increase in the cost of living will have on the various sections of the community.
The administration of this turnover tax will severely dislocate all sectors of the distributive trades. The compilation and verification of monthly turnover figures, the completion of numerous forms and returns which will be necessary under the scheme, and the discussion and negotiations with officials on these figures will all involve extra costs in clerical and executive man-hours.
Furthermore, as this tax is to be levied on gross turnover, it introduces the undesirable principle of paying "tax on tax". In some countries the sales tax is separately stated as an addition to the price.
With the extra costs involved in administering the collection of the levy for the State and the operation of the "tax on tax" principle it must be recognised that ultimate incidence of this tax on the public will exceed the bare 2½ per cent indicated by the Minister, the statement continues.
Commodities like tobacco, beer, spirits and oils were liable to excise duties several times greater than the prime cost of the article, and practically all imported consumer goods were subject to a customs duty. All those items would be liable to the new tax at the full retail price so that, in effect, the Government was increasing those excise and customs duties by the amount of the levy.
The mind boggles at the task of registering over 40,000 retailers and about 5,000 manufacturers and wholesalers, not to speak of thousands of hotels, guest houses, restaurants, barbers, taxi-drivers, jobbing plumbers and general handymen, and the even greater task of ensuring that each and every person registered makes a monthly return of his sales with a remittance of the amount of the levy involved.
Having regard to the fact that the scheme is intended to cover all retail transactions of both goods and services throughout the country the Minister's estimate that the cost of administration to the State will be less than one per cent of yield seems to be unduly optimistic.
I should like to know what the view of the Minister for Justice is regarding the cost of administering this turnover tax, leaving out for a moment the merits of this method of taxing our people. Is it possible that this will be administered for a sum of £80,000 per annum?
