After agriculture, tourism is our biggest industry but here again we have failed completely. There are no economically priced hotels or package tours, for instance. The booklet setting out hotel prices was not published until a couple of months before the season began. In any other country in the world such information would have been published during the previous season. In our case it was published this year in February so that until then no travel agent was in a position to give anybody any information on hotel charges. If the Minister responsible for tourism has no problems of his own, the country certainly has problems. It is a question of either the Minister or Bord Fáilte going.
We were told recently by the Taoiseach that the Anglo-Irish Free Trade Area Agreement has only marginal effects in regard to the failure of some Irish industries. At the time the agreement was signed, the then Minister for Industry and Commerce spoke about the need for rationalisation and said that we must prepare for EEC membership. I think it was Deputy Treacy who said that he did not see why we should rationalise and do ourselves so much harm in order to be ready for the bigger market of the Community. These are two different concepts because, in the bigger market, we will have a better chance. We are limited to some extent in so far as England is concerned but there will be no limitations within the Community.
There has been much rationalisation in so far as the Anglo-Irish Free Trade Area Agreement is concerned, not necessarily in relation to the agreement but in order to follow the advice of Government Ministers. This rationalisation resulted in mergers which, in many cases, put people out of employment. The legislation that was promised to ensure that such workers would obtain alternative employment has not been introduced.
Death duties have been increased to 55 per cent. Some people may say that this will not matter very much because only the rich will be affected but of course that is not the case. It was said that only very big companies would be affected by the introduction of the 58 per cent company tax but it is a well-known fact that jobs have been lost because of that 58 per cent. The tax should have been on dividends or on salaries but if it had been on salaries I suppose some higher civil servants as well as some Ministers would have been caught in the net. Personally, I am not against company tax but I could not approve of it when its application puts companies out of business, thereby causing unemployment.
The same applies in the case of death duties. If, as I said here before, two directors of a company die within a short time, this results in the payment of double duties which might well mean that the premises concerned would have to be sold. The new owner would have no obligations towards the staff. If he has come up the hard way he will be likely to employ his own staff who have helped him. In any case, he will be likely to employ young staff. This results in older people being put out of employment and having to be supported. Therefore, out of the £1 million per annum that will accrue from this extra taxation, how much will it cost to maintain those who will have been made redundant? The net gain to the Exchequer will be very small.
A certain amount may accrue from any particular taxation but we must remember the proportion that will go in administration. For example, in relation to motor taxation, there are staff and buildings to be maintained throughout the country. Tax collection should be centralised. It is my belief that any one such factor as death duties, company tax or the Department of Industry and Commerce could have such adverse effect on a company as to cause unemployment. That is what worries me.
There has been an increase in wages of between 20 and 30 per cent but nobody is allowed to recover more than 7 per cent of that increase. If there must be a squeeze, I have no objection so long as the squeeze applies all round. However, our company tax has been increased to 58 per cent at a time when our competitors in England are paying only 40 per cent —theirs having been reduced from 42½ per cent whereas ours was increased by 8 per cent. We must compete on the home market and no company anywhere can export successfully unless they first build up a good home market. There are one or two companies in Ireland who have been successful but they are huge multi-millionaire companies with branches throughout the world.
I should like to quote from the contribution made on the 18th May, 1971 by Deputy T.J. Fitzpatrick of Dublin Central as reported at column 1793 of the Dáil Debates for that day. This reflects something that I said in the same context. I said that during the maintenance men's strike there should have been an embargo on the importation of biscuits. My reason for saying this was that if our people got used to the flavour of foreign biscuits they would be encouraged to buy these in future even if they were a little dearer than our own. I quote what Deputy Fitzpatrick said:
Many big retail combines have established branches throughout the country. Many of these firms are English-based. There is much foreign competition in the distribution trade. I personally cannot see how foreign capital can benefit the retail sector of the business, but these large combines have channelled their resources and, as they have many branches in England and also manufacture their own lines of branded goods, they could operate to the disadvantage of our manufacturers here. They might promote the goods manufactured in their own bases to the disadvantage of Irish-manufactured goods. Our goods must get comparable prominence to that given to the goods manufactured abroad. If the quality of the goods is right they will sell well. When we enter the EEC we will enter a large Community and those who are efficient and project the right image will benefit substantially.
How can we start at a disadvantage of 18 per cent on company tax in the home market? It cannot be done. Take the combines that are here at present in the retail trade, say the grocery trade —when we are in the EEC and we have free trade they will sell and push their own products in their supermarket chains here. It does not matter much whether they make money or not in the supermarket chains here because they will have 18 per cent more profit in their company in England and they will make their money there. I think it was to Mussolini that one of the big petrol companies complained that they were making no money in the country and said: "You cannot control the price." But he controlled it because he found out that while they were not making money in Italy they were making it in America. That is what will happen here unless we get our company tax down to the British level.
Somebody mentioned that there is a dividend tax in Britain that comes out of the company and the Minister said that if you paid 4 per cent dividend tax you paid more tax in England, that you only pay 44 per cent here. So what? I have no objection to taxing dividends. If you want to stop spending that is the way to tax but do not hurt jobs. Any Minister or civil servant who brings in such a provision knows nothing about business.
We heard from the present Minister for Finance when he was Minister for Industry and Commerce that car assembling would last until 1980. I do not know how he could say that because when you get into the EEC you can buy a car in Germany, or Italy, and drive it into Ireland; you do not have to buy it here and there would be no duty on it. If you get that agreement you must sacrifice something else and I think it would be something on the agricultural side. This is what I was told when I inquired from the Department of Industry and Commerce. I do not believe for one second that the Fianna Fáil Party have any interest in saving car assembly until 1980 because they made the agreement with the present importers of cars that no other make, whether Russian or East European, would be allowed in. They guaranteed that they would assemble cars up to a certain price which, I think—I may be wrong in this—is £1,200. We shall have only one or two years, perhaps, to go until every car is above £1,200. I know at present at least 25 of the car assemblers—I cannot speak about Cork—in Dublin have been let go and others are on short time. By 1973 probably 50 per cent will be gone. The Government will have no worry about them; they will either be absorbed or will be working in some other country. The Government could not come out and say that honestly; they let it die out gradually, let the workers believe and give the Government their votes for a number of years but when the workers would be gone to England it would not worry the Government any further. They are just playing politics with the lives of families.
We have heard all the Ministers and the Taoiseach shouting about wages, saying workers should not seek more wages, that they are increasing costs and creating inflation. I should like somebody to think back to this time 13 or 14 months ago shortly before the 2½ per cent increase in turnover tax. All the financial writers and economists were saying that anybody who would touch turnover tax would create the greatest inflation and that that would be the worst thing that could happen. The Central Bank also said it but our Government thought differently. Now they are criticising people for seeking extra wages when it is the Government who have increased the cost of living more than anybody. I do not know what this 2½ per cent brings in but I suppose the Government get £40 or £50 million out of it but the extra increases on top of whatever the Government get would mean a fair amount of money.
I was elected in 1963 and we saw at that time how much the 2½ per cent turnover tax cost and how much the cost of living went up. But they tried it again last year and put up costs again. This was not enough and they had to come again in the autumn with the corporation profits tax. They had a wage freeze which they withdrew eventually. They say there is dividend control which to me is the greatest nonsense because whether you are an efficient or an inefficient company you can only pay out the same amount of money. Nobody will bother to pick a good company to invest in. I believe they should be allowed to pay what they like but, when the dividends come out, hammer them. That is the way to do it.
I suppose every man is vain to an extent but when the Minister brought in the corporation profits tax he was lambasted publicly by every business group and, I believe, privately by the trade unionists because there was less work available. Employers could not afford to compete against English products on the home market and had to let staff go. If the Minister were a man he would have admitted that he made a mistake and said he would withdraw that tax and put it on dividends or get the money some other way. Instead, he tried to get out of it by helping a few companies. I know the argument. I met three or four of the employer groups. They had put up the legitimate argument that they had not enough money to compete. It was very difficult to buy new machinery, in fact, it could not be done because there was no reserve. The Minister, to placate some of them and prevent the whole of the employers and employees organisations coming down on him said: "We will give you machinery tax free in the coming two or three years but not this year and you can write it off in one year."
Again, I think this is not facing the facts as they are. I think that most of the machinery that would be bought, say, in a retail trade, would be new machinery for decimalisation. If a company buys a computer for decimalisation it is allowed to write it off immediately; this provision is not necessary. This provision is an attempt to placate employers. If the Minister wants Irish companies to be able to compete with English companies he must reduce company tax to the rate of the British company tax.
We have seen the shoe industry go to the wall and many people are unemployed as a result. The remaining companies are barely existing and are suffering a tremendous drop in profits.
On 29th April, 1971, at column 851, Volume 253 of the Official Report Deputy Cosgrave said:
Under the Capital Budget it is proposed to increase the amount of money made available to the IDA from £18.5 million to £23 million— an increase of approximately 22 per cent. This is to provide and stimulate industrial employment and to provide and assist the establishment of new industries. At the same time, we are continuing with proposals that raised company taxation in the supplementary Budget last year and which brings us to as high a rate, and in the upper limit higher, than similar taxation in Britain. On the one hand, in the most expensive possible way, we are trying to generate and establish new industries and, on the other hand, we are taxing excessively industries that are established and that have been, and are, providing employment. We are preventing them from expanding, developing and meeting the problems they must face in competition with other countries.
I would say at home mainly but also in foreign markets. Deputy Cosgrave continued:
One of the effects of company taxation has been to increase the tax taken from companies in respect of the Budget of last year from a total of £3.5 million last year to £6 million in a full year. This is being done when the growth of imports from British firms to this country has doubled in the last five years.
The Government proposals have not been adequately thought out. There is growing feeling that the failure of the Government to adopt a consistent, coherent policy in regard to industry and finance has been shown in this situation. The figures to which I have referred indicate the situation that has developed in industry compared with that which obtained prior to the Supplementary Budget of last year. This year we reached the half-way stage in the working of the Anglo-Irish Free Trade Agreement. Since the agreement was concluded imports from Britain have doubled and most firms are finding it increasingly difficult to compete with British imports.
The sooner the Department of Finance gets a business brain the better because I cannot see how any company can compete with foreign companies.
The Minister said that wage increases are the cause of most of our troubles and I agree this is partly the case but the wage content of an industry can be as low as 2 per cent or as much as 20 to 30 per cent. If a commercial traveller buys a car he has to pay 20 per cent wholesale tax and 5 per cent turnover tax on top of the duty on cars which means he has to pay much more for a car than his English counterpart.
Overdrafts are a thing of the past. If one wants to borrow money one has to go to a merchant bank. If a large sum of money is wanted the merchant bank will only lend it on the understanding that they get a cut in the profits. They will lend money at a lower interest rate provided they get a bigger cut in the profits and the bigger the cut in the profits they get the lower the interest rate will be. If a person went into a bank after the bank strike and asked to borrow money he was told to come back the following March, but when he asked what the chance of borrowing money next March would be he was told it would be nil. The Minister talks here about control but there has been control for the last two years although it has not been called a "credit squeeze".
The Minister admitted that Government expenditure has contributed to inflation. At column 692, Volume 253 of the Official Report the Minister said:
For some time the Government have been concerned because public expenditure has been rising at a rate substantially faster than national production.
To me that means the Government are getting money but are investing it badly. If money is invested properly there should be a return on it of even 2 or 3 per cent. It appears that the Government are spending money but are not getting any return on that money. In the course of his Budget speech the Minister went on to say:
In addition, there is the impact of price and wage inflation on the labour intensive public sector, for which pay alone now amounts to £154 million, and one the wide range of goods which must be purchased out of Exchequer funds.
As far as I can work out, the tax on cigarettes and drink is paying for at least three-quarters of the Civil Service.
Someone mentioned a figure of £4.6 million that farmers are alleged to be getting. I wonder how much of that £4.6 million will go back to the Government. The farmer cannot give a marriage settlement to his son. In the cities and towns owners of property are inclined to hand that property over to their children but, in the country, the children are often 40 or 50 years old before they get the property. On an average 60 or 70 acre holding death duties will account for 10 per cent. In a letter in The Irish Times today it was reckoned that a 75 acre holding was worth £22,000. If a farmer wants to clear off a debt on a holding the only way he can do it is by selling portion of the holding. But he is not allowed to sell. If he owes something in the region of £3,000 where will he get that £3,000? He will have to pay 9 per cent interest to the Revenue Commissioners. It seems contradictory that one Department of State should insist on making farms into larger units while another Department of State puts farmers into debt.
Some years ago Deputy Sweetman and I objected strenuously to the capitalisation of land. I think this was introduced by the Taoiseach when he was Minister for Finance. It was subsequently withdrawn by Deputy Haughey when he was Minister for Finance. Capitalisation meant that, if one sold land, the Government took two-thirds. Our main objection was to the loopholes. One could form a company and get away with it. Secondly, there would be no land for building.
Deputy O'Kennedy, the Parliamentary Secretary to the Minister for Education, said that here in Dublin we have huge open spaces. In most areas in Dublin there are no open spaces. Of course, when the Minister describes the amount of money spent on housing, he gives the total amount, not the units.
I have a sort of vested interest in drink, not a very big one. In 1968 beer went up by one penny. The pint was a great deal cheaper then than it is now. The proportion would be bigger than it is now. The Government expected in 1968 a yield of £1.4 million. Beer was increased in 1968 again in November by two pence and the yield was expected to be £1.1 million. The total, therefore, in 1968 was £2.5 million. The actual total was £3.74 million. By increasing the price of the pint this year by 1.3 new pence the Minister expects a yield of £1 million. Surely there is something wrong in his estimation here. There seems to be a lack of proportion. Who is codding whom? In 1964 the total income from beer and spirits was £21.6 million. To 31st March, 1971, the total income is just £60 million, practically three times as much. In 1964 the yield went up by £24.7 million; in 1965 it was £27.33 million; in 1966 it was £32.32 million; in 1967 it was £34.89 million; in 1968 it was £41.45 million; in 1969 it was £54.05 million and in 1970 it was £59.15 million. The estimated figure for 1971 is £60 million. How wrong has the Minister been in his calculation? In November, 1968, it went up 2d. The total estimated yield was £2.5 million; the actual receipts were £3.74 million. In April, 1968, foreign spirits went up 6d a glass; the Minister expected £0.35 million. All other spirits went up by 2d a glass; he expected £.4 million; that is £.75 million for spirits and £2.5 million for beer. That works out at £3.25 million. The actual receipts were £7.61 million.
In the 1969 Budget beer went up by 2d. The Minister expected a yield of £2.6 million; he got £7.92 million, almost five times more than he estimated. In spirits he estimated a yield of £1.33 million; he got £4.63 million. In fact, the total estimate for 1969 was £3.93 million, and the Minister got £12.55 million. That is some estimation. A child of two years of age could estimate better than that. In the 1970 Budget, he could not estimate the turnover tax but the increased receipts were £3 million. In the 1971 Budget he has put approximately 1.30p on drink. The Minister says he will get £1 million, but I would say he will get £3 million or £4 million; and spirits will be up £1 million more than he estimated.
We cannot believe what we hear in this House at all. The figures are picked out of the air. There is no proper check. Every year, taking cost price, the Minister has been wide of his estimate by a couple of hundred per cent. Some months ago a Minister from another Department said on Telefís Éireann that drink could not take any more tax; the licensed trade would charge so much and that would be it. In his Budget speech the Minister said the brewers and distillers had looked for half a new penny and he was giving them .45p. He said he would round it off to one new penny. His excuse for this was that you could not charge for a half pint. The way he put it the public would be led to believe that he was giving the brewers and the distillers something and the retail trade something. He did not say, however, that the retail price would be increased, as it had to be, because as the cost goes up you must charge at least the cost. He intimated that the licensed trade were getting something. While he may have given the people that impression let me say here and now that the trade got nothing whatsoever on beer or stout. They got one-seventh of a new penny on spirits. One-seventh of a new penny is not bad, but one-seventh of a new penny on a glass of brandy at 12s 6d or 64p approximately is hardly significant.
In putting a tax on beer the Minister says he will get £2 million. If he had left it alone, buoyancy would have given £3.5 million more. Other countries are running their tourist business on cheap drink and cheap holidays, but the Minister is killing the goose that lays the golden egg.
The licensed trade must face this taxation. While I am not looking for increases in prices we must consider the position of a company in this business who now pay 8 per cent more tax than heretofore. While everybody else gets an increase in income to meet increases in costs, companies engaged in this business have to face increases without adequate compensation. I mentioned earlier that a company to succeed must have a very good home market. Each item more they sell at home reduces the cost of the other items and makes them more competitive on the export market.
I wish to refer to one of the major breweries in these islands, with a worldwide reputation, which has contributed in no small measure to the expansion of this country and represents an asset in the region of £7 million or £8 million to our balance of payments —it could be more now; it was £7 million or £8 million a few years back. Due to economic pressures and the high taxes that have kept sales of their product down here to an extent—I know sales have increased marginally here each year but in other countries there have been greater increases— they are now to start another brewery but they are not looking at Ireland, they are looking at England. They will build it in England.
The tax on beer here is, I think, 5d more than in England or in the North of Ireland. This tax is killing a very good brewery or breweries in this country. I am thinking particularly of one that has always been here. The Government are taking the cream of all the work of this brewery or these breweries and using it in some bad industries. They are taking it from a good industry from the point of view of balance of payments and of employment and from people who give a great deal in the way of charity, sponsoring races and things like that. The Government are taking the cream and the licensed trade and the breweries have ended up as unpaid tax collecting agencies for the State.
Farming is our main industry; tourism is our second most important industry and the drink trade is the third. Farming and tourism are subsidised. The drink trade is penalised. I am speaking for the breweries, not for the licensed trade. I heard today that we are to give another grant to an industry in Donegal. That industry was given something like £100,000. It failed. Another company took it over and got another £75,000 or £100,000. It failed, and today it is in trouble again. It is a worldwide company. A subsidiary of Lever Brothers had it for a period and they failed. I hope this company will prove viable and I hope the Government are correct. There is no good in giving money today if a company is liable to go broke in two years time. To hammer a business that makes a lot of money for this country in order to help industries like this is a disgrace.
Tax on drink and tobacco is almost paying the Civil Service. Perhaps some road tax is added in. There will be £65 million collected on drink next year. Since 1964 there have been 13 changes in the price of drink; 88 per cent of the increases have gone directly to the Government with nothing for anybody else. Ninety per cent of all increases since 1964 up to the introduction of decimalisation went to the Exchequer. Up to date, the Government took approximately 1s., the brewers got 2.47d and the retail trade got 4.239d, or the Government got 4.8 new pence, the brewers one new penny and the retail trade 1.78 pence. The brewers and the retail trade have had to pay somewhere in the region of a 50 per cent increase in wages since 1964, with much shorter hours, that is £14 to £22 approximately a week with shorter hours.
The duty collected by the Government on stout, taking Dublin prices, is 1s 9d whereas in 1964 it was 8.69 old pence, on beer it is 1s 7½d, on Irish whiskey it is 3s 9d—it was 2s 1d approximately in 1964—on brandy it is now 5s, it was 2s 1d in 1964.
Our priorities are completely wrong. The Minister did say that he will have to look at taxation again. Any business person who would take money from a good business and put it into a risky one would be stupid. This is what we are doing at the moment. All one has to do is to be a member of Fianna Fáil and he can come along and say he has a client who wants to start a factory that will give employment to 200 people. He opens with two or three people, gets a Government grant and then goes broke.
Having regard to the rate of inflation in the last few years I cannot see anybody saving. I would like to see people saving. We are told we need £600 million or £800 million per annum invested up to 1980 for full employment. This is a Government statement so you cannot believe it anyway but it has been made. Who will save having regard to the rate of inflation we have? A person would be better off buying a suit, buying a house or buying a piece of land than saving. We are now paying on borrowed money over £100 million. That is a little less than one-fifth of our Budget. No proper business would borrow at that rate.
If the Taoiseach calls an election many Ministers will lose their jobs and many Deputies on the hind tit will go. That is why they are staying in. The only way we can get rid of some of that Government, if not all of them, is to have a general election.
