Léim ar aghaidh chuig an bpríomhábhar

Seanad Éireann díospóireacht -
Wednesday, 20 Jul 1938

Vol. 21 No. 8

Finance Bill, 1938 (Certified Money Bill)—Second Stage.

Question proposed: "That the Bill be now read a Second Time."

I do not know whether the House has studied the Bill which has been circulated and has been passed by the Dáil, put perhaps a brief reference to the purposes and provisions of the several sections might not be inappropriate. Section 1 is the usual section which fixes the rates of income-tax and surtax for the current year. Section 2 relates to income settled on children and provides for exemption from Section 2 of the Finance Act, 1937, under certain conditions, in cases where the child is over 16 years and is permanently incapacitated. It will be remembered that the section of the Finance Act to which I have referred related to cases of a settlement made upon children. Section 3 brings up to date the existing legislation for exempting from income-tax certain allowances payable to relatives of persons killed in the Rising of 1916. Section 4 brings up to date the existing legislation for exempting from income-tax wounds and disabilities pensions and gratuities granted under the Army Pensions Acts. Section 5 provides for the confirmation and continuance of the practice in force for many years relating to the deduction of income tax from foreign dividends, interest, etc., by bankers and other persons concerned.

Section 6 provides for the assessment of income-tax where the owner of a security sells or transfers the right to receive interest payable in respect of the security without transferring the security itself. Section 7 provides for the assessment to income-tax of income arising where a foreign Government, instead of meeting interest due on a coupon on the due date, gives the holder of the coupon a funding bond. Sections 8 to 14, that is to say, Part II of the Bill, form a series of provisions the effect of which, broadly, will be that in so far as income which accrues to the executors of an estate of a deceased person is in fact paid to the life tenant, residuary legatee, etc., it shall be treated for the purpose of income-tax and surtax as the income of the person to whom it is paid.

Section 15 is a general section increasing certain existing duties and imposing some new ones (as set out in the First Schedule to the Act), with preferential rates for Commonwealth products and with a licensing provision in some cases. I may say that the effect of item 9 in the Schedule is to permit the importation of rice meal free of duty for manufacturing animal feeding stuffs. Section 16 increases the duty on certain articles of iron or steel and is for the purpose of affording protection to a certain new industry which has been established.

Section 17 exempts fire engines and trailers thereto from customs duties. Section 18 exempts from customs duties articles designed for blind persons and imported in the circumstances set out in the section. Section 19 amends certain existing duties. Extension of the scope of existing duties, or increases in existing duties, are made for protective purposes at reference Nos. 3, 8, 9, 10 and 11 of the Second Schedule.

The remaining reference numbers provide for exemptions or concessions.

Section 20 provides for the termination of certain customs duties. Section 21 doubles the rate of excise duty on licences taken out by hawkers on or after the 1st April, 1939. Section 22 provides for exemptions from entertainments tax in competitions promoted by the Irish Amateur Billiards Association, the Irish Chess Union, the Irish Squash Racquets Association, and such like bodies. It also provides for exemptions in respect of air displays, gymkhanas, motor racing and motor boat racing.

Section 23 provides for the payment of compensation bounty on portions of the 1934 and subsequent crops of homegrown tobacco allocated by order of the appropriate Minister to manufacturers and which subsequently had to be destroyed as unworkable. Section 24 merely extends from one year to three years the period during which an officer of customs and excise may demand the production of documents relating to the importation of goods.

Experience has shown that the existing time limit is too short in certain cases. Section 25 enables the Revenue Commissioners to estimate the value of an imported article for purposes other than the amount of duty payable thereon. Section 26 is intended to clarify the position and to provide for the levying of estate duty where a person who has a life interest in the residue of the estate of a deceased person dies before completion of the administration of the estate. Section 27 provides for exemption from estate duty of an inter vivos gift of movable property abroad made within three years of the death of the donor if the gift is made in consideration of marriage, or is proved to have been part of the normal expenditure of the deceased or does not exceed £100 in value. Section 28 is intended to defeat a device suggested by a writer in a legal journal for avoiding payment of estate duty in connection with settled property. Section 29 continues the exemption from Corporation Profits Tax already provided for the Agricultural Credit Corporation and railway companies. Section 30 defines “Ireland” and “Irish” in accordance with the terms of Article 3 of the Constitution. Sections 31 and 32 are the usual sections relating to the care and management of taxes and duties, the short title, construction and commencement of income-tax and surtax.

Mr. Hayes

As I said when discussing the question of giving the Minister all stages of these Bills to-day, and as Senator Douglas said subsequently, since the Minister introduced the financial resolutions which began this Finance Bill, his policy has, in fact, been approved. A few general points may, however, be made in the expectation of some change in the Minister's policy. There have been many changes in the Minister's policy in the last five or six years, but it has been consistent at least in one thing—that he has regularly increased our expenditure and steadily kept to a higher and still higher level of taxation. We have had many changes made, including the one alluded to in Section 30 of this Bill, where we find ourselves in the melancholy position that we have to define "Ireland." One of the Government's changes of our Constitution has put the ordinary primary teacher in the position that he cannot get an answer to a simple question in geography in either the Irish or the English language. No teacher and no school-going child in the Twenty-Six Counties can answer the question: An oileán Eire—Is Ireland an island? In order to answer that question he would be forced to have regard to constitutional law and practice, and to add a certain amount of history which it is in the Minister's interest to conceal. The Minister, as I have said, has been consistent in raising expenditure, in increasing our Estimates and in increasing our taxation. In that regard, it is very difficult, even with the two Bills we have before us to-day —the Finance Bill, which imposes taxation, and the Appropriation Bill, which shows how the money is to be spent—to get a proper picture of what this country pays in taxation. In one capacity—that of taxpayer—one pays certain taxes. In the capacity of ratepayer or tenant of a house, one pays other taxes which have been substantially raised in many ways by Government policy. In one's capacity as consumer one has to pay what are really concealed taxes, to enable the Government to carry out certain schemes.

It will eventually be borne in on the people of this country that the taxpayer, the ratepayer and the consumer are all one and the same person and that taxation in a country of this kind cannot be confined merely to the rich but must, eventually, and in the gravest part of its burden, filter down to the worker and to the poor. Government policy has increased not only taxation but also rates and it has also raised the cost of certain articles for the carrying out of Government schemes. It seems now that a policy which involves high tariffs—which are still further increased in this Bill in respect of certain articles—and, at the same time, high taxation, cannot possibly continue if we are to have a reasonable standard of living because if we are to continue high tariffs for the purpose of enabling industries to be established here, then, at least, we might expect that taxation, independent of tariffs, would not be increased. The policy has been to give us high tariffs, to increase taxes other than tariffs and not to allow us the benefit of certain articles which, if imported free of duty, could be sold at cheap rate.

That policy of high tariffs and high taxes has led to many cases of profiteering and to considerable industrial unrest. It is difficult for a person living on a fixed weekly wage or monthly salary to escape the impression—whether it is correct or not, the impression is widespread—that the result of a very rapidly executed tariff policy has been to line certain people's pockets at the expense of the ordinary consumer. I happen to know, and to be satisfied, that a great many of the people who put their money into Irish industries have not got upon that money an extravagant return but certain people have actually been compelled by Government policy to take an extravagant return upon their money. While we have high tariffs, high taxation, high rates and high costs, we cannot but have a demand for higher wages. If the cost of living goes up, there is bound to be an effort—that effort can be made only by persons in sheltered industries—to bring wages up to the cost of living. If money buys less, constant demands will be made to get wages to catch up on the cost of living and we shall have a vicious circle which will increase the cost of production for the manufacturer and prevent our industries from getting any kind of export market which would benefit them to any degree. In the absence of that export market, many of these industries cannot possibly reach the point to which the Minister for Industry and Commerce has quite recently been alluding—the point at which they can turn out a good article at a reasonable price. If our expenditure on national services be high and if our taxation be high, then our costs of production are bound to be high, and our opportunities of getting into an export market correspondingly reduced. That is a situation which the Minister himself, in much more extravagant language than I have permitted myself to use, was once wont to point out to the Dáil. Many a time and oft have I heard him speak of a burden which the people were unable to bear when that burden was much lower than it is at the present moment. Only a few weeks ago, he was renewing his promises to reduce taxation. Now that the economic war, which gave him an excuse for everything, no longer continues and that he has a majority in the other House which enables him to do anything he pleases and a majority here which enables him to do more than he pleases, perhaps he would tell us what his plans are for reducing Government expenditure and taxation and thus allowing the industrial policy which he and his colleagues are fostering to have a reasonable chance of success.

As Senator Milroy was anxious to have an opportunity of indicating to the House and to the Minister the way in which he differed from the Minister on the policy which underlies his whole scheme of taxation, so am I. As Senator Hayes has pointed out, you cannot think of the spending of the money which the Minister collects without thinking of the collection of it and of the people from whom it is collected. In my view the whole philosophy behind the Minister's policy is fundamentally unsound, from the national point of view, and there is grave necessity for the Minister and his colleagues in the Cabinet to take stock of the position as it is and try to get a picture of the fruits of this policy if it be continued for a few more years as it has been operated for the past five or six years. I do not desire to be critical merely for the sake of being critical but rather for the purpose of pointing out where, in my view, a change ought to be made. Along the lines on which the Minister is proceeding, I suggest that the sources of revenue will, in a short time, dry up. If that be so, we shall reach a position in a few years when we shall have the same demands for expenditure on the administration while the money necessary will not be available. It has been the policy of the Government to carry through what, in their view, was an essential scheme for the industrialisation of the country. They seem to have the view that the country can have no future unless we are to have a great number of very small industries. They have preached from the hilltops that whatever risks are necessary to bring about that state of affairs should be taken. In my view that policy is not going to bring success from the point of view of establishing industries of stability. I believe that great and serious disappointments will come to those who have sponsored that scheme and to many people who have put their hopes and, perhaps, their money into making that policy operative. I used to believe in the policy of reviving Irish industries. I believe in it still, but I believe that you cannot bring any policy to even a comparative measure of success unless reason, wisdom and judgment are exercised in the carrying out of the scheme. My quarrel with the Ministry's way of doing things is that they preached this policy of industrialisation at a time when our main industry—agriculture—was in a parlous plight. If the Government spoke of establishing new industries at a time when we, farmers, were enjoying comparative prosperity and when we were able to carry the burdens incidental to the establishment of these industries, then the attitude of mind of a number of people might, perhaps, be somewhat different. I say further that the possibilities of success from the industrial point of view would have been 100 per cent. greater, and you would not have done this serious and, perhaps, lasting injury to agriculture which was done in the last few years. Our people have become so urban-minded that you cannot make them realise that agriculture is still our main industry and that there can be no prosperity or thriving conditions for other industries unless it is realised that agriculture is our main industry. Accordingly, the people have been flying away from the land into our towns and many of them, as I remember Deputy Gorey saying in the Dáil some years ago, are polishing the corners in the streets.

You have, too, the picture of the Minister for Industry and Commerce going down to open a new factory in Galway a couple of days ago, when just around the corner there were the closed doors of a very old and at one time a very prosperous factory in the same place, a factory which was, one might say, indigenous to the soil, with native workers trained and skilled in the industry. I wonder what the prospects of this new factory are going to be. Are we going to have another Minister for Industry and Commerce going down to open another new factory in a few years' time and trying to forget that just around the corner there are the closed doors of two factories that were once prosperous? The Galway Woollen Mills are closed to-day and the workers are unemployed. I went through that factory a few years ago and I saw a great many people working there. They were skilled and they were natives. Strangers had not then to be brought in to show them how to do their work. I point that out to indicate that the policy of industrialising this country is not at all as simple as it appears, and that there are difficulties to be overcome which cannot be overcome by keeping your eyes solely on the towns in which the industries are. You will have to cast your eyes across the hills to the country, and there you will find the reason why some of these factories are working half-time, some threatened with closing down, and even those that are going threatened, perhaps in a little while, with the fate that has overtaken quite a number of these new industries and some of the old. I suggest that that is so for the reason that conditions in rural Ireland, no matter how we try to paint the picture and no matter how the Minister may try to convince himself that things are well, are not well and are far from being well.

How do you judge what conditions are like? There are farmer Senators on both sides of this House, and if you ask a farmer Senator how his neighbour is getting on, the answer will be based on what the particular individual can see in his neighbour's fields and around his home. Here is the sort of picture we see to-day, taking the country as a whole. We have at present, according to the latest published figures of the Statistics Department for 1938, 500,000 fewer cattle than in 1931, 400,000 fewer pigs, 1,300,000 fewer sheep, and almost 10,000,000 fewer poultry than in 1931. On top of that you have the figures which Senator Johnston gave the other day. These are not my figures, but figures available to the Minister and his colleagues, and they are the standards by which one can judge whether there is poverty or progress and prosperity in the country. These figures indicate that the 650,000 persons engaged in agriculture 12 years ago were earning on an average £88 per annum, and that between 1932 and 1936 they were earning £60, based on the value of the productivity of our agricultural industry. I suggest that there is the answer as to why some of the old industries in this country are not flourishing, and there you are going to find the foundations on which new industries will be built. Unless the Minister and his colleagues can take their eyes from the towns, unless they can think less of the towns and more of the country, I have no hesitation in saying that the white elephants which the Minister in his day talked about will not be the ones he thought of and talked of then. It is not going to be any credit to us as a nation that either from amongst our own or from amongst the strangers that come to us anyone can point a finger at something which is to-day a white elephant. What, after all, is it but an indication of either incapacity or decadence if there are industries established here which we cannot keep going?

I do not believe that the policy which the Minister has been pursuing is a policy which will provide for him in the future revenue to spend at the rate at which he has been spending for the past five or six years. The farmer can spend money only when he has earning capacity. The six, seven or ten-cow man to-day may have been a 15 or 20-cow man two or three years ago, and there you have the picture of rural Ireland as it is, with fewer live stock of every kind and description. I am prepared to go further and say that there are fewer machines on about 90 per cent. of our holdings to-day than there were five or six years ago. I suggest that our soil is ever so much poorer than it was five or six years ago, and a great many of our homesteads have not the appearance of up-to-dateness, of thrift and of hope that was to be found amongst the rural population a couple of years ago. I know that one cannot commit a greater crime in these days than to attempt to point out things as we know them to be. The figures I have here are figures which are available to any member of this or the other House, and I have not any doubt that the Minister and his colleagues know that these are the facts. That being so, they ought to realise that the country is definitely poorer than it was when our farmers had more stock on their holdings.

I am not at this point going to get into a long discussion of the demands made in the name of the farmer for help and for relief. I do not propose, because it has been debated very fully in the other House, to talk at any length about the repeated demands of the people in the country for relief of taxation, and particularly relief of taxation on their holdings by way of derating, but I urge that the conditions are such for the farmers to-day, and have been such for the past five or six years, that you are taking, day after day, ever so much more away from them than their farms enable them to provide for them, as a just and equitable burden for them to carry. You have now instituted a condition of affairs over the past five or six years in which every shopkeeper and businessman in the country has been a collector of taxes for the Minister to a degree never before experienced in this country. You cannot consume anything to-day on which the Minister has not imposed a levy of some kind, and that has been going on at such a rate that we are definitely impoverishing our people. In rural Ireland particularly, one can see alarming signs of it. Every farmer knows what the conditions were during the economic war. It was my personal experience that farmers were taking their cattle to the fairs and selling three head to get the price of one, and the net result naturally was that we had fewer cattle. To-day, we are in the position that the capacity to produce, which is essential to our farmers in order to carry this burden of taxation, is not there. Beyond doubt, the farmer to-day must be given relief from some of the burdens which the Minister believes he can carry. I am convinced that if the farmer could carry these burdens he would not cry out against them. The Minister will ask me who is going to benefit if agricultural land is derated but the man with hundreds of acres, but I know no moral doctrine that would suggest that simply because it is going to benefit the 100- or 200-acre farmer, a relief from taxation should be denied the smaller farmer. I can assure the Minister—he may not know it and I do not think it would be possible for him to understand it—that 30/- or £2 to the small farmer in my county, which would enable him to provide fertilisers for his land in the spring of the year and which would be available to hundreds and thousands of them if they were relieved of rates, would do more to increase productivity than a great many of the factories of which the Minister has such hopes. I realise that the Minister has taken a decision on this, but I still have hopes that, as he grows older, he will grow wiser. He has now and again displayed flashes of reason and wisdom which give hope for the future. There were times when he seemed to be at one with his colleagues about the attitude towards the people across the water——

It is a pity the feeling is not mutual.

I will not interrupt the Senator when he comes to make his long speech. I have hopes yet that the Minister will display an attitude of mind towards the farmer's problems which, up to the present, I regret to say, he has not displayed. I confess that I do not believe it is due to a lack of desire on his part, but I suggest that until the Minister for Finance in this country comes to understand the problems of rural Ireland, he does not understand his Ireland at all. Perhaps it is difficult for one brought up amongst small farmers to imagine how, at his time of life, the Minister could be got to understand what the life of the 15 or 20 acre farmer on bad land is like, or what his problems are with his two, three or four cows, what his problems are when perhaps he has lost one or two of these, and he has no credit in the banks or anywhere else to replace the stock he has lost, what his problem is when he comes to till his acre or two in spring, when he is not able to supply the nitrogenous fertilisers that are necessary to enable him to till the extra half acre of ground, the half-acre of potatoes or the half-acre of corn which would make such an immense difference for the whole country if we could have every small farmer having it. He cannot have that extra half-acre because the land is short of the stock that it could carry. The land is becoming impoverished because it has not the fertilisation from that stock which would enable it to produce a better crop and a heavier yield. That better crop and that heavier yield would again enable the man to feed more stock and, because he would have much more stock to sell, he could bear a heavier rate of taxation. He would have a better purchasing capacity so that the people in the towns would in turn benefit.

It is quite clear that the position of the small farmer, the medium-sized farmer, or the big farmer has not been considered by the Executive Council in the way that is essential if we are to have in this country that prosperous and progressive agricultural community which will enable the industrial policy of the Minister for Industry and Commerce to be carried to fruition. I suggest, Sir, that the conditions in agriculture, no matter how the Minister and his colleagues may attempt to brighten them, are serious and, indeed, grave. I am not suggesting that the conditions in agriculture in other countries are ever so much better. It is true that in America they have been very bad. It is true that in Germany the authorities recently have been driven to take the most extraordinary measures to try to better the conditions of the people on the land, to encourage them to settle down upon the land and to marry on it. Even in England people are considerably perturbed about conditions in the agricultural industry, but, to us here in Ireland, agriculture is of much more importance than it is to countries like America, Germany or Britain. I was urging in this House last week that the position of our farmers and their whole future demanded an examination for the problems of agriculture which has not been given to them. I confess that, with one or two exceptions, I did not seem to get much sympathy or co-operation from the Senators on my right.

Or on the left.

Their attitude generally is that things are all right. I suggest that they are far from being all right. The first line of thought, apparently, is that, now that the British market has been restored to us, the farmer will manage. Somebody said that all you have got to do is to leave the farmer alone. The trouble is that you did not leave the farmer alone when he was comparatively well-off.

A Senator

When was that?

Somebody says "question." There is ample evidence from the Minister's own statistics whether the farmer was better off six or seven years ago than he is now. I do not want to be understood as suggesting that in considering this problem the question we have to decide is whether he was better off six or seven years ago than he is now. I am pointing out that, according to the knowledge we in the country have, the farmer is definitely badly off, that he has definitely fewer cattle, fewer sheep, fewer pigs and fewer poultry, and that accordingly, farmers' incomes are low. He has fewer machines and poorer machines; they are worn out. His land has also fallen into an impoverished condition. Much of the land is not producing more than 25 per cent. of what it is capable of producing. There would have been ways to discover whether that was or was not the position, if the House had given to the motion which I brought forward the consideration which I had expected for it and which, in justice, it was entitled to receive.

I do not know whether the Minister can be got to look into this situation. If the Minister puts it to me: "What is there to do for agriculture?" I reply that it is not enough to say: "There is the British market now, and the farmers can manage." It is no use pointing out a fair or a market to me, if I have nothing to sell at that fair or market, or if I have only five cattle to sell at that fair or market when I want the price of ten. The first thing which the Minister should do is to relieve the burden which the farmer has to carry on his land. His burden is too heavy. By imposing that burden on him, you are extracting capital from the farmer of which he and his family are in sore need. Having done that, I say the next step which the Minister ought to take is to provide the capital which is essential to-day to put the wheels of agriculture working again. Now, the Minister can do this much. There is no use in the Minister arguing that he cannot. There is no use in suggesting that the problem is insoluble. It is not. There is no use in suggesting that it is impossible to set up the machinery to do these things. It is not impossible.

The machinery is there and working. Let the Minister ask himself: Does agriculture want capital? If he comes to the conclusion that he does not know, let him have an examination of the situation carried out. I suggest that when that examination is complete he will definitely have made up his mind that agriculture wants capital and wants it very badly.

I suggested to the House last week, and I have no reason to think that my view then was incorrect, that there are at least 1,000,000 acres of land in this country which have hardly been worked at all for lack of capital, that there are perhaps millions of other acres which are only being half worked for want of capital, and that the total area in this country in the possession of our farmers is not producing, for want of capital, more than 60 per cent. of its total capacity.

A Senator


I do not want at this stage to be drawn into a discussion as to the merits of different types of farming. I know, of course, that the urban mind, as I said last week, always expresses itself by saying: "If the farmer would only plough his field." The urban-minded individual would like to stand on the ditch, and watch the farmer ploughing his field in the hope that when the crop was sown and reaped, he would be able to squeeze it out of the farmer at the lowest possible figure. He would not be in the least concerned if the farmer were unable, from the proceeds of his labour, to rear and educate his family on the urban standards. That is not the sort of foundation upon which you will build up a decent people here.

The Minister in his speech in the Dáil, when this question of credit for farmers was raised, used an argument which in my judgment, and from my experience, does not hold water. He used a number of arguments. In fact, they were so interesting that I should like to read them to the House. He tells us, in one place, that there is a danger that, if you start to provide capital for farmers at, say, 3 per cent., people who have capital of their own, perhaps invested, would borrow this money at 3 per cent. and use it on the Stock Exchange. That, practically, was his suggestion. He tells us in another place that it would be impossible for the Government to carry through any schemes to provide capital for the farmers. "In the first place," he says, "you would be in this position that the Government would have to find an enormous sum and suffer a very heavy continuous loss for a considerable number of years, a loss that I could not put a price on, but it might be £1,000,000 or more." He goes on further and says that "if money can be got easily, it will be wasted and misused so that when we talk about loans for farmers we might as well say gifts for farmers." His speech was the most striking I have read for a long time but, with a great deal of what the Minister said, I do not agree. I say that with all respect, from my experience for seven years of the work of the Agricultural Credit Corporation and from my experience of dealing with farmers.

It seems to me that the Minister's point of view was that when people demand that the Minister for Finance should make provision for credit for agriculture, what they contemplate is that you are going to set up a great machine in the Ministry of Finance to dole out credits to farmers. Nobody, who has considered the problem, suggests that at all. I suggest that the Minister was talking raméis when he spoke about the Government being asked to face a loss of £1,000,000. I cannot conceive any scheme where there is the remotest possibility of their losing any such sum of money. It is very difficult to say whether any money put into agriculture is lost. In one way perhaps, you might say that the money made available in credits, might not actually show a return in interest, from one point of view. On the other hand, very probably you would have a considerable increase in the revenue collected because of the putting into circulation of these moneys. I suggest that there is no difficulty or danger whatever if the Minister will give to the Agricultural Credit Corporation £1,000,000. I was looking at their balance sheet recently. I do not want to discuss the affairs of the Agricultural Credit Corporation here but, in mentioning this, I am not discussing anything that is not public property. Their last balance sheet indicated that they have given loans to 18,000 people and the average loan amounted to £88 or to approximately £90. The total amount distributed was £1,600,000. If an extra £1,000,000 were made available to-day, even if you were to make it available at 3 per cent. and borrow it at 5 per cent.—which you would not have to do—£40,000 or £50,000 would bridge the difference between the 3 per cent. which borrowers would pay you, and the amount which you would have to pay to the public who would provide the money. You would pass that money over to that body and let them handle it as they have been handling other moneys, wisely and well.

I know it will be said that there are a great many people who are not credit-worthy. When is a man credit-worthy? Of course if you are going to charge 6 per cent. for that money, a man will have to be in a much stronger position to pay that 6 per cent. than if it were advanced to him at 3 per cent. A farmer who is given a loan of 3 per cent. would make money when it would be impossible for him to make money if he were charged 6 per cent. Even though there are a number of people who are not credit-worthy, I urge upon the Minister very strongly that there are decent citizens, men of character as a whole, thousands of them, men who to-day, from one stroke of misfortune or another, have had their lands depleted of stock, or who, through illness or for other causes which we cannot discuss here, find themselves without the necessary capital to stock their lands and put them in working order. I am not suggesting the Minister should in all cases take the risk of advancing capital, but that he should favourably consider a case where there are decent men, decent citizens, who will justify themselves and who will bring up families of decent boys and girls to do the country's work. Instead of many of the children of these small farmers being able to find work on their parents' land to-day, they are turning into the towns. They are attracted to the towns to get a few shillings on the dole, or they have to look for work on the roads. They are turning in any direction but to the land, which should be the natural place for them to find work.

There may be a number of people who are not credit-worthy. You will, of course, find in every grade of society a number of people who will not come up to one's standard of perfection; but the great bulk of our people on the land to-day, who want credit, cannot go on with that work unless they get credit. I would like to put this question to the Minister for Finance: Why does he differentiate between the people who are on the land to-day, and whose fathers were on it, and those others whom he talks about putting on new land? The Minister, in the speech to which I have already referred, said that the Government were going to spend approximately £7,750,000 to complete the provision of economic holdings in the country, and that of this capital sum no less than £3,750,000 was expected to fall as a direct responsibility on the Exchequer. I would like to know what is the moral justification, apart from any other question, which the Minister for Finance has to advance for undertaking the liability of providing £3,750,000 to provide new farms for new people, while at the moment we have hundreds of thousands of people on old farms who are without the necessary capital to work the land that they, and those who went before them, are in possession of. We learn that some of these new holdings are going to cost the State £900 each; others are going to cost approximately £700, while we have another class of holding which is being fitted up for people at a cost of £320.

The State is doing all that for one group of people, but I ask the House to think of the position of the others— those for whom I have been speaking. I cannot understand the attitude of the Government on this. Surely, it is not a wise or a good policy to break up holdings and start new men working on them—holdings that were being worked before the State intervened to break them up at a cost of vast sums of money to the taxpayers of the country; while across the fence there are holdings that are only half equipped for the proper working of which the Government say that no money can be found. I suggest that all those who are getting new holdings are not going to make a success of them. What about the people who do not succeed in getting land? Everyone who has had experience of the breaking up of estates knows well how narrow is the margin which decides whether I shall get a holding on one of these estates, or whether Senator Quirke shall get it. We all know of the grave dissatisfaction that exists as to whether the great benefit of getting a holding is to go to one man and be denied to another.

I put it to the Minister that he has a very grave and a very serious problem to consider. I cannot see anybody providing this credit, which is necessary for agriculture, other than the Government. The banks will not do it. If the Minister refuses to do it, I do not think it is the responsibility of the banks to do it. It is true, of course, that the banks have done a great deal in that respect in the past. In addition to this sort of credit you have of course a number of frozen loans in respect of farms. To-day you have farmers who may be described as distributed individuals. Some of them are a cause of social disturbance and unrest. What you should do is to try to make these men happy, progressive, intelligent citizens. In my opinion the only person who can do that is the Minister for Finance. I believe and am convinced that it is his responsibility.

With regard to the establishment of the Agricultural Credit Corporation, I myself was not satisfied that the method adopted from the beginning of financing it was the best that could be adopted to meet the situation. Nevertheless, in those days money was dearer than it is to-day. The Government have at their disposal all the experience gained since that institution was set up to work upon. I noticed the other day that the late Secretary of the Agricultural Credit Corporation, speaking at a social conference at Clongowes Wood College, addressed himself to this subject and pointed out how essential it is to make credit easily available for farmers. I know, of course, that the Minister for Agriculture argued that if you do that you are going to appreciate the value of stock out of all proportion to their real value. I do not agree with that. If such a scheme is to be operated it can only be operated by one body, and it will only be able to get into circulation a limited amount of money week after week. The circulation of that amount of money will not have such an effect on the fairs and markets of the country as to appreciate the value of stock beyond what is reasonably fair. On that point, I would remind the Minister that the Government, when operating its heifer scheme during the progress of the economic war, did so in such a way as to put the value of stock beyond their true value. The Government, under that scheme, provided a certain amount of money, and held sales at appointed places. The men who wanted cattle went to those places and bid for them, one against the other. If ever there was an appreciation of the value of stock beyond what was reasonable, that scheme did it more than any other. It certainly did it in a way that the ordinary administrative work of the Agricultural Credit Corporation could never do it, even though to-morrow the Government were to make available the sum of £1,000,000 for the use and benefit of farmers.

I strongly urge on the Minister that, come what may, this problem that I have been dealing with has got to be faced. There is no use in expecting that those who are working on the land to-day can bear the present burden of taxation unless they can produce and sell. They are not able to do that to-day because the facilities necessary for production are not available to them to the extent necessary.

The Minister for Finance is the only one who can provide those facilities. In fact, there is no other organisation in the country to do it. It may not be possible to make the Minister appreciate how urgent and essential those facilities are, but I want to tell him that every thoughtful man in the country to-day is convinced of the necessity of his doing this work.

People on both sides in politics and people who are not in politics have been urging the necessity for this during the past two years. It can be truthfully said that if the Ministry had been looking ahead and had provided these credits when the economic war was on, they could have stocked every unstocked farm in the country. They could have done that during the days when we could not send our cattle to England. By the adoption of that policy they could have stocked every unstocked farm in the country; they could have appreciated the value of the stock belonging to the men who had them and could not sell them. That is the policy that they should have adopted then, because they knew that some day the economic war would have to be settled. The Minister for Finance himself knew that, because many a time he gave an indication of the thoughts that were occupying him in those days. If the Minister and his colleagues on the Executive Council had been looking ahead in those days they would have made credits available. They would have taken the surplus cattle of the country off the markets and put them on to the unstocked farms, so that when the economic war was settled—and they knew it would have to be settled some day—the country would be ready to go ahead with 100 per cent. production. As I have said, there is no one that the farmers of the country have to look to for these credits but the Minister for Finance. Quite a number of the supporters of the Government Party are amongst those who are in a depressed condition to-day. Every section in the agricultural community is feeling the necessity for these credits. It is a social necessity, apart from being a national duty, for the Government to bring relief and hope to all those people. The payment of the land annuities and the experience that has been gained from the operations of the Act setting up the Agricultural Credit Corporation must convince everyone that if the farmer gets a decent chance he will honour his bond.

I rise for the purpose of dealing with some of the remarks made by Senator Baxter in reference to the Galway Hat Factory and the Galway Woollen Mills. Personally I do not think this is the proper place to have a discussion as to the affairs of private business concerns. As a representative of Galway I am glad to be able to say that the Minister for Industry and Commerce attended there on Monday and opened a new hat factory. I do not think any public representative should criticise the Minister for doing so. I feel confident that the girls and women of Ireland will prove patriotic enough to wear the products of this new industry which has been established despite the opposition and the sneers of some people.

The Senator also referred to the Galway Woollen Mills and said that this old industry was closing down. That is not a fact. It has not closed down, but at the moment, I regret to say, it is not in very good circumstances. If it should happen to close down, this would not be the first time for it to do so. It was closed down when the late Government was in office, and if it closes now it is not because of the policy of the present Government. As Senators well know, the policy of the present Government is to help industry. This is a very old industry in Galway, but the machinery there is not as up-to-date as in other woollen mills. The position in that respect will probably be rectified. I feel confident that the people connected with it are quite capable of carrying it on. I do not think its present position should be made a subject of criticism in this House by any Senator.

I am not very well acquainted with Parliamentary procedure, but I understood that we were to discuss the Second Reading of the Finance Bill which at the moment is before the House. Instead of that, we have had to listen for the third time to the same speech made by Senator Baxter.

For the fourth time.

The Senator, in dealing for the fourth time with the plight of the farmers, evaded the one big issue on this matter. He forgot to mention the fact that when he and those associated with him were the Government of the country they paid £5,000,000 a year of the farmers' money over to England, even though, according to the Senator, the position of the farmers was as bad in 1931 as it is to-day. Senator Hayes in his speech also alluded to the Government's policy. He said that it was having the effect of putting the workers in a very sheltered position, and that, therefore, we were having a number of strikes and things like that.

Mr. Hayes

I did not say that. Surely, I could not say that.

We should be proud of being able to put the workers of the country in a sheltered position so that they can demand and get their just rights. Senator Baxter also alluded to the urban mind. Well, any Senator with commonsense knows that a farmer rearing a large family is not in the best of circumstances and cannot afford to keep the whole family on the land particularly when Senator Baxter objects to the dividing up of large farms. The only place that children can look to, then, is to the towns or cities if they do not go across the water. I cannot see any objection to those people getting employment in our towns and cities if they can. He also objected to the breaking up of the land.

I did not object to that at all.

His main theme seems to be that we must still continue to be a country of grass lands and large farms. How on earth are we going to maintain our population and keep them at home if we are not going to try to put them on the land?

A point was made here about Galway Woollen Mills and, going back to the Bill, there is another suggestion I would like to make to the Minister. He has exempted from entertainments duty certain entertainments which were liable to tax, and I would press for a further exemption for ceilidhe dancing. I think that the amount of revenue that he would lose by this exemption would not be very important, but the concession would greatly increase dancing throughout the country, particularly Irish dancing.

Before making certain remarks about the Budget which raises on the Finance Bill, I should like to say something with regard to Senator Baxter's proposal of finance for farmers who have suffered in recent years, and whose farms are under-stocked. I think that matter has to be approached with great caution. Personally, I am not in favour of any new authority to deal with any loans that may be made in the future. I think the Agricultural Credit Corporation is quite adequate for the purpose, but Senator Baxter referred to the work the banks had done in the past to finance farmers. I can assure him that that work would have been carried on to a much greater extent and finance would be much more readily available in the future if it was not for the unfortunate fact—as Senator Baxter knows quite well—that a certain number of farmers, a minority I grant you, are anxious to take advantage of every opportunity to avoid meeting their obligations.

I must say that most farmers do make an effort to meet their debts when they are due, but a substantial minority do take advantage of the position to avoid their debts and to refuse to allow their farms to be put up for sale, and generally to frustrate their creditors. I think that anybody who finances land has to have that fact in view and to take precautions to see that those dishonest practices are not allowed to prevail, or are reduced to the smallest extent possible, and where people are hesitating to finance land it is because of the fact that certain of these debators may—I do not hesitate to say so—take dishonest means to evade their obligations.

With regard to the Budget, the Minister has referred at some length to this debatable question of the surplus, and in doing so, he has contrasted the British method of budgeting with our own, and he has suggested that if misrepresentation continues, it might be necessary to adopt the British system of borrowing and of clearing out altogether from the Budget certain items which are to be made the subject of borrowing. I have always felt myself that borrowing should in no way form part of the Budget—that it should be taken right out of it—and I still feel that that would be the better method, and I rather hope the Minister in the course of time may be persuaded to adopt the practice which might make the position clearer, and avoid misrepresentation which I cannot believe is malign, but due simply to honest misunderstanding.

I would like to congratulate the Minister on the tables he has issued this year. He has issued a number of explanatory tables which clarify the position very much, and I hope these will be continued in the future. This question of "What is a surplus?" is more or less an academic question with which I do not want to weary the House, but it is bound up in the question "What is legitimate borrowing?" and I do feel disposed to question the legitimacy of borrowing on two items. One item is the money for employment schemes—relief works. It seems to me that all relief works should be met out of revenue, and not made a capital charge. The other question is that of borrowing for any portion of the bounties. That is a thing now largely of the past, but the proceedings arose, as we know, out of the annuity dispute. Large sums of money were withheld in the course of that annuity dispute, and in sound finance those moneys should have been allocated to bounties instead of borrowing for these bounties.

Really, the question of the actuality of the surplus is determined by the legitimacy of the borrowing. The Minister will agree that there is room for, at least, differences of opinion on that matter. But there is a new feature in the Budget which I should like the Minister to explain. He has carried forward a sum, £450,000, from last year's surplus, towards meeting the cost of certain bounties. I think I am right in saying that it is the first time that has been done. It is new, I submit, in budgetary finance; the whole basis of the Public Accounts every year is self contained and it never has been the practice in any British Budget—I have to use them because we have followed on the British tradition—nor has it been the practice in any previous Free State or Éire Budget, to carry forward any surplus in relief of expenditure for the following year.

Any surplus there may be is used either to reduce debt or it goes to increase the sinking fund. In our case, there is no cash surplus because a very large proportion of the Budget expenditure is met from borrowing so that there is no actual cash surplus. I fail to understand how the Minister can in practice adopt the artificial method by which he is enabled to carry forward an item of £450,000 not represented in surplus cash, from one year into another.

The Minister refers in his speech to the value of the rateable assessments and he suggested, especially in urban cases, that the assessments are far below the actual value. In certain classes of urban property he may be right, but a very large proportion of the rateable assessments are on normal values and I do question very much whether the rateable value of rural property is less than its market value.

You see even to-day farms put up and unsaleable and it is difficult to realise rural values readily at all. I do not think it is correct for the Minister to suggest that the assessments on rural properties are below their market value. Of course, we know that the market value of rural land is very much affected by the practice of taking land arbitrarily by the Land Commission. The Minister is aware that it is a factor which seriously depreciates the market value of agricultural land.

I wish also to question whether the Minister is entitled to take in certain assets at their nominal value in the computation of our actual debt. Some of them he is unquestionably entitled to take in, for instance, expenditure on the electricity undertaking which is an earning business, but it is very questionable if he is entitled to take in the shares of the Industrial Credit Corporation at their par value.

No dividend has yet been paid on them. It is also questionable whether he is entitled to take in money spent on the improvement of estates which, I submit, is not directly represented by revenue payments by the occupiers; it is only an indirect value. If the Minister will tell me that the money is supported by definite charges I shall be glad to know it but my understanding is that it is not. That money goes for the improvement of estates and it really bears no direct relation to the rents that are paid by the occupiers.

I should like the Minister also, if he could, to be rather more explicit in respect of the repayment to the Guarantee Fund. In Table IV there is shown as an asset, £3,810,000—Repayments to Guarantee Fund. Does that represent the arrears of annuities that were funded, and only those that were funded, or does it represent sums repaid to the Guarantee Fund in respect of annuities that were completely discharged as we know? Certain annuities, I think, for the previous three years were funded, those over three years or over a certain number of years were written off, and I would like to know whether this capital sum represents any charge in respect of the moneys advanced to wipe out arrears of annuities?

Both in the British finance and here in Éire there has been considerable concern lately on this question of tax avoidance, and I would suggest that there has also been a great deal of misunderstanding. Nobody could possibly favour any method which enables a person by company devices or by getting payments made abroad or by artifices of various kinds to avoid payment of super-tax or income-tax on moneys he does receive, but I am afraid that in some cases tax avoidance has a very different aspect, and I refer especially to the case of the owner of rural properties, what we might call estates. Once he was a landlord, but he is no longer that in the ordinary sense. He owns certain demesne land, woodland, and in those cases the Minister knows—he has had figures before him—that the actual money the owner has to spend is never the half of his income. It is generally between 30 and 40 per cent. of his actual income, and yet the method of taxation is such and the allowance is so small that he is practically taxed on the whole of his assessable income, on the whole of the value of his property.

I consider that person has a very legitimate grievance, because under our present system he is asked to pay tax on money he never receives. Perhaps he receives only 40 per cent. of the total amount for which he is not only taxed but super-taxed, and in those cases a person's conscience will not stop him from taking advantage of any legal methods he can, quite openly, to avoid tax. The Government has made the lot of those people infinitely hard. Mr. Lloyd George recognised the inequalities of the position when he made a very substantial allowance to owners of that class of property—he allowed them to set off the whole of their arrears against their rents. The Minister will excuse my treading this old familiar ground, but I do say that there is a basic grievance, and so long as that remains it will have to be ventilated. The Minister took away that, and he abolished even allowances for the costs of collection and insurances. I remember I was standing here and the Minister was where he is now, and when I pressed him about the cost of collection he said, "If we once admit the cost of collection on rents, we will have to admit the cost of collection on other forms of interest as well."

In fact, he pictured the position of an owner who collects rents and who has to do repairs, to keep an office, with all the incidental expenses of running a property, as the same as that of a person who simply turns his dividends into a bank and has no expense whatever. There is that basic grievance and, so long as that continues, tax will be pursued and we will have a continual battle between the revenue officers and the legal advisers of those who think they are hardly treated.

I hope that in these remarks the Minister will not suggest that I, in any way, imply that the credit of the country is not good or that, on the whole, our financial methods are not sound. But, I feel that it is necessary to advance these criticisms and, at the same time, to assert that the Budget is sound and that the taxpayer is very pleased that he was not asked to pay any more taxes. The credit of the country, as shown by the issue of the recent Loan, is eminently sound.

Mr. Kennedy

I am in thorough sympathy with Senator Baxter. It is admitted, I think, by all Senators that something must be done for the farming community. They are the wounded soldiers of the battle which went on for six years and I am sure you do not want to leave them in the trenches all the time. There is one matter which I should like to bring before the House in connection with a farmer in County Wicklow of whom I happen to be a neighbour. This man's few milch cows were seized last week. I understand that what is known as the "Flying Squad" had been there on a few occasions. Luckily the matter has been settled, but it has been settled in this way—that this man had to go into Wicklow and mortgage his growing crops and, in fact, everything he had in order to meet this annuity charge. I think that they acted rightly and in the interests of everybody in not taking away his cattle, because they would not be worth what it would cost to shift them to Northern Ireland, as other cattle were shifted a short time ago.

There is also the case of a man who had 15 cattle seized four or five miles from that place. I have heard Senators on the Opposition Benches say that there are fine prices for cattle now. Ten of these cattle were in-calf heifers and five of them were cows and the whole of them were sold for £60, or, in other words, £4 each to go across the Border. Of course, the Government had to supply lorries and to bring these gentlemen from the North to buy these cattle. Senators, I am sure, will agree that something must be done, and I think the best thing to do is to call a truce and either suspend or dismiss these men until you have done something to help the farmers to restock their lands. What is the good of taking a man's few cattle and selling them for £4 apiece? Is it any good to the Government or to anybody? I say that we should call a truce until some settlement is made and you have done something to enable these people to restock their lands and to carry on so that they can pay their rates, annuities, etc. It is no use depleting a farm of stock and not leaving a four-footed beast on the place. I know you are all anxious that something should be done and, in the meantime, I say you should call a truce, as that, in my opinion, is the best thing to do.

There are one or two matters I should be obliged if the Minister would deal with when replying. They can be raised on the Committee Stage again if necessary. There are always a number of items in a Finance Bill which do not appear in the Budget statement. The Minister generally refers to them in a sentence or two as clarifying something or other. Sometimes at a later date one finds that it means, certainly so far as certain individuals are concerned, very much more than clarification—an additional liability. I should like the Minister to deal with Section 5, particularly the end of it, which provides that Schedules C and D shall be deemed to have always had effect subject to the provisions of the section. Does that mean that the provisions here could be enforced if they were not carried out a few years ago and that an attempt will be made to adjust them? If so, it will lead to an unsatisfactory position.

In Section 6 you find the same position—that this section shall apply and have effect in relation to every year which began before the 6th April, 1938. That is, presumably, for all time, or at any rate it goes back as far as the establishment of the State. When we come to Section 7 we find the same provision in sub-section (4). With regard to Section 7, it may be that it is due to my not fully understanding the effect of it, but it would seem to me from that section that if a person has bonds, say, in one of the South American countries, because these are the countries, to my own knowledge, where funding bonds have been issued to holders in place of a dividend, income-tax can be collected on the nominal value of the funding bonds. If not, what is to be the value? In a number of cases that I know of, funding bonds were issued and were immediately quoted at something like 80 per cent. and, at a later date, dropped considerably lower. It would seem to me as though the tax could be charged on the then market value even though actually the person who should have received the dividend is not anything like in the same position as if he had received the dividend. In the first place, he does not receive any money, he only receives a paper that promises to pay, in effect. That is all the funding bond is, and if the State should not succeed in making good its promise, he may never get anything. In the past in many cases those bonds dropped very considerably in value. I should like the Minister to make clear at what rate and on what the tax could be collected.

I should also like to know whether, under Section 7 (4), the Commissioners can go back, say, ten or fifteen years, and say: "We find that you received these funding bonds from Brazil and we now demand the income-tax." If so, I think that is unjust. They were not liable then, according to the law, and it was not a question of evasion or of some clarification, the word the Minister often uses. It seems to me to make people liable for income-tax on a paper income which they received ten or fifteen years ago, which would be unjust. Possibly I have misread it, but, on the face of it, that is what it looks like. I think it is not one of those things the Minister mentioned in his Budget speech or in his election address. It is the kind of thing which might be properly brought forward in order to get some clear statement from the Minister. Personally, I agree with Senator Sir John Keane with regard to what is called legal evasion of what everybody knew was the intention of an Act, but to make people liable now by an Act for a tax which they were not liable for ten years ago seems to me something which ought not to be agreed to willingly.

There are a couple of changes made in Sections 24 and 25 and I should like the Minister to explain what is the difference involved by these two changes. Section 24 involves the repeal of a section of the Revenue Act of 1909 and I presume the provisions, which deal with the power of the Revenue Commissioners to send an officer to inspect books and obtain documents, are being changed. On the face of it, without looking up the British Act, I was under the impression that we had very similar powers at present and that, apparently, there are some additional powers being taken. I should be glad if the Minister would tell us what they are.

Section 25 is a new definition of the value of goods for the purpose of customs. I presume it is a new definition, because it also repeals a section of a previous Act. There again I was under the impression that that was very largely the practice, though I am not sure, with regard to insurance. In my business it is not the practice to insure goods, certainly from Great Britain. Will the word "insurance" in Section 25 mean that not only freight and packing can be added to the price, but that insurance, if not effected, and not usually effected, could be added? I take it that it is not meant to mean that, but, on a strict reading of it, it would look to me as though it could be.

I should like to raise one point under the Bill with regard to people now resident abroad. Many of these people went away from this country because of income-tax liabilities and are still resident abroad. They are people with a certain amount of capital and it would be a great advantage to have them back. I think that there should be some special consideration with regard to them. We know that in years past there were inducements held out to people in every possible way to obstruct the operations of a foreign Government here and people were asked not to pay taxes. To my knowledge, there are people who from 1916 to 1923 did not pay income-tax deliberately because it was a matter of obstructing the people who were in power at the time. Very many of these people are abroad at present. I might point out to the Minister that the policy of the British Government with regard to income-tax previous to that period was to let sleeping dogs lie—a very wise policy in its way. Many people liable to income-tax got a sort of assessment but, when their allowance was disposed of, they were allowed off. Since then many of these people have been brought into liability and I know cases of really good people, who gave really fine national service, being almost driven from their own land at the present time. When so many things are being put right, and when there is general good-will abroad, would it be possible to reconsider the position of these people? The debate to-day has taken lines which I did not anticipate. The arguments would be interesting if they were in any way new. Somebody here said that Senator Baxter had delivered his speech for the third time. He has delivered that speech so often that I am quite certain he could now deliver it in his sleep.

Is it true?

It covered all the old trouble we had during the economic war. We were told, at that time, that in six months, eight months, or ten months we should be bankrupt. The Senator got up here to-day to repeat these things and tell us that if we went on as we are going we would be bound to be bankrupt in the near future. The Senator represents a county which distinguished itself in meeting its obligations in the height of the economic war. It distinguished itself in paying its annuities and its rates. It was at the head of the list, and it was one of the poorest counties in Ireland. The reason the farmers there were able to do that was because they had perfect loyalty to the Irish ideal and because it was a normal county where men worked for a living and did not sham. They are still prepared to do that. There are other counties—I am associated with one of them—where things were done in a big way and where we had this wonderful industry we hear so much about—the cattle industry. We were to sacrifice everything, even honour itself, for a market for that industry. I knew the circumstances, between 1927 and 1931, of these people. I knew them intimately, and I knew that they were on the verge of bankruptcy all that time. It was only a question of time until their bluff would be called. That is the reason we had this "blue war" and all the indignation we had during the economic war. I am sorry to have to refer to these things. I would not refer to them but that Deputy Baxter and his friends insist on doing so.

In the richest county of Ireland— Meath—the people were sunk up to their eyes in mortgages up to 1931, although they had the market of England open to them all that time and all the advantages which, they say, were denied them during the economic war. That is the reason you had the "blue war". That is the reason why people arrayed themselves in colours and came out in their thousands to try to crush the people with a Fascist movement, which meant that everything was to be sold for this alleged benefit of the British markets. I spoke of the bankruptcy which, we are being told, is before the farmer to-day. Senator Baxter does not speak for the farmer. The farmer stood by the national policy all through that economic war, no matter what it cost him. He has no hesitation in standing by it to-day. We have done the biggest thing we could possibly do by securing the home market to that farmer, and we have not exhausted the possibilities in that respect yet. We know that three-fourths of our wheat requirements have not yet been met. Along these lines, lies the hope of the farmer, and the farmer realises that. The political farmer is a different person, and he has to keep on repeating the things he has been saying for the past five or ten years lest he should look ridiculous. They had a policy in the late administration—a pronounced policy—to which the present Minister for Finance would not contribute. The last Minister for Finance contributed to it without a blush. He said that he had definitely made up his mind, after examining the whole circumstances, that the population of this country should never exceed 2,000,000——

Give us the date on which that statement was made?

You will find that in his speech.

Give us the reference.

I will when you require it.

We require it now.

I am not drawing on my imagination. I am saying deliberately that Mr. Blythe said it would be a mistake to expect this country to support any more than 2,000,000 of a population.

Give us the reference?

I will give it to you when you want it.

We want it now.

I cannot give it to you now. You can verify it.

Give us the date.

The present Minister for Finance will not say that——

And neither did the last Minister say it.

We were to proceed with the policy of exporting the bravest and best of our population for the purpose of proving the wisdom of the late Administration. That is what it amounts to. Because of the compromise they had made, they found it necessary to unsay all they had said and to deny the hopes they previously had. They had to commit themselves to this policy of saying that there was no Irish nation and should be no Irish nation, that there was no Irish people and should be no Irish people, that any surplus population we had we should get rid of as quickly as possible for the purpose of making this country a land with no other purpose than that of supplying England with her needs. What I have said will be admitted by the vocationally-elected members of this House who, I have no doubt, have forgotten all their political affiliations and simply want to deal with these things from the point of view of farmers. We have no doubt of the mind of the farmer on these matters. It was tested quite recently and you know the result. I do not want to go back on these things, but the mass of the people who voted in the recent election—the labourers and the farmers—gave a fairly convincing verdict on this question. The Minister can take courage to proceed in the most fearless way along the lines which he and his colleagues put before the country at the last election. They definitely told the people that they had to suffer and to forego advantages in order to carry through to success the policy which he and his colleagues put before them.

We had no end of a Jeremiad from Senator Baxter with regard to loans. The only people I know who are looking for loans are people who have been looking for loans since they were born, and who will be looking for them until they die. The Minister is quite right in discouraging that class of people from putting themselves deeper into the mire. Anybody who knows these people will bear out what I say. The policy of making it easy for these people to get credit has deluded them into the belief that they can live by pleading their wants and sacrifices. These are the people for whom Senator Baxter is mainly speaking. He is not speaking for the working farmer. He is independent of loans. I shall give an example. Recently, in the Meath County Council we had a debate on rates. We had a man there —a very able man—who owned 200 or 300 acres, and he said that there was no doubt that a stage had been reached when the farmer could not meet his obligations with regard to rates and annuities. He happened to be a freeholder, so that the annuities question did not affect him. As regards rates, he had all the advantages of a man working his holding, because he was a practical farmer. Following him, there was another man from a different side of the House. He said he had only 100 acres and he found it absolutely impossible to meet his obligations in respect of rent and rates. He quite agreed with his friend on the other side of the House that things were awfully bad. A third man got up. He said that, four years ago, he was given a farm—a very bad farm in a very bad area. I was able to verify that. The farm consisted of 25 acres. When he went there, he had one four-footed beast. He had then 14 four-footed beasts and he had his rates and annuities paid. That man had a wife and four children; he was living decently, and he told us he was putting money in the bank. I asked that man to give me the full facts and I would furnish them to the Press, which was so anxious to publish the truth. That is the case of a man with 25 acres prepared to work for his living, as against a man of 200 or 300 acres—a sham farmer—who is not able to make a living. I recommend Senator Baxter to get into touch with men of the type of that man with 25 acres. He lives in the Oldcastle district of Meath, and he told us that he made a decent living right through the economic war, when everything was against him, and was able to provide for the future.

He must have won the Sweep.

Some Senator spoke of cattle worth £4 a head. The fact is that the economic war was a blessing to the people who were the main parasites of the cattle industry—the people who buy the stores. In the first year these people put money in their pockets which they never expected to see and which they never saw before except during the Great War. I examined the accounts of a big grazier in Meath. It will be interesting to the Minister to know that the purpose of my examination was to prove that the farmer had lost. The account had been made out very well—not by me. I was called down because the account, instead of showing a loss, showed an immense profit—far above the poor law valuation—and the man was open to assessment as a cattle trader. He was in a terrible state of excitement, and I got a wire to go down and have a look at the account. I have to make a confession in the presence of the Minister. I said to this man: "Do not put in a farm-loss claim." Instead of making the amount represented by the poor law valuation, which is the statutory figure for a farm, this man had made five times as much in the second year of the economic war. These are facts and I can verify them. Despite all that, we have this talk by Senator Baxter of the distressed cattle trading farmers. There is no doubt that the ideal of most of the people who are represented here as farmers was to let this country be dominated by the bullock and to wipe out the people. Luckily this is changed. We have still an opportunity of dividing up the fertile land of Ireland in the interest of the Irish people and not in the interest of the bullocks. Irish bullocks are very fine, but the Irish people are much better and much more deserving. We have the lands of Meath, which have been reduced in their population from 125,000 to 60,000 in the last 50 or 60 years. I invite the Government to take these lands, which are in the hands of people who do not see them from one end of the year to the other, and to divide them amongst the people, and to put the man—such as the man from Oldcastle to whom I have referred—into possession of them. Even if he goes in with only one four-footed beast, he will wind up with 14 four-footed beasts, with his land cultivated, with his wife and family living comfortably, and with money to put in the bank. Let that be an encouragement to the Minister to proceed with his policy. I think we are under a deep obligation to him and his Government, and, please God, Ireland will proceed with that policy.

I think that, after the speech of Senator Condon, it is not necessary for me to devote very much attention to the main burden of Senator Baxter's remarks. I was asked by the Senator's colleague, Senator Michael Hayes, to tell the Seanad when I should be able to reduce taxation. My answer to that would be that I, and whoever else might occupy the position of Minister for Finance, would be able to reduce taxation as soon as responsible Senators, like Senator Baxter, refrained from delivering the sort of speech he delivered to day.

Can we take that as a bargain? It would be a cheap price for silence.

I would not like to deprive some Senators of their occupation in this Chamber. I remember reading a long time ago a novel by Robert Louis Stevenson. It was entitled "Dr. Jekyll and Mr. Hyde," and I often wondered where the novelist had had the experience which enabled him to draw that character. I came to the conclusion that the prototype of that character must have been a politician in opposition. Such politicians invariably start off, as Senator Baxter started to-day, complaining about the heavy burden of taxation and clamouring that something should be done to reduce it, but before the speech concludes the character of the speaker changes, and he is advocating measures which would compel the Minister for Finance to increase the burdens which, at an earlier stage, he was demanding should be reduced. I am afraid that is what we have experienced from Senator Baxter to-day. I should regard that speech as being a little out of date. It was delivered during the election; it was delivered prior to the election; and it was delivered over a number of years; but since the Senator first began to make it, he and I have had the opportunity of going to the people, he devoting himself almost entirely to the rural constituencies where the farmers, whose sad lot he was complaining about, lived, and who themselves actually know where and to what extent the shoe pinches them. The Senator sat at one time in the Dáil for the constituency of County Cavan, and I am sure that he, any more than I, would not agree with the proposition that the majority of the farmers in County Cavan are fools, because at the last election, not merely a majority of the farmers, as was the case in 1937, but a very greatly increased majority of the farmers voted in support of the policy which the Senator has been arraigning and attacking here to-day

I am not an agriculturist, and the Senator is perfectly right in saying I have no practical experience of agriculture, but I do know that the great majority of the people have that practical experience and that the present Government derives its power and its authority as a result of the suffrages of the majority of the people. I must, therefore, assume that so far as they are concerned, they are not greatly dissatisfied with the policy pursued over the past five or six years.

In that connection, I may say that the speech of mine in the Dáil, dealing with the proposal that subsidised loans should be granted to farmers, to which the Senator referred, was made before the election. It was the subject of a great deal of attack by those who took the same view as the Senator takes in regard to it. I said that so far as I can see, the ordinary man in the countryside knows that if subsidised loans have to be provided, he is going to have to pay the subsidy. Accordingly, he does not feel that there is any reason why his capital, the capital he employs in his business and on his farm, and employs profitably, economically, and advantageously, should be taken from him in order that some other person, who during a long period of years has not shown the same capacity as he to use it well, may have the benefit and advantage of it.

The Senator, towards the end of his speech, said the Minister can, and ought to, provide the capital which he considers necessary in order to enable certain agriculturists to put themselves in a better position. The fact of the matter is that the Minister has no capital; the Government has no capital; and the State and the community, as such, have no capital. There are, however, individuals in the community who have capital who are using that capital profitably and advantageously.

Why should it be taken from them, as the Senator wishes, in order to give it to some other person?

That is what it means. It is, in fact, an expropriation of one man's capital to convey it to another. The Senator asks why we should not do that when we are providing new holdings for new people. He asked me why we were doing the latter, and why, at the same time, I refused to sanction this proposal to grant loans which, in the aggregate, would amount to considerable sums, at unduly low rates of interest to certain sections of the farming community. If he asks me why I can conceive that the one thing could be done and the other should not be done, my answer is that the new people are only having provided for them what the older people have already got. Most of the tenant farmers have benefited by the Land Purchase Acts which at one time were not even financed by the community as a whole. A very large number of farmers have received advances from time to time in the course of the working out of a policy which has not yet been completed. Until the problem of land distribution has been dealt with, and has been solved, there is no reason why the same benefits and advantages should not be given to the new holders as were given to the old, but that is quite a different matter, and on quite a different plane, from the proposal the Senator has been advocating here. As I said when speaking on this matter in the Dáil, one of the practical difficulties is: How are you going to single out the men who are to get these loans? Think of the huge apparatus of officialdom, of review and supervision we should have to have.

I have answered that.

I take the liberty of saying that the Senator did not answer it. It is no answer to say that the Agricultural Credit Corporation can do it. The Agricultural Credit Corporation would have to provide the staff. Is it going to be put into the position in respect of loans, the justification for which is that if they are given, the person who gets them will be able to earn more than the normal return upon them, of having to decide whether Tom, or Dick, or Harry is going to be the beneficiary of this State bounty? If you are going to give these loans at all, you will have to give them to Tom, Dick and Harry in order to justify them.

Is not the Credit Corporation doing that every day?

The Credit Corporation is advancing money at what are the normal standard rates of interest, but the proposal here is to advance money at less than an economic rate of interest. The proposal is that loans should be made at a rate of 3 per cent. There are almost £15,000,000 of money of private individuals lent out to farmers—most of these private individuals being farmers themselves—at rates above 3 per cent., and are those who have borrowed at 5, 5½ or 6 per cent. these £15,000,000 to go to the Agricultural Credit Corporation and say: "I want a loan of £100 at 3 per cent. in order that I may repay a loan of £100 at 5 or 6 per cent. which I have already received from the bank"; and is the Agricultural Credit Corporation to say to one of these applicants: " We are not going to let you have this money at 3 per cent." and to another, "We are going to let you have this money at 3 per cent."? Is it not quite clear that we should have to give that concession to everybody if we wanted to be just as between one farmer and another, as between the industrious farmer. who possibly has put his money on deposit in the bank and is getting only a small return for it, and the spendthrift farmer who has never been able to save anything? Or are we going to have an investigation into the circumstances of every farmer and see whether his sore plight is due to hard luck, folly or laziness, or some defect in his own character? What sort of an inquisition would be carried on all through the country if a proposal of this sort were going to be given effect to?

It is done every day. That is the answer.

It is done every day for the purpose of establishing the credit-worthiness of a particular farmer. Suppose a farmer is credit-worthy. Cannot the ordinary credit institutions deal with that case, could not the Agricultural Credit Corporation deal with it on its merits, and let the farmer have his advance at a normal rate of interest? Why should it consider the case of a farmer who has been able only at a late stage in the day to establish himself as a credit-worthy farmer and give him the concession as against the man who has been credit-worthy all during these hard times? Why should it give the man who has established himself only quite recently a concession at the expense of the man who has been credit-worthy all the time?

It would not be at his expense.

Of course it would, because the difference between the commercial rate of interest and this abnormally low rate of interest which the Senator has been advocating would have to be provided out of somewhere. It would have to be provided out of taxation if the Government made itself responsible for it, and the man who had been paying his way all the time, who had been fighting the country's battle all the time, and who helped us to carry on the public services all the time, would be paying for the other man who, for one reason or another, had not been able to carry his fair share of the burden. That is why I say that the more you examine this proposal the less justifiable and the more expensive and difficult to administer it appears, and, I think, the more clearly contrary to the true interests of the agricultural community here.

I do not propose to continue on that line any longer as this matter was thrashed out in another place. It was dealt with by the electorate, and I have no reason to question the wisdom of their decision in the matter. I would prefer to come to some of the points raised by Senator Sir John Keane. With regard to the matter of the exemption for ceilidhthe to which Senator Hawkins referred, it would not be possible for me to do anything in this Bill in that connection. Apart from that, there has been a long-standing exemption for ceilidhthe which are held under the auspices of the Gaelic League. The matter is bristling with difficulties because owing to the extension of the entertainments tax to public dances, a very large part of the revenue which we derived from the entertain-dances. I am afraid that if we went any further towards meeting this demand for the complete exemption of ceilidhe dances, we should open a loophole in the entertainments tax which would be very expensive, so expensive that it would not be possible on practical grounds to justify it. Therefore, I cannot hold out any hope that any extension of the existing concession is likely to be made, even in the future.

Senator Sir John Keane said that, after all, this question as to whether there has been a real surplus or not turns very largely upon the legitimacy of the purposes for which money has been borrowed. In that connection, he referred specifically to items of borrowing for relief works and for bounties. With regard to bounties, I have never purported to justify borrowing for that purpose on any ground other than this: that the expenditure on bounties was abnormal in its character; that it, in fact, partook of the nature of military expenditure during a time of war and that our only justification for it was that, after all, one of the principles which the Minister for Finance must always keep in mind is that in no single year should he impose such a burden of taxation upon the people as is likely to cripple them in their productive efforts. The bounties were provided during a period when we were endeavouring to assert our right to certain capital sums. If that right were successfully asserted, and we were enabled to have our title to these moneys accepted by the other party to the dispute, the benefits of that success would inure to the taxpayer for a long period of time. Accordingly, I did not feel it equitable, apart altogether from the question whether it was practicable to do so, to ask the people, who admittedly were suffering grave disability by reason of this dispute, to meet in any one year the whole cost of it. Throughout the economic war, we did, in fact, I think, defray almost the whole cost of the bounties out of revenue.

One of our difficulties in preparing a Budget arises from the fact that we have a specific sinking fund attached to most of our loans, that every year provision is made in the charge for the Central Fund Services to repay them and repay them out of taxation We are not, therefore, in the position in which, when we have a surplus, it can go to reduce debt. Most of the debt is long term debt and we are not in the position in which we can use a surplus to repay that debt or make an extraordinary appropriation to the sinking fund in any one year. We are in quite a different position from the British in that regard. Accordingly, if we take one year with another over a period, such as we have been dealing with, that is, the economic dispute with Great Britain, at the beginning of each year I had always to set aside or earmark certain sums and say: "These may be borrowed for, if necessary." That was the principle on which I acted. Fortunately it was often not necessary to borrow even for purpose which were demonstrably of a capital nature. In order, however, not to impose an undue burden of taxation in certain years, I had to make up my mind that if the yield of taxation proved not sufficient to meet expenditure—to meet, say, more than one-half of the bounties out of taxation—I should have to borrow for them; not because I could produce any strict canon of finance which would justify me in doing that, but that on practical grounds it would not be possible to impose a greater burden of taxation on the people.

That has a bearing on the other question as to why I decided, in regard to the carry-over of the charge for export bounties and subsidies from 1937 to the present year, that instead of imposing taxation this year to meet that charge, I should simply say that last year we had a surplus, on a certain basis, of £694,000 and that we should utilise portion of that balance towards meeting this charge.

Normally it would be used to swell the Exchequer balance. I said: "Well, we have wound up the land annuities dispute. It is a carry over from that. In this particular year, when I have got to find an additional £600,000 for defence purposes, I do not propose to tax the people for £194,000, for the carry-over of the export bounties and subsidies." I am quite prepared to admit that the position is one that is open to criticism but I have always got to remember, in regard to any particular Budget, that it is the out-turn of the year which justifies the Budget. So far as that goes, I should be always prepared to contend that if our Budgets from 1932 to 1938 are examined, it will be seen that we had a clear surplus on the average, taking one year with another. I do not think it is quite possible to put every year in a watertight compartment. I am satisfied that with the somewhat rigid financial budgetary structure we have, it would not be possible to do that without, on occasions, doing a certain amount of injustice to the taxpayer in one year as compared with another.

With regard to the items which the Senator questioned, he asked me whether in regard to the improvement of estates that could be justifiably taken in as an asset in Table 4 because the Senator said that the grants towards the improvement of estates were, on the whole, not repayable. The position is that we have only taken into account, under that particular head in the table of assets, amounts which are repayable and which are being repaid in the form of annuities. The money for the last six years has been provided out of taxation and that part which is repayable, I believe, is a sound asset and we are quite justified in taking it in. The same applies to the repayments to the Guarantee Fund. They represented funded arrears of annuities which are at present being collected and are accordingly quite sound assets.

With regard to the shares in the Industrial Credit Company, it is true that they have not paid any dividends since they started but the company has made substantial profits. These profits are being appropriated to reserve in order to strengthen the position of the company. I do not see any reason why, in the present state of affairs, we should not take the Government's holding in the Industrial Credit Company at its par value.

Would the Minister think of applying this test? Could these shares be disposed of to the public at their par value?

All I know is this: We have in fact not encouraged the public to subscribe. I have no doubt that if the shares had paid a dividend, as the company could have paid a dividend during the past two years, and if it wanted to make a public issue—while I do not know to what extent the public would take it up—that is a very problematic question always—that the issue would have been well received. I have not any doubt that, as the shares are firmly held, their par value probably represents their real value. The company is building up, as I said, reasonable reserves. All the profits have been allocated to reserve since they started. So far as that goes, I have no reason to believe that the value of these shares is very much, if anything, less than the figure at which we have taken them into account here. With regard to the Agricultural Credit Corporation, the corporation has gone through a very difficult period. It is true that we have not received a dividend on certain of the shares but again the reserves of the company are not unsubstantial. I do not think that those who are familiar with the operation of the company feel that the advances are not reasonably well secured in normal times. During the period of the economic dispute, it is quite true. that if we were to offer them to the public, they probably would not be taken up. I have no doubt that with the improvement, which I hope the next two or three years are going to bring, if we were again to offer them, they would not go abegging on the market. They would not be a drug on the market, anyhow. With regard to the point raised by Senator Douglas on Sections 5, 6 and 7, I think the sub-sections of those sections about which he wanted some further information were those in which words, more or less to this effect, occur: "Schedules A, B and C shall have, and shall be deemed always to have had, effect subject to the provisions of this section." The point about these provisions is this: that, in fact, nothing is being done in regard to Sections 5, 6 and 7 which has not heretofore been done as the customary practice over a period of, I think, 50 years. That particular sub-section of Section 5 is a saving section for bankers, and for those who have been deducting income-tax from dividends. It was originally intended, when the law was passed, that bankers should do this, and they have been doing it. A decision given in England recently in the Court of Appeal, has suggested that, possibly, there may have been a flaw in the drafting, and that this practice which, as I have said, has been in operation for the past 50 years in regard to the deduction of income-tax and the cashing of coupons for foreign dividends or interest is not justified by the Act at present in force. The English decision, to which I have referred is, of course, not binding on this country. We do not know whether our courts would agree with that decision or not, but in order to avoid fruitless litigation, and to make the law read as it has always been taken to be, we have brought in this series of sections and have made this declaration that it has always been the law. That is in regard to Sections 5, 6 and 7.

With regard to the point which the Senator has raised as to whether, in fact, income-tax would be levied on the face value of the bond, if the Senator will look at the section he will see that the bond "shall be treated for all the purposes of the Income Tax Acts as if it were the payment of an amount of the said interest equal to the value of the said bonds at the time of the issue thereof."

That is the real value, and that is the value upon which income-tax will be assessed—the value of the bond at the time of issue. It may be, as the Senator has said, that its nominal or face value may be declared higher than its real value, but it will be the real value of the bond at the time of issue which will be assessed.

What is the position with regard to funding bonds?

If a funding bond is issued, the general practice, I think, is to issue a separate funding bond in respect of each year in which the interest arises. I assume that the person who gets it in those circumstances will dispose of it as quickly as he can, and as near the time of issue as he can.

The point is rather a technical one. I do not propose to deal further with it now, but will return to it on the Committee Stage.

The position with regard to Section 24 is that we are merely extending from one year to three years the period during which an officer of Customs and Excise may demand the production of documents relating to the importation of dutiable goods, or may require them from the person concerned with the exportation of goods in respect of which a specification or shipping bill has been delivered.

Will there be an obligation on the trader to keep those documents for three years. Ordinarily, they would not be kept after the accounts had been audited for a particular year.

There will be that obligation.

I think that a notification should be given.

There will be a notification on those terms. Section 25 is, in effect, to enable the power which is given in Section 34 of the Finance Act, 1933, to the Revenue Commissioners to value goods for the purpose of levying duty there on to be extended so that they may value them for other purposes as well. Section 34 of the Finance Act, 1933, which it is proposed to repeal, reads as follows:—

Wherever a duty of customs is imposed (whether by this Act or by an Act passed after this Act or by an order hereafter made under an Act passed before or after this Act) at a rate calculated by reference to the value of the article or goods chargeable with such duty, the value of such article or goods shall, for the purpose of the calculation of the amount of such duty payable thereon, be taken to be the price which, in the opinion of the Revenue Commissioners, an importer would give for such article or goods if such article or goods were delivered, freight and insurance paid, in bond, at the place of importation.

Now, it has been suggested that the words there, "for the purpose of the calculation of the amount of such duty payable thereon," are limiting in their effect, and that they would not allow a customs officer to value the goods for the purpose of determining that no duty was payable thereon. Therefore it has been decided to repeal Section 34 and to enact the section in the following terms:—

Section 34 of the Finance Act, 1933 (No. 15 of 1933) is hereby repealed, and in lieu thereof it is hereby enacted that the value of any article or goods for any of the purposes of this Act or any other Act (whether passed before or after this Act) relating to the customs or of any order relating to the customs heretofore or hereafter made under any Act (whether passed before or after this Act) shall, in the absence of provision to the contrary, be taken to be the price which, in the opinion of the Revenue Commissioners...

The end of Section 34 is then repeated:—

...an importer would give for such article or goods if such article or goods were delivered, freight and insurance paid, in bond, at the place of importation.

The replacing of the old section by the new is intended to get rid of the words which I have mentioned and which it has been suggested might have a limiting effect.

So far as importers are concerned, there is no change in the practice.

No change. Senator Condon mentioned the matter of those persons who have gone abroad in order to avoid the payment of tax. Well, I am afraid it is too late in the day to hold out any hope that the Government will reverse engines in that regard. When the Finance Act, 1932, was before the Dáil, I asked the Oireachtas to give the Revenue Commissioners special powers to deal with those cases in which persons who had wrongfully withheld the payment of the tax due to the State came forward and made a full disclosure of their affairs to the Revenue Commissioners—that the Revenue Commissioners would be entitled; first of all, to waive all claims or penalties and to grant a substantial reduction in the amount which they might otherwise ask the defaulting taxpayer to pay. Any person who has not taken advantage of that up to the present has, I am afraid, lost an opportunity which cannot recur. We have always to bear in mind, in matters of this sort, that those who have succeeded in withholding tax from the revenue over a prolonged period have only been able to do that at the expense of honest taxpayers who have come forward, particularly during the latter years, and met their obligations. It would not be desirable, in the first instance to do this thing, because it would mean a great deal of money, apart altogether from the question of expediency, which must, to some extent, be a guide in revenue matters. However, it would not be just to those taxpayers who have paid very substantial amounts over the past 12 or 13 years.

Question put and agreed to.

An Cathaoirleach

When is it proposed to take the Committee Stage of the Bill?

If we might have it now.