I should like to know on what basis the Minister has calculated the yield from the increase in income-tax for a complete year. I know he will not get a full year's yield in the current financial year. I have been making a calculation on the basis of a two-ninths increase on the standard rate and, assuming the present yield to continue, he should get over £1,000,000. That is considerably more than he is budgeting for. I should like the Minister to comment on that and to say whether he is calculating on a diminishing yield in future years.
Finance Bill, 1939 (Certified Money Bill)—Committee.
Question proposed: "That Section 1 stand part of the Bill."
Would the Minister say what yield he does expect to get from the increase of 1/- and the other increases?
In the present year we expect to get about £660,000. In a full year we estimate we shall get about £800,000. Normally, by an increase of 1/- in the £ we ought to get £1,000,000 in a full year, but because of the increase in respect of earned-income relief we shall probably only get about £800,000.
The Minister is reducing the personal allowance, and he should therefore get more in that direction.
A little.
Surely that large difference of £200,000 would not be accounted for by the concession in respect of earned income?
More than that.
More than that?
Yes.
So then I can assume generally that he is not expecting any decrease in the yield of income-tax? There is no decrease in the yield he anticipates?
The Senator would not be entitled to assume that at all because one of the reasons which have necessitated the increase in the tax is the fact that the income upon which the tax is assessed under certain schedules—the income for last year under schedule D, for instance—in the view of the Revenue Commissioners may show a slight decline. One of the reasons why the general increase in taxation has been necessary is in order to counteract that.
There is a reduced rate I think on capital which has been floated by public issue here. Does that still apply?
Yes.
What will the rate be now?
Provided that the conditions of the section governing the relief in respect of investments in Irish companies are complied with there is a 20 per cent. reduction in respect of income derived from new investments in Irish public companies.
The Minister in this section is increasing the standard rate of income-tax by 1/-, making it 2/- greater than the rate he found when he came into office. Income-tax is usually increased in small doses, for a variety of reasons: from the point of view of the yield and from the point of view of the disturbance to industry and employment, and for various other reasons. This increase which we are asked to pass now in this particular section is not for the purpose of armaments. I think it is fair to say that from the moment the Minister came into office his policy was a high income-tax. I think he raised it three six-pences—1/6—at one go. This particular rate of 5/6 is not the complete picture. There is also a 1/6 corporation profits tax after a certain point.
The idea that income-tax is something which merely taxes the rich, which has no effect at all upon the poor is, I think, entirely erroneous. The Minister himself is now convinced of that. After a certain level, income-tax, like other taxes, produces less for the Minister. He expressed a certain fear of that even this afternoon. The burden becomes greater, and when it becomes greater it is felt downwards and influences the position of people who pay no income-tax at all. In this particular instance, this imposition of an extra 1/- follows upon a number of other impositions. When the Minister came into office, a person with a house in Dublin valued at £24 or £40 paid income-tax, whatever the valuation was, at the rate of 3/6 on five-sixths of his valuation. Now he will pay income-tax at the rate of 5/6 on five-fourths of his valuation—a very substantial increase. Apart from that, rates, not only in Dublin, but all over the country, have increased substantially. I think they have increased by at least one-third, so that a person who paid £1 in rates to a local body, whether a country borough or county council, in 1932, will pay, I think, in this year at least 27/-. As well as that, the Minister's policy has increased the cost of repairs and decoration to a house. Therefore, any person who owns a house now, big or small, has to pay higher taxes, higher rates, and higher costs for repairs and decorations. I know in my own particular case, over a period of ten years, the increase for decorating a room is up at least one-third. In addition, the Minister has taken steps in the Dáil to pass a Valuation Bill, which will increase valuations and increase the yield of income-tax to the Minister. All that has been done at a time when the national income was falling, when our exports were falling, and when the Minister was seeking for a cure for unemployment without any success.
You cannot have all these burdens placed upon the people and at the same time expect that these people will have money to spend for goods and services so as to solve unemployment in the most effective manner. A person in Dublin who has to pay increased rates, who has to pay increased costs for decoration and repairs, who has to pay increased income-tax and increased costs for everything he buys, cannot possibly spend as much money even in the matter of repairs and decoration to his house. If you apply that all round, you get, naturally, a marked decrease in employment.
This tax is not being put on for armaments. It is the same tax, roughly, as in England, although certain reliefs that are given in England are not given here at all, notably the relief for age. But the idea that a country of the size of this, of our population, of our national income and of our exports and production generally should have the same income-tax as England is ridiculous. It is really the greatest possible condemnation of the Minister's policy that he has to charge the same income-tax as a country which is the centre of a vast empire, which has greater national wealth than we have, which has immense trade and immense responsibilities all over the world and which, to fulfil those responsibilities, has the largest navy in the world and is now proceeding, I think, to double it. We have not a navy at all. They have an army which they are proceeding to quadruple, I think, right away and they are going to have conscription generally. They have immense investments abroad and they have a class in England of which there is no counterpart here at all since the landlords had to go consequent upon the Land Acts, a class which has considerable accumulated wealth. Those people pay income-tax at the same level as the income-tax in this country. It is not for armaments and I doubt very much if the Minister, even if he had the money, could possibly spend it on armaments in the year that is before us.
This section shows the result of the Minister's policy over a period of years. It shows an immense burden upon the community, a burden which will result in decreased spending, decreased employment and some of it will be passed on to the people who are foolish enough to think that those who are better off than themselves are the only people who will have to pay. I think the Minister has discovered and I think his Parliamentary Secretary has proudly declared that there is no reason why the working class should not pay. The working class will certainly pay some of this. One would like to hear from the Minister what justification there is for a State of our type having exactly the same income-tax as England considering the lesser responsibility we have; and for what reason the tax is being put on and whether it is not part of a regular policy which has no reference at all to the European situation. I think myself that this is really part of a policy which the Minister entered upon in 1932 and that the talk about armaments is merely an excuse. At any rate, it does show that taxation in this country is at a level which is bad for employment and which offers no hope that the problem of unemployment can be solved in this State.
Question put and agreed to.
Question proposed: "That Section 2 stand part of the Bill."
On this section I want to get information rather similar to what I was seeking to get on Section 1. I take it that the Minister knows the amount of the incomes on which this new tax is levied, that he has found, for the purpose of calculating this tax, the total amount of the incomes between say, £3,000 and £8,000 on which the 10 per cent. addition is to be levied. I would like to know if the estimate was less than that 10 per cent. because, pursuing this matter, I would suggest that it is open to objections rather different from those that apply to income-tax.
I feel that the Minister may be gravely disappointed over the yield of this tax. The person at present with an income of £3,500 a year is going now to pay an additional 10 per cent. on the total tax. There is nothing easier than for that person to get rid of the additional £500, and thus bring himself down below the level where 10 per cent. increase operates. Evasion of that kind is perfectly legitimate. We all know that it is going on. We know that people are every other day transferring part of their incomes for that purpose. Now, there is suddenly going to be this 10 per cent. tax on incomes of over £3,000 and 15 per cent. on those over £8,000. I suggest that the Minister is going to stimulate the transfer of large sums by persons with large incomes. They will transfer part of their incomes either to their descendants or, if they think fit to escape death duties, they will do, as has been done on a large scale in England, give large sums to charity. It is very nice to see those large sums given to charity, but every Minister for Finance knows that it is exceedingly embarrassing to the Exchequer. We know that in this way millions have been given to charity in England so as to escape the payment of estate duty. All that is very embarrassing to the national finances. Would the Minister say on what basis he has calculated this increased yield, and whether he has had regard to the great stimulus he is going to give to the perfectly legitimate evasion of taxation which is almost sure to follow from his proposals?
I would like, in case Senator Hayes might have misunderstood my silence on the last section, to say that I was quite prepared to answer. There are five sections in the Bill dealing with income-tax and surtax, and perhaps it might be as well if I held what I have to say until we came to the last section or reached the Report Stage.
However, on the point which is directly ad rem to Section 2 of the Bill, which Senator Sir John Keane has mentioned, I should like to say that to my mind, so far as surtax collectible in the current year is concerned, there is no possibility of evasion. As the Senator is aware, the incomes upon which the surtax will be assessed have already been determined and, accordingly, it will not be possible for people to dispossess themselves of income in the way the Senator has suggested. With regard to the future, we cannot speak with the same certainty. It was a very distinguished statesman who, I think, was at one time Chancellor of the Exchequer, said, in regard to quite another category of operations: “The resources of civilisation have not yet been exhausted,” and what the British Chancellor has done indicates to us that there are quite a lot of shots in the locker of the Treasury yet so far as tax evaders are concerned.
I do share personally the apprehensions which the Senator has expressed here. There is no doubt about it that when our rates of taxation on fixed incomes become heavier people are induced to do things—perhaps, in some cases, are coerced to do things—which they themselves would have looked askance at. There is no doubt that people are distributing their incomes over members of their families and are getting rid of portions of their income by giving them to what may be broadly described as charities. Whether greater public good is being done by placing these sums at the disposal of private committees, of individuals or of trusts, or whether it would not be better to hand them over to the community as a whole, in so far as the Government may represent that community, is a question upon which there may be differences of opinion but I think there is no person, looking at the general trend in regard to these larger incomes, but would say that a case is being built up where Governments and those in charge of public finances may not have to say to themselves "We are killing the goose which, up to this, has laid the golden eggs." Undoubtedly, when incomes, no matter how large they may be, are taxed at such a level at which it would pay a person better to hand the income over to the State, and, as has been said, "retain the tax for yourself," than to proceed in the way in which we are now doing: when that stage is reached it becomes a matter for consideration whether we would not have to find some other sources of taxation bearing as heavily upon those who are able to bear taxation at present, and abandon the direct tax upon which, up to the present, we have relied to provide the Treasury with a very large portion of its resources.
That is, I think, a problem which is engaging the attention not merely of people in Great Britain but of people everywhere. It is one of the great problems of this age where these large taxable incomes have tended to accrue, and it may be that, as the Senator has pointed out, we have perhaps reached the limit of our ingenuity in regard to those matters. I am not so certain that we have, but, as I have said, it is a matter for consideration. However, I have no doubt that if we should decide that these taxes have perhaps reached the limits of their usefulness we may have to try to see whether we cannot devise some other taxes, perhaps, of the same nature but slightly different in their incidence, which would catch some of the income which is going astray.
Is it not a fact that at the higher rate the Minister for Finance is getting less than he was getting when the surtax was at a lower rate? The Minister talks about things that he will discover in the future. He has had plenty of experience in the past and plenty of figures. There is a small number of surtax payers. I am sure the Minister could give us a fair round figure. Is the actual yield from surtax increasing from year to year? Are we getting in fact more from the people with the higher incomes than we were getting formerly?
When the Minister is replying would he say if the income-tax payer with an income of between £1,500 and £2,000 pays more here than in Great Britain, if he includes income-tax and surtax?
It may happen that an income-tax payer with an income ranging between £1,500 and £2,000 whose income is all earned may pay slightly more than a taxpayer in the same circumstances with the same earned income would pay in Great Britain; but one has got to remember that the yield from taxes upon incomes within various ranges tends to cross up and down the British scale. Our rates of relief in regard to certain elements—in regard for example, to the reduced rate relief allowance—are smaller than the British. Our normal tax upon the first quota of income, say £100 or £75 income, as the case may be, tends to be at a higher rate. The rate tends to be higher, but our actual yield lower. The people here with small earned incomes tend to pay less. As we advance up the scale to the region of £1,000 incomes, we tend to close the breach between our rates and the British rates. In the range from £1,500 to £2,000, our rate is slightly above the British.
Does the British supertax begin at £1,500 or £2,000?
We cannot dissociate the two things. The total tax upon our incomes here between £1,500 and £2,000 does tend to be slightly above the British scale. If the Senator would give me a moment, I believe I can give him the exact figures.
This question is much talked about and possibly the Minister could set it right to some extent.
I will now give the Senator the figures. Taking the case of a single person whose income is all earned, if he has an income of £200, is single with no dependents or housekeeper or anything else like that, he pays us here £5 10s., while in Great Britain he would pay £5. Above that, in respect of earned income, a single person will tend to pay generally more. At the surtax limit he would pay £283 5s. 0d. as against £276 12s. 6d. in Great Britain—that is, where his income is £1,500. On £2,000 he would pay £433 5s. 0d. here as against £414 2s. 6d. in Great Britain.
That includes surtax?
Yes, this is the total payment. If he is a single person whose income is all earned, on an income of £3,000 he would pay £750 5s. here as against £751 in Great Britain.
If his income is £8,000 he would pay £2,908 5s. here as against £3,033 10s. in Great Britain.
The position is quite different when we come to consider married people. Take the case of a married man, without any children, whose income is all earned; again, there is a certain amount of criss-crossing. If his income were £350, he would pay £8 5s. 0d. here as against £8 6s. 8d. in Great Britain. If his income were £400 he would pay £13 15s. 0d. here as against £12 12s. 6d. in Great Britain. If his income were £450 he would pay £24 15s. 0d. here as against £23 12s. 6d. in Great Britain. At £1,500, the married taxpayer here, whose income is all earned, would pay £255 15s. 0d. as against £254 12s. 6d. in Great Britain. If his income were £1,700 he would pay £315 15s. 0d. here as against £309 12s. 6d. in Great Britain. At £3,000 our taxpayer would pay £730 15s. 0d., while the British taxpayer would pay £729 0s. 0d. Somewhat above that point our income-tax and surtax tend to be slightly lower— that is, in the case of married men.
It is really from £1,500 to £3,000 that we are higher?
But even then it is only slightly higher and the figures do not make much difference.
That is in the case of married men without children. We now come to the most usual case in this country, that of the married taxpayer with two or three children. I will give the figure now for the married taxpayer with two children, whose income is all earned. If his income here were £414, he pays nothing here whereas in Great Britain he would pay £2 11s. 9d. If his income were £431 he would pay 13/9 here and would pay £3 15s. 0d. in Great Britain. On an income of £440 the amount would be £1 13s. 0d. here and £4 6s. 8d. in Great Britain. At £500, it would reach £8 5s. 0d. here, in comparison with the British figure of £8 6s. 8d. At £500, there is a momentary cross, so that, taking the £550 income the amount in Great Britain would be £12 12s. 6d. while the same taxpayer would pay £13 15s. 0d. in this country. Now, at £600, the taxpayer here would pay £24 15s. 0d. compared with £23 12s. 6d. in Great Britain; at £1,500 the figures would be £222 15s. 0d. compared with the British £221 12s. 6d. At £1,700, due to the fact that the surtax rates come into force, £282 15s. 0d. would be paid here compared with £276 12s. 6d. in Great Britain. After that, at £3,000 the position is that whereas the taxpayer pays £696 0s. 0d. in Great Britain he pays £697 15s. 0d. here, but from somewhat above the £3,000 point (about £3,280) up to the top of the scale he would pay less here, very much less on the large incomes.
The fact of the matter is that, so far as the lower ranges of taxable income are concerned, our scales tend to be more favourable to the taxpayer whose income is all earned. At the very high rates, even with the additions which we have had to impose in this Budget, the surtax payer here tends to pay much less than in Great Britain, and there are, of course, very good, practical reasons for that.
Except between £1,500 and £3,000?
Yes, or thereabouts.
Are not they the very people we have?
The Senator may think that, but I would say that, in the case of a person with an income between £1,500 and £3,000, and whose income is all earned, he is not going to shake the dust of this country off his feet because of that tax; he is going to remain here as the differences between our rate and the British rate are, in any event, inappreciable. £10 is very little to a man with an income of £3,000. Senators can try to make as much political capital out of this as they wish.
We are lost now.
The fact of the matter is that, in general, bearing in mind everything which I have said in reply to the point which has been made by Senator Sir John Keane, our income-tax rates here are carefully calculated, so far as it is possible to do it, in order to leave an appreciable inducement to the major part of the surtax payers to remain in this country.
Is not the income-tax specially harsh on say an old person who has passed the age of working for a living and has a small unearned income?
I should say in response to that that it is no more harsh in regard to an elderly person who is living upon an investment income than it is upon an elderly person who is living upon an earned income. After all, if a person is living upon an unearned income like that, unless he or she is in the enjoyment of an annuity, the capital remains.
Supposing that that is a pension?
The difficulty and the trouble about particular tax systems is that there are cases where the incidence of a tax may fall with greater severity upon one class of individuals than it does upon another. We cannot simply proceed to tax classes. We have to impose the taxes on the general mass of the people. Some people, bearing in mind their own particular circumstances, may be more heavily hit by any system of taxation than others are, but all we can try to do is to do rough justice and equity between the people as a whole. I am quite prepared to admit the force of what Senator MacDermot has said. I know cases myself where this bears heavily upon people, but we cannot legislate for these particular cases, as the Senator knows. I think it is very true to say that hard cases make bad law.
Surely the principle would be perfectly sound to treat unearned income, in the case of persons over 60 or 65 years of age, on the basis that it was earned? There does come a time when you do not expect a man or woman to earn up to a certain figure say, £500 or £600 a year, and surely the principle would be perfectly sound to treat that, in the case of elderly persons, as if it were earned income. Surely the Exchequer could do that without any very enormous loss.
I asked the Minister a question which, in giving all these figures, he forgot to answer. Is it a fact that from people with an income of over £1,500, we are getting less at a higher rate than we formerly got at a lower rate? Apart from any sympathy one may or may not have for persons with a certain income, the object of taxation is to get money. The Minister used to be proud of the propaganda slogan, that he would tax the rich, but is it a fact that he is getting less from the rich?
There are very few rich people now. He has made them all poor.
Some have been made rich.
The Senator asked me if it is a fact that we are getting less from people within the range of £1,500 to £2,000.
No, from surtax payers generally.
I think the Senator suggested that we are getting less from people within the range of £1,500 to £2,000.
No.
It was I who asked the question about that.
Are we getting less from surtax payers?
I have no reason to believe that we are getting less. If the Senator is going to refer to that very strange case which Deputy Cosgrave cited——
Can the Minister not answer the question I asked without putting something into my mouth? I asked a general question, and he is going to answer something which somebody else said somewhere else by saying that I am going to refer to it. Can we not have a debate on the basis of what we say ourselves? Are we getting more now from surtax payers than before, or are we not? The Minister must know.
The well simulated indignation of the Senator is not going to throw me off this point, because I have had to meet it previously in the Dáil on this very Bill. Deputy Cosgrave referred to the fact that in the year 1931-32——
I did not refer to that year at all.
The Senator did not, but how are we going to find the trend of the yield from surtax, unless we take some point of reference, and the point of reference which has generally been taken in this respect is the yield of surtax for the year 1931-32, or the year 1930-31—I am not sure which. When the yield from surtax was returned at over £700,000, it was quite an abnormal year, as any person who studies the figures for the preceding years will see. In those years, the yield from surtax was of the order of between £550,000 and £600,000. In the particular year which is so often cited, the surtax yield exceeded £700,000, and why? It was due to one abnormal payment in that year, a payment of £180,000 in respect of surtax which had been in dispute for a period of years. There was a slight fall in the yield in the years 1932-33 and in 1933-34 but, in 1934-35, it tended to go up. If there was a decrease in the years 1932-33 and 1933-34, it was because surtax is levied, not upon the income of the current year and not even upon the income of the preceding year, but upon the income of the year before that again, so that the diminution in the yield in those years was due to the fact that conditions had been deteriorating in the years 1930-31 and 1931-32.
That was the world condition.
Conditions here, and, of course, conditions everywhere. I am not trying to imply that our predecessors were responsible for the world depression.
I think I heard the Minister actually say they were.
I would not ascribe such economic mal-prowess to them, but, in any event, the fact is that, during the years 1932-33 and 1933-34, we got less in surtax than our predecessors had collected, and, while I am not prepared to ascribe to our predecessors in office responsibility for that fact, they nevertheless, just as the Senator is doing now, endeavoured to place responsibility on us for circumstances which were not within our control. Since 1935, the yield from surtax has been increased.
Is that when it was reduced to £1,500?
It may happen, and is very likely to happen, that, in the present year, the yield from surtax will tend to fall, and certainly next year the yield will tend to fall. Why? Because there has been a heavy fall in income derived from investments, and investments not made in this country, but made abroad, and the major part of our surtax revenue is derived from those who get their income from investments, and, as I have already said, from investments not made here but made abroad. It is derived, in fact, I might say, from people who maintain a residence here, who perhaps live three or four months of the year here, and spend the rest of their time abroad; but because they are good enough to maintain a residence here, we are enabled to get a share of their income and surtax. The main point about it however, is that no argument based on the yield of surtax is a sound argument, if it is held up as a reflex of the economic condition of the country. The yield from surtax is very largely conditioned by the economic state of countries other than ours. These people have their moneys invested in many countries. They do not put their eggs in one basket, by any means, and, if we see a fall in the yield of surtax here, it may be, to some extent, a reflection of conditions here, but it is, in a much larger measure, a reflection of the conditions which prevail elsewhere. If Senators want to make a case against the general policy of the Government they should not base it upon the yield from surtax.
I did not say anything about the general policy of the Government except that the general policy of the Government was declared to be that we would get money from the rich to help the poor. While that is a very good thing to preach off a political platform it is a very difficult policy for the Minister for Finance on which to work. The Minister has actually increased the standard rate of income-tax. He has also increased the surtax. I hold no brief for surtax payers. Income-tax is a fair tax and should be graded. Surtax payers are mainly people who have incomes derived from investments abroad. The kind of person who has a residence here and stays here for three months out of the 12 months, is exactly the kind of person who can pack his bag and go back where he spends the other nine months. Assume that the Minister is accurate, that he is getting this surtax from the kind of person who lives here for part of the year and whose income does not depend upon this country at all, the time comes when such a person can pack his bag and go and the Exchequer here gets nothing from him. Having increased the standard rate of surtax is the Minister getting more money year by year? Let the Minister never mind about the previous Administration. What I want to know is whether the present rate is giving him a greater yield than we were getting before? I very much doubt it. I think the Minister could give us a simple figure for surtax for 1934-35 and for 1935-36. I am fairly certain that it will be found that the Minister is not actually producing the goods from this particular provision. That is my point.
There is one question I would like to see cleared up. Does the Minister know that on an examination of this problem, no recent statistics are available? The reports of the Revenue Commissioners are in arrears for even two or three years sometimes. For that reason we are very much handicapped in criticising these matters and in examining the trends. Would the Minister look into it and say whether it is possible to expedite these reports? I do not suggest that the Revenue Commissioners should increase their staffs. But I rather think if that matter were examined in the light of modern statistical machinery, in the light of the machines now used on census work, these reports could be expedited. These modern statistical machines could be adapted to a lot of laborious calculations that have to be made. I should think if there was an approach by an up-to-date system of calculation, these labours could be expedited without increasing the staff. Would the Minister mind my telling him of a case of which I have knowledge—where a certain expert report was made on the matter of these calculating machines in the Land Commission in reference to the use of this machinery in expediting work and is he aware that the expert reported that he was satisfied that a saving of 50 clerks could be made by the use of these machines and the reply was that they could not get rid of these 50 people here on account of their national record? I do not want to pursue that but I think the Minister, irrespective of any political reactions caused by a reduction of this staff, should examine this as a business firm would examine it and use the latest mechanical means for getting out statistics.
With regard to a comparison of the taxes—and I do not want now to make any political point—we have to bear in mind that the cost of living here is very considerably higher than the cost at the other side. So that as regards the actual burden on the taxpayer, it is substantially greater not only in the case of necessities but still greater in the case of luxuries and other amenities in the lives of the richer people. That, however, is a matter that I do not want to pursue.
With regard to the question of the earlier or prompter publications of the Revenue Commissioners' accounts I wish to say I have had a discussion with the Revenue Commissioners with regard to that matter and I think I can give an undertaking that the arrears in the publication of these reports will be speedily overtaken and that we will have prompter publication in future of these reports. With regard to the question which Senator Hayes has put to me, I can only give him these figures. The yield from surtax for the year 1929-1930 was £549,000; for the year 1930-1931 the yield was £597,000; for the year 1936-1937 the figure was £545,000, and for 1937-1938 it was £595,000. Now I think when I come to remember that the years 1927-1928 and 1928-1929 were years of general economic importance, and when we remember that the year 1929 was the year on which we had an economic recess and the slump started to manifest itself, I think the Senator will agree that those figures do not afford any basis for the case made here that, though we have been increasing the rate of tax the yield from the tax has fallen off. He said it did not even remain stationary. That is, naturally, one of the reasons. We have had figures in relation to income tax giving the income upon which the tax is assessed. These figures show that the amounts upon which the tax is assessed have tended to fall off. We have, therefore, tried to compensate the Exchequer because of that. As I have already endeavoured to point out, the yield of income tax is by no means a sort of barometer for the general economic health of the community which Senators and others sometimes tend to assume it is. I say that because a large part of the income which is assessed for tax here is income derived outside this country. Naturally, if conditions elsewhere are not good the amount that falls to us for assessment tends to dwindle. That is a fact that has to be borne in mind when we are trying to draw conclusions from the yield of income tax as to conditions here. I do not want to be taken as saying that the yield from income tax should not be looked to and regarded seriously when it does fall off. It may be a manifestation of conditions operating here which may be a different manifestation of increases in ordinary trading conditions within the community. But there are these two sides to the question. I can only say that a very certain analysis of the figures should be made before one can arrive at any conclusion and the conclusion I have come to is this—that our economic conditions here are very largely governed by the conditions in other countries. That is natural. We are, taking the community as a whole, a producing concern which has to rely upon its exportable surplus. If conditions in other countries are not such that they can absorb our exportable surplus at a price profitable to us, naturally, our producers tend to relax their efforts. In view of that, they have less to sell, the price which they get being lower than they regard as reasonable. Income from primary production, therefore, tends to fall off. Our primary producers have less to spend upon the products of our manufacturers and the incomes of our merchants tend to decline, as do also the incomes of our manufacturers. The main governing factor, so far as income tax is concerned, is not the conditions which prevail within our own narrow community but the conditions which prevail in the great, wide world.
The Minister means not "income-tax" but "surtax" in his last sentence?
Both.
The Minister will appreciate that he has travelled a long way since the day he and his colleagues promised to build up a storm-proof economic system in this country.
I do not want to follow the Minister into the point that we cannot do anything at all about economic conditions here. I seem to remember an advertisement which stated that there was no reason why unemployment should continue here, that certain people, including the Minister himself, had given consideration to the problem and could solve it. Now, it appears that the Minister cannot solve the problem unless the Englishman solves his problem, the German solves his problem and the American solves his. I do not think that either statement is quite accurate. The result of the Minister's figures with regard to surtax is that, in spite of having reduced the surtax limit from £2,000 to £1,500 and in spite of having increased the rate, he has got practically no more from it than formerly but he has been extremely successful in obtaining tax from the people with earned incomes up to £1,000 and £1,500. Apart from the general economic policy, the Minister's scheme for taxing the rich has been a complete failure. Whether that is due to economic conditions here or outside or to the fact that the Minister had no plan except a plan to get into office, the truth is that he has not succeeded in taxing the rich to help the poor. He has succeeded in getting a considerable yield from the lower income-tax levels but he has not succeeded in getting anything appreciable from the people with incomes over £1,500 a year.
I should hate this debate to develop into a conversation piece for two, but I must try to keep the Senator right in regard to these matters. On the last occasion on which this Bill was before the Seanad, we listened to a very eloquent speech, if I may say so, from Senator McLoughlin in which he ventured to put before the House views which I had put before the Dáil in the year 1929 or 1930. Everything in that speech is in flat contradiction of the views which Senator Hayes and Senator MacDermot ascribed to me here to-day.
What views?
The statement that I ever thought we could keep this country a closed economy, the statement that I ever thought the incidence of income-tax was confined to those on whom it was first imposed. The sum and substance of that speech was that, by increasing the rate of income-tax, we tended to decrease the purchasing power in the hands of the people for their own individual and general uses.
Are you still of the same opinion?
Yes, and I have never concealed it. Therefore, I have never taken the facile view that it is possible to tax the rich without taxing the poor. For that reason, I suppose, I have come to be regarded as being conservative. I want to deal with one point which the Senator raised. He has endeavoured to show that our rates of surtax have been so excessive that, by reason of those rates and the fact that we have brought the surtax level down to £1,500, we have tended to depress general economic standards.
I did not say that at all.
If the Senator now wishes to withdraw from the impossible position which I thought he took up, I am quite prepared to accept his withdrawal.
Not at all.
The Senator was contending that, by reason of the fact that the surtax limit had been reduced from £2,000 to £1,500, surtax had tended to give a diminishing return. That was what I understood the Senator to be putting before the House——
I asked the Minister to tell us what the return was.
Let us see what this means from the point of view of the general body of taxpayers. There are, roughly, 120,000 or 125,000 persons assessed to income-tax.
How many to surtax?
About 2,500. I think that there were fewer last year— 2,402.
They are growing fewer.
No. The figure tends to be fairly constant. The point which I noted in respect of some of the figures was that people were tending, for good or ill, to get out of the range of £1,500 to £2,000 and to pass into the higher ranges. That seems to be the tendency in certain classes. There are, therefore, people whose position does seem to be improving.
The bacon curers.
Strange as it may appear, from the information I have from the Revenue Commissioners, other classes seem to be passing into the higher ranges—newspaper proprietors, for instance. Undoubtedly, there is a growing demand for the popular Press and the good businessmen who meet that demand are profiting accordingly.
I did not think that the Minister could get that information from the Revenue Commissioners.
I get a great deal of information from the Revenue Commissioners—not about individuals but about classes. I cannot get from the Revenue Commissioners particulars about any individual but I do get every year from the Revenue Commissioners certain information as to the trends which are manifested in certain classes of activity. One of the things which struck me in connection with figures which I had before me was that the number of taxpayers whose incomes range from £1,500 to £2,000 had been tending to decrease very slightly, but, above £2,000 and up to £3,000, there is a tendency for the numbers to increase, ascribe that to whatever cause you may. I am dealing only with the point the Senator tried to make here. With regard to the number of people whose incomes come within the range £1,500 to £2,000, I have already told the Seanad that the total number of taxpayers might be taken to be of the order of 125,000. The numbers whose incomes come within the range £1,500 to £2,000 is less than 1 per cent. of that figure. We get about 1,000 within that very narrow, limited range and no person is going to expect the House or the intelligent public to accept the suggestion that, by lowering the surtax limit from £2,000 to £1,500, you are going to decrease the yield from income-tax.
Mr. Hayes
I cheerfully withdraw from all the positions that the Minister says I got into. I got into none of them. There must have been dissent and division in the Fianna Fáil Party that Senator MacDermot and myself did not know anything about. If the Minister did not agree with what his colleagues said, they did say freely, frankly and fully all over the place that they could tax the rich to benefit the poor. The figures the Minister gave us here this evening show that although he lowered the level for surtax, although he increased the rate, he got substantially the same amount of money, if he did get that. He did not get much more. His success has been as a tax gatherer and a tax imposer in taxing the people who have earned incomes under £1,500 a year. He has been a failure in getting more from the people who have more than that.
I had better let the Senator have the last word, not because he is right, but because he has the privilege.
Question put and agreed to.
Question proposed: "That Section 3 stand part of the Bill."
I want to say a word on this section. Apart altogether from the fact that the alteration which the Minister has seen fit to make in the figures in this section has left the members of the Ministry in the position that they, like Deputies and Senators, or anyhow like Deputies have increased by the amount of £120 the tax-free portion of their own salary—and that is a fairly substantial figure—there is another aspect of this question of allowances to which I think the Minister ought to give attention. The scheme at present in the matter of allowances for children is that no matter how many there are in family the allowance is the same. I do not think that is right.
It is the same per child.
The same per child. I do not think that that is as it ought to be. I think it is unsound from the family point of view. The position of the family in this State is so vital to our very existence that the first consideration ought to be given to it. The family life in this State to which I think the Minister should exert himself to the fullest to keep intact and to encourage and expand is the type of family where incomes are low and where, in quite a number of cases the number of children is fairly large. If the costs of living were low, if they were as low as they are in neighbouring countries, the position would not be as difficult as it is to-day. The Minister surely is not going to argue that it does not profoundly influence the life of a family where there are five or six children, that only the same allowance is made to people with small incomes for the fifth child as for the first. I think that point of view is all wrong. I think the point of view which ought to exist and which ought to be encouraged is that the greater the number of children in a home the greater will be the allowance in the form of remission of tax. We have others advocating that, in relation to the poorer members of our community, consideration will be given to family, allowances and in other countries on the Continent where terrific efforts are being made to-day to propagate the race and to keep it strong and virile and increase the numbers, one of the methods which is being employed is to encourage marriage by giving marriage bounties, and to encourage the families where the numbers of children are greatest. I do not think there is a country in the world where that sort of encouragement needs to be extended to family life to the same extent as it is required in this country to-day. This is a country where in the past the numbers in family were not inconsiderable, to say the least of it, and in days like these, when taxation presses so heavily on all members of the community, I think the Minister in his future scheme of family allowances ought to consider that point of view. Pressed, as apparently he is, in the difficulty of finding money, he is not prepared to do anything except rake in all he can and give as few remissions as possible. I do not think in the end that that is sound. I think it is very unwise. The Minister ought to see his way in future to give the kind of relief which I am urging. I do not want now to say any more about it. I know it is a point of view which is strongly held in the country. It is not as freely expressed as perhaps it might be, but beyond doubt any consideration that you will give to it will convince you that it is a scheme of taxation which the Minister ought to attempt to adopt here.
It strikes me that the idea of Section 3, reducing the limits to £220, is to bring in those people who are on the margin. Many shopkeepers in the smaller towns who own their own houses will be brought in under this section, probably many of them for the first time. It is going to be an undoubted hardship.
Is it not a fact that it leaves them the same if it is earned income?
Oh, yes, slightly better off.
The position of many of these people in these towns has undoubtedly worsened in the past few years and many of them who formerly were not under the Act will now come within the terms of it. I think it is going to be a hardship on them. I recognise, of course, that income-tax is a fair tax, one of the fairest taxes we have, and that all this talk about taxing the rich for the sake of the poor has, to a great extent, social justification for it. We, in common with every other country in the world, have to deal with a large unemployment problem. A considerable number of our people are unable to obtain a livelihood. Those people have to be supported and the people who are in the fortunate position of being able to make more than a livelihood should, in fairness and justice, contribute to the support of their less fortunate brethren. None of us likes taxation. It hits everyone of us. Direct taxation hits some of us. Indirect taxation hits others. I think, on the whole, that those of us who can afford to pay something extra towards the support of those who can afford to pay nothing should be willing to do so. The individual taxpayer, of course, finds it very hard to take the broad view. We all feel it when we are hit and when we have to pay something extra that we did not have to pay before. We have to pay more for our luxuries, for our tobacco and other things but, despite that fact, one cannot but be struck with the vast amount of money we are spending, even in this country, on luxury services. We are spending more in backing horses; we are spending more on pictures and other amusements and although we all realise that the country is not as well off as people would like it to be, we cannot close our eyes to the fact that we are spending far more than we can afford on purely luxury services. When we hear it said that the country is very badly off and that everybody is badly off, we must face up to the fact that we are spending far more than we can afford to spend in this way. Everyone of us as I have said, resents being taxed as do the smaller taxpayers in regard to some of whom a move is now being made to bring them within the ambit of taxation. Still, we must realise, as I have already said, that many of us are spending money in ways that we could perhaps avoid. If we could make up our minds to curtail expenditure in some direction, perhaps it would not be necessary for the Minister for Finance to increase taxation on more of us.
Perhaps I might deal with the point which the Senator has raised. He fears this section because, in his view, it is going to bring within the shadow of the income-tax code the smaller shopkeepers in country towns and villages. The first thing we have to remember in connection with these income-tax proposals, is that Sections 1, 2, 3 and 4 all form part of a general scheme: that Section 3 cannot be considered apart from Section 4. Section 3 is there because it was necessary to reduce, to some extent, the cost to the Exchequer of a concession which has been given under Section 4.
I would like Senator Goulding to consider the position of the small shopkeeper, or indeed of the small income earner, whether in town or country, in the light not merely of Section 3 but of Section 4. Section 4 proposes to provide for an increase in the earned income relief. Section 3 provides for a reduction in the personal allowance. If we want to see what is going to be the effect of these two sections upon the small income earner, we can take two critical cases. The first case is that of a single man who has an earned income of £150. Last year his allowances would have been calculated as follows: His earned income relief, amounting to one-sixth of his total income, would have been £25. In addition, he would have a personal allowance of £125. These two allowances amount to £150. Therefore, since his earned income from all sources did not exceed £150 he would be tax free. His position under our present proposals is as follows: Under Section 4 of this Bill his earned income relief would amount to one-fifth of his income, or to £30. His personal allowance would have been reduced from £125 to £120, but the sum total of his allowances would have remained as before at £150, so that he would have been no worse off under our present proposals than he was last year.
The next critical case is that of the married man with an income of £270, all earned, and with no dependent children. Last year his earned income relief would be one-sixth of £270, or £45. The personal allowance for himself and his wife would have been £225, so that his total allowances would be £270. Accordingly, he would have paid no income-tax. This year, not merely will a man with an earned income of £270 pay no income tax, but a married man with an income of £275, all earned and with no dependent children, will not pay any income-tax either, because the position will be that the earned income relief, being one-fifth of £275 or £55, has to be added to the reduced personal allowance of £220, making the total allowances to which this person would be entitled £275. So that under the scheme that we are proposing now not merely will that married man with an earned income of £270 be no worse off than he was last year, but a person whose income does not exceed £275, and is not less than £270, will be slightly better off than he was last year.
Provided it is all earned income?
Yes.
The person referred to by Senator MacDermot will be worse off, to the extent of £5.
That will depend on how his income is derived. If his income is investment income he will be worse off to the extent of the tax on £5, but if he has a pension income he will be in exactly the same position as if his income was earned income, because pensions are regarded for income-tax purposes as being deferred pay on earned income, and as such they get the allowance.
Question put and agreed to.
Section 4 agreed to.
SECTION 5.
Question proposed: "That Section 5 stand part of the Bill."
Would the Minister say what does this section mean?
The purpose of it is to clarify a position which has existed here since 1933-1934. The section, in fact, brings up to date, and gives statutory authority, for the exemption given by Section 3 of the Finance Act of 1931. As Senators may remember, at the time that the Finance Act of 1931 was passed, all the surpluses from the sweepstakes went to the hospitals organising the sweep. Since the passing of the Public Hospitals Acts of 1933 and 1935 all the surpluses are now payable to the Hospitals Trust Board as distinct from the hospitals organising the sweep. Without the amendment of the law now proposed, the strictly legal position I understand would be that sweepstakes surpluses, in the hands of the organisers or committee of a sweep, would be chargeable to income-tax. In order to clear up the position and leave no doubt that the surpluses which are now being transferred to the Hospitals Trust Board are free of income-tax, this section is being introduced.
Question put and agreed to.
Sections 6 and 7 agreed to.
SECTION 8.
Question proposed: "That Section 8 stand part of the Bill."
Mr. Hayes
This is an illustration of the extraordinary tariff policy that we have. I believe that most of this is elucidation and amelioration. This section was described as being the section of elucidation: it makes something clear until somebody gets working upon it to make it clearer still— and then it becomes aggravation. It resembles the position where you put on a tariff by means of a Bill, and then one by decree and by a Bill afterwards, and then discover that it is not the tariff that was intended, and you set out to give somebody a licence and make a quota or a prohibition, and then nobody knows what the tariff situation is. It requires constant elucidation, constant change, and constant attention by the staff of the Revenue Commissioners. It also requires the constant attention of special persons on the staffs of most Dublin firms, who now employ men with nothing else to do but look after the tariff position. That adds still more to our costs.
It is very difficult to know what anything precisely means. Nobody knows what the Minister for Industry and Commerce and his colleague, the Minister for Finance, are doing at a particular moment, except the persons who are directly interested—and if these are making something out of it they do not squeal. If something is being done to them they may squeal, but not too loudly, because the Minister may hit them harder some other time. The result is, that we get about £500,000 more in customs, but we have a substantially bigger staff to collect it. The situation remains that it is almost impossible to know what is taxed, or how it is taxed, or where it is taxed, or even what it is.
This is a case where I am not in complete agreement with my friend, Senator Hayes, because I think that, but for the machinery such as we have in this section, things would be even worse from his point of view, very much worse. It is essential to any scheme of general tariffs that errors are inevitably found—even with a Minister as clever as the present one— in any scheme, because no one knows in regard to any particular tariff exactly how it will work out or what the incidence of it will be, until it is put into effect. Few people can say what effect it will have on industry or on manufacturers and therefore it is essential that some adjustments should be made from time to time. However, as far as the general working of tariffs is concerned, from the point of view of the importer, the machinery has now got to such a stage that most of us have extremely little trouble. Most of the initial difficulties have disappeared and, while that does not mean that there are not many improvements that might be made, though we may have grumbled in the past, we have reached the stage now where most ordinary business men can understand the position and get reasonable expedition in regard to tariffs.
I would like again to urge on the Minister—I will not argue with him, as I did that on the Second Stage—not to stand too closely over what he said in the reply he made to my question with regard to examination of the basis on which general tariffs are applied, that is, the ad valorem basis; and to consider carefully whether another basis such as that which is in operation in Canada might not be from every point of view a great advantage both to the State and to manufacturers. I have given a good deal of study to this question, I have made enquiries and have discussed it with English manufacturers who did not like it at first; I have also discussed it with Canadians and with persons who have made enquiries in Canadian offices; and I am quite convinced that it is not a matter that the Minister should lightly pass over, but one that he should very carefully investigate. It is not, of course, a matter for hasty action, but I believe it is one which should be carefully investigated. I am not trying to make Party points in any sense of the word. But this is, in my opinion, a case which will, on full investigation, be found to be the basis of a change to our advantage.
With regard to the desirability of finding another basis for assessment of our ad valorem duties, I am having that matter examined without its being prejudiced by anything I may have said here on the last occasion. I have a perfectly open mind on the matter, but objections did occur to me spontaneously, though it may be that, on investigation, these may be ascertained to be not so well founded.
We will not get anything that is perfect.
Question put and agreed to.
Section 9 agreed to.
SECTION 10.
Question proposed: "That Section 10 stand part of the Bill."
I move recommendation 1:—
At the end of the section, that a new sub-section be added as follows:—
Whenever it is shown to the satisfaction of the Revenue Commissioners that hydro-carbon light oil (chargeable with the duty imposed by this section) has been used in the ordinary course of his business by the owner or driver of a street service vehicle which plies for hire from a street stand in the County Borough of Dublin, the Revenue Commissioners may, subject to compliance with such conditions as they may think fit to impose, allow a repayment of duty at the rate of 2d. per gallon up to such maximum sum in any one month to any one driver or owner as may be fixed by the Minister.
This may have some superficial resemblance to an amendment that was moved in the Dáil, but it was devised by myself to try to meet the objections which I read in the Minister's speech to the amendment that was proposed in that House. He objected to the proposal to meet the hardships on taxi-drivers on several grounds, one of which was that the proposal was to go back on previous taxation and not simply to give a concession on the taxation that was added this year. My recommendation only proposes that the concession should be the 2d. per gallon which the Minister has put on in this Budget.
He further objected because, he said, it would be open to evasion and that taxi-drivers would have many friends and would get petrol for them, etc. I do not think that objection is a good one. The taxi-driver must have a licence and has to pay a fairly substantial tax for it. I see no reason why he should not be given a certain amount of petrol per month, which would be fixed by the Minister on the basis of the average use of the taxi; and when he proved by means of the receipts from various garages that he had paid for petrol and that he had used it up to that amount, he should be refunded 2d. per gallon on it. He could not get more in any month than the fixed limit. That is a method that is applied to tourists in certain countries in Europe. If you stay a month in a particular country you obtain petrol and keep the receipts and show that you are a tourist by means of a passport. A taxi-driver would have similar possibilities because he has been registered and has to pay tax.
There would be a limit to the maximum amount on which you can get a refund so that there is no use in offering it to the people in the country, because that would be of no gain to yourself. If that were adopted here, it would be a very definite relief to taxi-drivers, who are now feeling the burden of this increase on top of a very considerable number of other increased taxes. Those who wanted to use more petrol than would be provided for in the maximum set down would not be entitled to receive the same amount of sympathy; if they exceeded the normal amount they would, presumably, be making a greater profit. One of the reasons why I brought this up again was, not that I had very much hope that the Minister will change his mind, but that I believe there is a general grievance and that it is not in the public interest that we should go on increasing charges and providing more difficulties for taxi-drivers.
Our taxis are none too good, and will not be improved, but rather worsened, by this tax. We are proposing to provide a lot of money for tourist development. One of the most important features of a city like the City of Dublin, the capital city of the State, is that we should have good taxi accommodation, especially from the point of view of tourists. When a tourist comes into a strange city and does not know the bus or other traffic routes he makes use of taxis. I feel that the majority of the Dublin taxis are none too good as it is and that they are not a credit to our city. That is very largely due to the fact that recent taxation here is in itself operating very harshly on these people.
I do believe that, without any substantial expense at all, it would be possible to meet them to the extent that I have proposed, which is to the extent that an additional tax on petrol has been imposed in this Budget. I do not say that it would solve the whole problem, but my principal reason is to call attention to a problem which ought not to be neglected. I know that there is a danger that certain companies who are operating from fixed addresses quite convenient to the ordinary citizens of Dublin, are operating at a rate which would knock the ordinary street taxis off the streets. I do not consider that desirable, because, from the point of view of the visitor, these people are no use at all. The visitor wants a taxi at a railway station, or on stands which are convenient, and I think it would be most unfortunate if they were driven off the streets, or if their general standard was allowed to deteriorate, when it should be improved. I am not optimistic enough to pretend that this recommendation will, by itself, solve the problem, but I do say that it was a mistake and unnecessary to add to the petrol tax, at any rate so far as taxis are concerned.
I should very much like the Minister to agree with this recommendation, but I should like to see it extended to hackney drivers throughout the country. Petrol nowadays is delivered directly into a car from a pump. In the old days, when petrol was sold by the gallon in tins, evasion was quite possible, but now when petrol is delivered directly into a car, it should be possible to make arrangements by which an outsider could not obtain petrol from any petrol supplier. These men who use motor cars for the purpose of making a living are in a different class from the rest of us. Some of us drive cars for pleasure and some in the course of business, but these are the only people who drive them directly for the purpose of making a living, and I think we would all wish that some concession should be made in their favour.
I am very sorry that I cannot accept this recommendation. The tax upon mineral hydrocarbon light oils has become a very important tax in our revenue. I think that, last year, we got almost £1,300,000 from it, and we expect this year to increase that to well over £1,500,000. If I were to accept Senator Douglas's recommendation, I undoubtedly would have to do what Senator Goulding suggests. I would have to extend the concession to the taxi-drivers throughout the country, but it would not stop there. There are other people whose livelihood is derived from the use of petrol.
Directly?
Yes, directly. Commercial travellers are engaged in the same way. They could not do their business without using petrol. Public transport companies would be in exactly the same position, and ultimately, we would come down to a point at which petrol, which was to be used for commercial purposes, would have to be exempt. The moment we tried to apply such an exemption, not merely should we have a very heavy reduction in the revenue derived from the tax on petrol, but we should also have wholesale evasion of the tax, because it would not end with commercial exemptions. Professional exemptions would then come into play. We should have the doctor wanting to be exempt; we should have the engineer wanting to be exempt, and we should have the clergyman wanting to be exempt. We would have all the people who use their motor cars for the dual purpose of business and pleasure wanting to be exempt from the tax, and the result of granting an exemption of this sort would be that we should have to withdraw the tax upon petrol altogether.
Somebody might say that that would be a good thing. It would be, if we could do without the revenue which we derive from the tax, but, unfortunately, the position is that we cannot do without that revenue, and if we did not tax petrol, we should have to tax something else. I do not think any person is going to contend that the duty on tobacco is not already as high as it might be, nor do I think any person is going to say to me: "Do not tax petrol, but tax tea or sugar." That is the alternative. I have given very careful consideration to this matter since it was first brought to my notice. I am satisfied that the end which is sought to be served, that is, to ease the position of taxi-drivers and hackney-drivers in general, must be served by means of a special exemption from the incidence of this tax. There are other ways. They pay road tax and, perhaps, something might be done in that regard. I do not undertake to do it, because I am not in a position to give any undertaking in that respect. The Minister for Local Government is in charge of the Road Fund, but undoubtedly, if you want to ease the position in regard to taxi-drivers, there are other ways in which it can be done, with less risk of evasion and with less justification for extensions and exemptions than would arise, if the concession now asked for were to be granted. I cannot accept the recommendation, and, if the matter were to come back from the Seanad to the Dáil, I do not think there is any hope that the Dáil would accept it either.
There is an Irish saying "Mair a chapaill agus gheobhair féar"—"live horse and you will get grass". That is the Minister's consolation to taxi-drivers and to a great many other people who are being taxed in this Bill. He feels that if he were allowed to get away with this petrol tax, sometime or other somebody or other might do something for some of the taxi-men. The Minister, in the course of his argument, did what he does so frequently—he built up a vast edifice of his own and destroyed it most systematically and thoroughly. But Senator Douglas did not make the case which the Minister destroyed and the Minister did not deal in any particular at all with the case Senator Douglas made. He was so immersed in his imaginary enemy that he even forgot what is in an ordinary Finance Bill. I think he said that the Minister for Local Government was the person who settled the road tax.
Yes.
Does it not appear in the Finance Bills?
No. The Senator is quite wrong. There is a particular Act which levies the motor vehicular duties.
The Minister for Finance has nothing to do with it?
The Minister for Finance has something to do with it, but he does not either enjoy the proceeds of the fund, or administer it.
Is he not robbing the Road Fund in this Bill? Is he not taking money from the Road Fund and has he not been doing it for years?
With the consent of the Minister for Local Government.
And of his majority in the Dáil, of course, not further or otherwise. The notion that if you did not tax petrol, you would have to tax sugar and tea is absurd. We have to have taxes because the Minister does not know where to stop when he is spending. There is no more foolish argument than that, if you do not tax one thing, you must tax another thing.
To come down to the precise matter of the recommendation, I sympathise with Senator Goulding's point of view about hackney drivers in the country, but there is this difference between the hackney driver in the country and taxi-men in Dublin, that the taxi-men in Dublin drive on a clock. They are bound to fixed charges, charges which are fixed for them and which they cannot increase, and they have to pay more for petrol but they cannot get more from their fare. The hackney drivers in the country are, I think, in the vast majority, people who do not drive on a taxi-meter and, therefore, they can make some effort to pass on the charge to the public who use these hackney cars. Similarly with the people the Minister mentioned, the transport companies, and even the other great carrying companies. As a matter of fact, what the Minister proved in his rebutting of this recommendation is that the tax on petrol is a tax on the food of the people, a tax upon necessaries, a tax on the cost of things we have to buy. In the case of the Dublin taxi-men, however, they work on a taxi-meter, or clock, as they call it themselves, and therefore, they cannot increase their charges. They have to pay particular road tax and they have cars which, in the main, do not give a good petrol return.
There has been in recent years, I think, though Senator Douglas does not make that point, a very considerable improvement in the type of taxi. These taxis are subject to very rigorous, though I am sure, very sympathetic inspection by the police. They have to be up to a very high standard and the taxi people can barely make ends meet. For my part I prefer the individual taxi-man to the big company. It is a pity that individuals who own one or two or three cars should be put out of business and that their trade and their profits should be gobbled up by some big impersonal concern. The remission of the tax on petrol in the case of the taxi-men would not lead to confusion if it were confined to the City of Dublin where the taxi-man drives on a taxi-meter. If we are going to develop the tourist traffic in Dublin, the taxis in Dublin are a very important consideration. All of us who visit foreign cities know that there is a very great tendency to take a taxi instead of depending on a bus or some such mode of conveyance. It is much more convenient to one in a foreign city to go round by taxi. The taxis are dear in Dublin, but that does not imply that the owner or the driver gets a big profit. I submit that in the case of the taxi-driver this particular tax should be remitted. The Minister did not make the case that the remission to the taxi-driver would be abused or evaded. It is a reasonable amendment and the Minister should accept it. These people are only given power to charge a certain fixed amount in their fares. For that reason there should be some relief from this tax. I think the Minister should have given it more sympathetic consideration as a special case. With regard to the road tax that, of course, is a different matter, but when this petrol tax is put on the difficulty of getting a reduction in the road tax will remain as great as ever.
While having no sympathy with this amendment I would strongly commend to the Minister that he should give some consideration to the question of the remission of the tax in the case of vehicles engaged in the removal and transport of agricultural produce. I have no sympathy at all with the motion before the House. I would be glad if we could tax the people of Dublin a little more in every shape and form and drive some of them back to the land, and the more of them we could drive back to the land the better it would be.
Ministers included.
I would not mind swopping with Senator Baxter.
I confess that I cannot be expected to know a great deal about this. I very occasionally drive in a taxi. I have not the accommodation which others, Ministers included, enjoy. What I would like to know is this: Senators Douglas and Hayes told us there is a situation likely to develop out of this tax which is going to put a number of taxi-drivers out of business. Is that a fact? What does the Minister know about it? It is all right to talk on platforms about taxing the rich for the sake of the poor. Does the Minister like the scheme in which he is imposing a tax which, when distributed over all members of the community, is going to fall most heavily on the weakest members of the community?
Supposing the Minister, by this tax, puts a number of these people out of business, what does he think is to happen to them? What will become of these people? Where are they to go? Are they to stay down and out? Are they to get employment in these firms to which their business will pass when they are put off the street? Is the Minister envisaging this measure having such a devastating effect on taxi-men in the city that they will be put out of their employment. Does the Minister want all this business to go to a big corporation out of which he will get a corporation profits tax? It seems to me that the case as presented by Senators Douglas and Hayes shows that very great hardships are to be imposed on these people who can bear very little additional strain at the moment. I think, in justice, the Minister should take a case like that into account and give it more con- sideration. It is terribly unjust to put these people out of employment. I can very well visualise the Minister asking: "If we give this remission, where are we going to stop?" I put this amendment as an alternative. I think the whole tax is unjust, but, unjust as the tax is, it would be less unjust if this remission were given.
This tax would not be necessary if the Minister were pursuing a sane policy in the years gone by. The Minister is now in a very tight corner in trying to keep his level of expenditure up to the same standard as that at which it stood a few years ago. The Minister is trying to search out every corner in the taxpayers' pockets and to collect from them all the pennies left but he will very soon discover that very little is left. Certain people are going to be injured and prejudiced in their business by this Bill. In this case I would prefer that he would take the line that he would do just a little to right a great wrong, for the whole tax is unjust. It would be better to do a little right on the fringe of this tax than to do nothing at all. If I had the power I would oppose the whole tax all round, but if the facts are as Senators Douglas and Hayes have stated them, the Minister ought to look around the whole situation and examine the consequences of what this tax will be if applied to the taxi-drivers in Dublin. There are things that human nature can stand and beyond these limits one cannot go. If you drive people beyond these limits, you certainly are not going to make them better citizens. If these people are put out of their employment are they to go on the rates or to look for unemployment assistance? What is to happen to them? If this tax is not going to press as heavily as the Minister suggested he ought to tell us the evidence he has that it is not going to press so heavily.
Before the Minister finally rejects the amendment moved by Senator Douglas, I would like to draw the attention of the Minister and the attention of Senators Hayes and Douglas to the fact that outside Dublin there are also taxi-men who are working on the meter. There are certainly as many per head of the population in the City of Cork as in Dublin and they render just as valuable a service. They also exist in Limerick and unless I am mistaken I have seen some in the cab ranks in Galway. I think the Minister should give more consideration to this amendment before he turns it down. Senator Baxter has pointed out that these men are not rich men. In fact they are poor men and they have invested what little capital they have been able to gather together in the purchase of their cars and vehicles. They have gone to certain expenses in the road tax and in the up-keep of their cars in the condition which will enable them to pass the tests of the Commissioner of Police and the local licensing authorities. I think Senator Baxter has made an extremely good case as to why these men should not be penalised. I think the Minister ought to see whether he can stretch a point to prevent them being put in a position where they would not only lose their livelihood but the capital invested in these vehicles.
With reference to the point which has been made by Senator Hayes that I told the taxi-drivers that they might live and that they will get grass, I would like to say this, that a Bill codifying the measures of vehicle taxation is under consideration at the moment and I have some hope that it may be introduced within the next year. That is the Bill consolidating and codifying vehicle legislation. On that Bill therefore will arise the case for considering the taxi-driver as a class and not merely the taxi-drivers but other classes of motor vehicle users. With regard to this particular recommendation, the argument has been used that because the taxi-driver charges upon a meter at a pre-determined rate prescribed for him by some authority, then the tax is going to fall entirely upon him. There is no justification at all for that. The charges for taxi fares are determined with a full consideration of the costs of running a vehicle and providing a taxi service. If, because we have increased the cost of petrol to the taxi-drivers, they have a claim for revision of fares, I have no doubt whatever they will not be slow in presenting that claim. If we may assume that the authority which prescribed fares previously acted fairly between the owner and the user of the vehicle, I think we may take it that it will act fairly in the future and that the charges will be amended in order to meet equitably the point of view of the taxi-driver in regard to this matter.
I cannot see any justification for the other argument used—that we are going to drive these people out of business by means of this tax. As may be gauged from what I have already said, if an increase in fares is necessary to enable the owners to run these vehicles and to provide this service at a profit, that increase in fares is likely to be granted. If that is done, they will be no worse off than they are now except in so far as the increase may deter people from using taxis and induce them to turn to other means of transport. In that event, if the taxi-owners lose, others will benefit. With regard to the suggestion that the taxi-drivers may be supplanted by large concerns owning taxis and a certain amount of unemployment caused, I think that argument is utterly fallacious. I do not think that large corporations tend to reduce employment. On the contrary, by reason of the fact that those who constitute the corporations cannot give to the business the same element of personal attention that the private owner can give, they tend to provide more employment at a certain cost, naturally. It is not a case of the poor taxi-driver being forced off the street and being left without a livelihood. He may cease to be an owner. Some people might regard that as socially disadvantageous. He might become an employee, but there is just the possibility—it has happened before —that the economic position of the person concerned would be improved rather than disimproved by becoming an employee. I am not suggesting that one state is more advantageous than the other but, when Senator Baxter was talking about these people being driven off the streets and supplanted by big corporations, he did not remind the Seanad that nobody ever yet saw a big corporation, public or private, driving a taxi. These corporations employ taxi-drivers. Those who suggest that the taxi-driver is going to be supplanted by large concerns and that a large volume of unemployment will thereby be created do not give due weight to the intelligence of the Seanad and of the general public. There would be something to be said for this recommendation if it was not for the fact that there is nothing in any code I know which would bind the taxi-drivers to shoulder the burden imposed upon them. They have various remedies. I have suggested two. They can go to the Minister for Local Government and try to secure his assent to a reduction in the road tax, or they can go to a commissioner of the peace and get him to agree that taxi fares should be raised. There is nothing in the ad misericordiam appeal made here to support this recommendation.
I am completely and absolutely unconvinced by the Minister's speech—more unconvinced than usual. The only argument that seemed to me to be sound, as against this recommendation, was that advanced by Senator O'Callaghan. That was that we should drive the taxi-men back to the land. That seems to be an excellent reason for voting against this recommendation. I had not thought of it myself and I congratulate the Senator on having thought of it. The Minister was quite up to his usual form and, in the latter part of his speech, he argued against something which is not a serious problem. There is not, so far as I know, any large corporation which puts taxis on the street. There is a large corporation which does not ply on the streets but which, if you have a telephone, you can ring up. That is of service to people in Dublin with telephones but it is largely useless so far as the general public is concerned. That corporation operates under different regulations because they do not ply on the streets. That argument is, I admit, irrelevant—just as irrelevant as was the Minister's argument when he referred to a corporation driving taxis.
That is the impression Senator Baxter gave.
The taxis to which I was referring were taxis on the streets and I never wished to confine the concession to Dublin. Cork would, certainly, be included and any other city that could make a case. It would be confined to hackney vehicles that operate on a meter, and I am not convinced that it could not be operated without evasion. As to the Minister's statement, that there is to be a general revision of the code, that seems to me to be a good argument for making this concession for one year, so that there will be no danger that a number of people will be driven out of employment in the meantime. That is possible. It is the last straw which does the harm. I am convinced that there will be a serious position with regard to the Dublin taxi-drivers unless somebody steps in. I think that it is not a bad principle, when you introduce general taxation, which is inevitable because of expenditure, to make exceptions where you find that a small class will be hit out of proportion to other people who have to pay the tax. In putting down this recommendation, I felt that the position was one to which publicity should be given. I was also convinced that the taxi-driver would be hit by this tax out of proportion to any other class which will have to pay this petrol tax. I recognise that taxes have to be imposed somewhere, but I do not agree with the Minister's general objection to making exceptions when a good case is made that certain classes are unduly hit. I propose to press the recommendation, as there is a principle involved.
Question put: "That the new subsection be there added."
The Committee divided: Tá, 8; Níl, 20.
Tá
- Baxter, Patrick F.
- Butler, John.
- Counihan, John J.
- Crosbie, James.
- Cummins, William.
- Douglas, James G.
- Hayes, Michael.
- Johnston, Joseph.
Níl
- Concannon, Helena.
- Corkery, Daniel.
- Goulding, Seán.
- Hawkins, Frederick.
- Healy, Denis D.
- Johnston, James.
- Keane, Sir John.
- Kehoe, Patrick.
- Kennedy, Margaret L.
- Keohane, Patrick T.
- Lynch, Peter T.
- McEllin, Seán.
- Magennis, William.
- O'Callaghan, William.
- O'Dwyer, Martin.
- Nio Phiarais. Maighréad M.
- Quirke, William.
- Rowlette. Robert J.
- Ruane, Thomas.
- Stafford, Matthew.
Tellers:—Tá: Senators Crosbie and Douglas; Níl: Senators Goulding and O'Dwyer.
Question declared lost.
Section 10 agreed to.
Section 11 agreed to.
SECTION 12.
I move Recommendation 2:—
In paragraph (b), in page 8, lines 5 to 8, that the words in brackets be deleted.
In this case I am not going to say that any large corporations are interested or that anyone is going to be put out of business. My object was really to ask the Minister if he would explain why it was essential that these particular words in brackets should be there. I asked him on the Second Stage and I think he forgot about it. It is only a discretionary power, and I do not see why the discretion should not be extended to the sidetrack film which has sound on it. May I say, in reference to the debate here on the last day, in regard to the suggestion that the Minister thought I made—that he, as Minister, was doing something because he was personally interested in it, that there was nothing further from my mind—especially as I have been the one person who has advocated the giving of this concession for the last four or five years. Frankly, I admit I was interested, but I am afraid I could not make much of a case against the Minister even if I wanted to. In the United States, where the amateur cinematograph came from, to a large extent the amateur cinematographers are now taking up the sidetrack film with sound on it. It is a pity that it should be precluded from coming in here. At the moment it is definitely precluded, because the price of having it processed and then of paying duty on it would be absurd. I suggest that it is not necessary to have in the section the words in the brackets. They are only discretionary.
I would ask the Senator not to press this this year. I undertake to look into it before next year's Budget. I am inclined to agree with the Senator that there may not be a great deal in it, but there is just the possibility that if these 16mm. films could be imported free of duty they might be shown in small halls in competition with exhibitors showing full-size films and paying tax thereon. The reason why the words in brackets appear in the section is that, in regard to concessions of this sort, where commercial interests may be involved and where the concession might adversely affect commercial interests, we have got to proceed slowly even with the concession. I understand that there are not any of these 16mm. sound-projectors in the country at the moment.
There are several.
If that is so, the people who own them apparently are quite content to pay the duty, because they have not approached me. I will undertake between now and next year's Budget to consider the matter sympathetically. That is not to say that I will grant the concession, but, at any rate, I shall be predisposed to grant it if I can.
The Minister is under a misapprehension. As I have said, there are several of these in the country and there would be more if it was not for the difficulty of getting them processed. This is confined entirely to a small number of films only available for use in private houses and in schools. I am more interested in it from the school point of view than that of private houses. The small sound camera, as far as I know, is not of any use here because you cannot get the films taken here processed. The cost would be quite prohibitive. It is not so much from the point of view of the users of projectors that I am interested in this. I do happen to be interested in a firm that sold two. The fact is that, at present, you cannot introduce a camera because if you do you have no way of getting the films processed. I am sorry that the Minister is going to allow another year to pass before he will undertake to do anything. I cannot see anybody bring a camera in here while the law remains as it is. I am not pressing this, and I am prepared to withdraw it if the Minister wishes. I would be glad if he would take a further opportunity of looking into it.
I think the Senator has now raised another point. When I was talking of the apparatus I was referring really to the camera. Because of the fact that there are projectors coming in, I think the concession which the Senator now asks would allow these 16 mm. films to come in indiscriminately whether they were shot here or not. That would mean that if we were prepared to grant a concession in regard to films shot here by residents who owned these cameras we would have to narrow the concession somehow. If the Senator, or those interested in the subject, would get in touch with the Revenue Commissioners on the matter we would try to meet them. Personally, I am satisfied that one of the ways in which we can develop, if we consider it desirable to do so, the cinematographic industry is by trying to encourage the amateur in this way.
Am I to understand that the 16 mm. film can come in indiscriminately provided it has not sound on it?
The point was made by Deputy Benson in the Dáil that one of the attractions of amateur cinematography was that you could shoot a picture with your camera abroad and have it brought in here free of duty. In order to meet that point we have had to relax the section very considerably. It may be possible that the Revenue Commissioners, when they are drafting regulations, will try to safeguard the position as against the wholesale importation of 16 mm. films. On the other hand, we have got to remember that the 16 mm. silent film has very little commercial attraction, but that the 16 mm. sound track film might become a competitive article. That is the point we are doubtful about in regard to it.
I quite agree that it is perfectly possible that it may in the future be a very important factor as far as the 16 mm. film is concerned.
Recommendation by leave withdrawn.
Section 12 agreed to.
Sections 13 to 18 inclusive, agreed to.
SECTION 19.
Question proposed: "That Section 19 stand part of the Bill."
I would like to raise one point, an administrative point. I have had one or two complaints recently regarding delays in the Estate Duty Office. I wish the Minister would give an assurance to look into the matter, as it is most inconvenient for beneficiaries after a death to be held up, as in one case that I know of, for a very long time.
It so happened that I was discussing the position of the Estate Duty Office with the commissioners some few days ago, but not entirely in relation to the point which the Senator has raised. It was in relation to other matters and it was suggested to me then that the work of the Estate Duty Office was rather complex and rather difficult because of the delay which they experienced in getting solicitors who were handling cases to furnish them with the necessary information. I am only saying that to indicate that perhaps the Estate Duty Office may not be entirely to blame in regard to questions of delay. I will put to the Revenue Commissioners what the Senator has said and will try to arrange that, as far as it rests with the Estate Duty Office, they will expedite the case with which they are dealing.
The Senator will understand that there is a natural inclination on our part to get the work of the Estate Duty Office done expeditiously, as the more rapidly these cases are dealt with the greater the rate at which revenue flows into us. I am not prepared to ascribe the responsibility for the delay to one party or the other, but there are two parties involved— the solicitors for the estate and, of course, the officials of the Estate Duty Office. It may be, as I have said, that the responsibility does not rest entirely with the officials. If the Senator thinks it does I should be glad to hear him.
I am not disposed, on the information before me, to lay the blame on any party; I am only asking the Minister to satisfy himself that a certain portion of the blame does not lie in the office. In any individual case where I have had to make representations, I have always received every help from the officials concerned, but I am not too sure that a favour being given to one person necessarily means that others receive such expeditious treatment.
If the Senator should think that the consideration that has been extended to the case of which he is aware would not be given generally I would like to hear him. If there is any person who feels aggrieved through a delay by any officer of the Estate Duty Office or by any officer of a Department for which I am responsible, I would be only too glad to hear from him on that matter.
Question put and agreed to.
SECTION 20.
Question proposed: "That Section 20 stand part of the Bill."
I do not think the Seanad could permit this section to pass without making a comment or two. I would be very surprised if the farmer Senators on the right-hand side of the House are prepared to support the Minister in the imposition which this section contains. The Minister is proposing to take £150,000 from the Road Fund and transfer it to the Exchequer. I think the Minister, early in his career as Minister for Finance, borrowed on the strength of the Road Fund; and I would like the Minister to tell us if that money has ever been repaid. Is it gone and lost for ever, or, on the contrary, has it come back to the Road Fund and is it there to the credit of that fund to-day?
It is not so much the fact that the Minister has decided to take £150,000 out of the Road Fund—it is not so much the loss of the £150,000 to that particular fund—that I disagree with it, but rather the attitude of mind displayed in such a decision. I confess, as a countryman, that that proposal was the one proposal in the whole Budget which gave me the greatest shock. It was going back on all the conceptions that we had here and that we tried to propagate, wisely and justly throughout the country—that taxation of land was too high. I think the position now is, that local rates are well over a million pounds higher than they were before the Minister came along.
When the Minister tells us of the benefits which have been granted in the remission of the land annuities—or half of the land annuities—let him recollect that it is being balanced on the other side now by the additional expenditure imposed on local authorities, largely through the scheme of financing which the Minister has in progress. At the present time when the farming industry is very considerably depressed one can see evidence of that, and it is admitted by every type of citizen in rural Ireland, regardless of politics—it is not a question at all now of men giving evidence of being depressed only because of the political Party to which they belong. The economic situation is pressing on all people in the country and they are quite prepared to admit now that the facts are as they are. What surprises me is that, in circumstances like this, the Minister could succeed in putting a scheme across his own Party, which gives him authority to take from the Road Fund moneys paid into that Fund to be utilised for the purpose of road construction and road maintenance in this country.
We had expected that the Minister had softened his heart a bit as far as the farmer was concerned, and was coming to the point when he would be prepared to admit that times had been very rough for the farmer and that concessions ought to be made to him. When we hoped that in the offing there would be some remission of local rates, we find, instead of that £150,000 being an additional relief of rates, the Minister actually comes in and takes from the Road Fund money which ought to be utilised in the construction and maintenance of roads and places it in the Exchequer, to be spent on goodness knows what. It is something to which I cannot subscribe and something which I think is entirely unjustifiable on the part of the Minister. I do not think it is a policy which people from the country—whatever about people from the City of Dublin who are not perhaps, so concerned—will stand for. No one knowing what the condition of the ratepayers is to-day can assent to it.
What is the net result going to be? Surely to the extent to which one is reducing the amount available in the Road Fund, one is going to reduce employment on the roads. The money is not there to be spent; at least, the money will not be available from that fund to spend on roads. It may very well be that local authorities will expect the roads to be kept up to a certain standard and the poor oppressed ratepayer will be further taxed to keep the roads up to the level which it is only possible to maintain by contributions from this fund, which we have always been led to believe was the legitimate property of the local authorities and was to be spent in road construction and road maintenance in this country.
I am against this section. It is staggering to think that the Minister, at this time in his career, is prepared to go on taking away money and putting a heavier burden on the local taxpayers than they have had to carry heretofore. One might add that to that extent local taxation has been increased, because that is what the real position is. I would like the Minister to tell us what has become of the money which was borrowed on the strength of the Road Fund. Was it ever given back to the Road Fund? It seems to me that the Minister in his whole scheme, as I said earlier to-day, is becoming quite reckless. The money has to be found and, no matter from what source it comes, it must be got. He is quite reckless of the consequences. That situation will have to be faced because you cannot go on spending at this rate, and taking from this hole to close that hole. The net result for the taxpayer of this country is going to be that the position will be worsened, not to the extent alone by which the fund has lost in cash, but in the sense that it is an attitude of heart and mind on the part of the Minister to the local ratepayer. I think the sooner the local ratepayer wakes up to the attitude which the Minister has to the rural dweller generally, the better for the Minister and for the country.
I should like to join in the protest made by Senator Baxter. I do not know if I am right, but, speaking from recollection, this is the first time the Budget has placed a burden on the local authorities. I may be wrong, but, if that is so, it is introducing indirectly a new principle, because that is the effect of it. This money, if it were not taken for revenue, would go indirectly to expenditure on roads and in relief of rates, and if the local authorities do not get it, they have to let the roads deteriorate to that extent or increase the rates to an equivalent amount. It does raise a very important principle because I feel that the Government, all along is paying inadequate regard to the burden on the ratepayers. The Minister has quite enough of a burden to bear in taxes, and wherever he can, it is very natural that he should yield to the temptation to say: "Put it on the rates." From the more or less narrow departmental outlook, I do not altogether blame him, but remember that the burden of rates is very different from the burden of taxes. The burden of rates is a fixed charge on a hardly pressed class and not like taxes, which, if you have not got the income, you do not pay. An increase of rates you have to pay, whether you have an income or not. It is a fixed charge on land and practically equivalent to a land tax. If you go down the country and talk to the farmers, you find that they all say: "It is the rates which are killing us." They will give you instances which, in some cases, are appalling, showing that rates are double what they were 20 years ago. We know that, in the last few years, rates have increased by 25 per cent., so that I do join in the protest made by Senator Baxter against this, the thin end of the wedge of a new principle. I do not believe that if the Minister is pressed for money, he will be satisfied with £150,000. It is a small amount, and I am afraid there will be an increasing tendency to raid the Road Fund, which really means placing additional burdens on the ratepayers.
I should like to join in the protest against this raid, on the ground that it will cause considerable unemployment throughout the country. It is well known that the secondary roads are falling into disrepair and these are the roads largely used by farmers. It will be impossible in a few years to get these back into condition, if the present position is allowed to continue. I think this is contrary to the whole spirit of the idea of giving assistance to rural areas. We have set up a commission for the purpose of devising ways and means to help agriculture, and here we find this principle cutting across that in a very important way. I think there will be great discontent on the part of public bodies, whose engineers are in despair because they can never get the secondary roads into condition without an immense expenditure. A little attention given annually would, in the aggregate, mean a good deal to employment, and, finally, would mean that the roads could be easily reconditioned. I think the Minister should seriously reconsider this proposal, and leave the fund to be used for its legitimate purposes.
I, too, wish to protest against this proposal. A sum of £150,000 will mean a great deal to the employment given by local bodies. I do not think there is any charge which presses so heavily on agriculturists as rates. I once mentioned here that fear is perhaps the greatest of all human emotions, and the fear that sees in this another effort to take away from what public bodies have come to look upon as their rights is very serious, and I appeal to the Minister to withdraw this proposal.
I am not responsible if the public bodies are taking the wrong view of this matter. To my mind, there is no difference between the tax paid on motor vehicles and the tax paid to the Exchequer by the owners of public houses. It happens that a tax has to be imposed which at the outset was very largely of a luxury nature—its character may have been modified in the course of the years, but in which there is still a very large luxury element—and I do not see any reason why it should not be appropriative to the general purposes of the Exchequer and a more orderly system of assisting local authorities in regard to the maintenance of roads devised. I am saying that because I want to make it quite clear that I do not regard and no Minister for Finance has ever regarded it that the Road Fund has been appropriated to one particular purpose. It did happen when the tax was first introduced in Great Britain that they did say that the proceeds of this tax will be reserved for a certain period in order to enable us to build up a proper road system, but they long ago have discarded that attitude towards it. Chancellors of the Exchequer have, on a number of occasions, taken contributions from the Road Fund whenever the general Exchequer position required it, but latterly they have wiped out the Road Fund altogether in the country in which it originated. Therefore, so far as the history of this fund is concerned, so far as its character is concerned, and so far as it is a tax of almost exactly the same sort as is paid by a tobacco licence holder or an excise duty licence holder or by a bookmaker it is there to be appropriated, in my view, for the general purposes of the Exchequer, one of the general purposes being to assist the local authorities to do their share to maintain the roads which run through their portion of the country. With regard to our justification for appropriating some portion of the Road Fund in this year I should like to make it quite clear that we are not, as Senator Sir John Keane has stated, introducing the thin end of the wedge. There are many precedents for what we propose to do here both in our time and in our predecessors' time. Why do we feel that it is necessary to ask the Road Fund now to contribute for the general purposes of the Budget? First of all, because if we do not do that we have to impose taxation elsewhere which will fall just as heavily upon the local ratepayers as anything we may do in regard to the Road Fund now; but, apart altogether from that, under the Employment Schemes Vote no less than £500,000 is going to be spent on improving the roads of the country and local authorities are not being asked with certain not very significant exceptions to make in the majority of cases, any contribution towards it at all. In so far as the ordinary county and trunk roads are concerned they are, but in regard to a considerable number of secondary roads and roads in tourist districts, in districts which are poor and congested, they are not being asked to make any contribution. There is going to be a sum of almost £500,000 spent in those areas, and I think that where that money is being spent in order to improve the means of transit in the country we are quite justified even if the Road Fund were in the sacrosanct position in which Senator Baxter and Senator McGee hold it to be, in securing a contribution from the Road Fund to devote to this particular purpose of improving the roads throughout the country.
Now, it has been said, of course, that we are going to impose an added burden on the farmers by reason of the fact that we are taking this money from the Road Fund. But the position is that the local authorities have never received more from the Road Fund to assist them to maintain the main roads and the other roads in the country, than they have been drawing during the past two or three years. The revenue from the Road Fund has been going up by leaps and bounds. When we came in, the receipts into the Road Fund were £700,000 to £800,000 a year and the borrowings by our predecessors were so heavy that the amounts that were being allocated from the Road Fund to the local authorities were considerably less than to-day. To-day the receipts into the Road Fund are £1,075,000 some of which is going to pay the interest on the borrowed money and the much larger part goes to the local authorities. The proceeds that create that fund do not come from the county councils at all. They come from the transport system in the towns and very largely the cities. Nobody can say that the county councils are entitled to this money by reason of the fact that it is raised mainly from those who reside in their area. Again, I come back to this point made by Senator Baxter who said that this is putting an added burden on the local authorities and that we were going to deprive the local authorities of some assistance which hitherto has been given to them.
The fact is that this sum of £150,000 can be taken and the local authorities should be no worse off than they ever were. In fact their position in the past few years with regard to the maintenance of the roads of the country has been steadily improving. I am sure that with the development of road transport, with the more general use of the roads and the fact that the quantum of charge to be borne by individual vehicles moving along the road will be reduced I think the position of local authorities will tend to improve. Naturally we are not predisposed to make the position of the local authorities in any event worse than it was. The fact is that in the last three or four years we are spending a considerable sum more than we had been spending, and more than ever was spent previously, upon improving the roads of this country. The utmost amount that was spent in any year up to 1932 was spent in 1926 and 1927 when about £2,000,000 was borrowed upon the security of the Road Fund. The Road Fund is paying that back and it is only the balance available that was granted to the local authorities.
The local authorities have no claim to any greater proportion of this fund than the proportion that has been allocated to them by the Minister in charge of the fund. He can build up a reserve. He could wipe out the borrowings entirely instead of giving the local authorities anything. He could devote the income of the Road Fund to wiping out previous obligations and liabilities. We are not doing that. We have in fact provided for the repayment of the borrowings by the Road Fund. We have provided for the repayment to the Exchequer of the moneys borrowed from the Exchequer for a number of years and we are making available to the county councils more than was ever available before for road maintenance.
I want some more information from the Minister on this question. In the first place the Minister seems to take a great deal of credit to his Ministry for what has been spent on the roads to-day compared with what was spent previously. The Minister told us that the revenue from transport services to the Road Fund is somewhere about £1,075,000. Obviously the traffic on the roads has grown. To the extent that this traffic is greater than in the past, the cost of road maintenance is greater. The Minister talked about the big transport services in the towns. What are they doing in the towns? These services are going over the country roads; the man with the horse and cart to-day cannot travel over the roads. These roads were built up by borrowings in the days of the Minister's predecessors here. They were built by borrowings and by the efforts largely on the part of the local authorities, who built up these lines of transport. The position in which the Minister is trying to put the local taxpayer is this—the Minister thinks that the people who are using the roads to-day have no obligation to maintain the roads they are so using. It seems, according to the Minister's thinking, that the men who ought to keep up the roads for the big transport services are the farmers inside the fences. The farmer must pay whether he is using the roads or not. The Minister ought to pay from the Road Fund which is made up of contributions paid into it by the transport services and by the owners of motor cars, taxis and lorries, the cost of the road maintenance. The Minister ought to be prepared to use that money for the road maintenance. But the Minister's solution of the problem is to let the local authorities find the money.
Let the Minister make no mistake about it, to the extent to which the money is not forthcoming to-day from this Road Fund for constructional work, it can only be found by the local ratepayers and the local ratepayers are already burdened too heavily. The traffic on our roads has grown practically speaking to an alarming extent. Now these roads can only be maintained by increasing the payments from the Road Fund. The Minister need not take credit for the fact that greater sums have been made available out of that fund at present than in the past. But these payments have been made because the moneys have come into the fund. The Minister deserves no credit at all for that. The method of distribution between one county and another I am not going to discuss now.
I do again say that so far as the ratepayers through the country are concerned, they are definitely convinced that they are not getting a fair crack of the whip in this matter. The ratepayer sees no justification whatever as to why he should have to maintain these roads for huge trunk services, for transport companies all over the country. Why should he be asked to maintain that out of his limited resources, all the more when he sees the moneys in the fund built up for that purpose? The Minister now has other plans. The ratepayer is convinced that there is no obligation at all on him to-day to maintain these roads. The people down the country will give the Minister no thanks for what he is doing, and they will give the people who are backing him here no thanks either.
I understood the Minister to say that this is not the first time the Road Fund was raided. Is that true?
Yes.
Perhaps the Minister would give us particulars.
It happened I think in the year 1931-32. It happened once earlier than that, too. It happened in 1926-27. I do think that the principle is important. If the Minister is going to break with the principle, he ought to break with it straight away. He ought to take this money into revenue and devote whatever portion is necessary for maintenance of the roads. There is a strong moral feeling that this Road Fund was established for the improvement of the roads and I do not think that the British analogy—which, if I may say so, is always quoted when favourable—is quite on all fours because agricultural land has been completely derated in England. That is why I am concerned that there should be no attempt to diminish the Grants-in-Aid of rates, either directly or indirectly.
Question put and agreed to.
Sections 21 to 23, Schedules and Title agreed to.
Bill reported.
Agreed to take the Fourth Stage now.
Question put: "That the Bill be received for final consideration."
Agreed.
Fifth Stage ordered for Tuesday, 11th July.