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Seanad Éireann díospóireacht -
Wednesday, 3 Dec 1952

Vol. 41 No. 2

Income-tax Code—Motion.

I move:—

That Seanad Éireann is of opinion that the law relating to income-tax is in urgent need of revision and requests the Government to appoint a commission of inquiry on the subject at an early date.

I want to preface my remarks by assuring the Minister that this is an entirely non-political motion. I would move this motion whatever Party was in office and whoever was Minister for Finance. It is not meant in any way to be critical of the present administration.

The second point I want to make is that all I am asking for is an inquiry. All I feel bound to do is to make a prima facie case for an inquiry on the grounds of the injustice to large sections of the population of the present income-tax system. I am not bound to advocate any particular policy of reform. I am not bound to answer questions that would be proper before the inquiry if the inquiry was instituted. All I intend to do is to indicate the presence of a problem and the need for its investigation.

The justification for this motion, apart from what I might suggest is its inherent propriety, is twofold. In the first place, the income-tax in this country was imposed 99 years ago. I hope that next year the Department of Finance will duly celebrate the centenary of this joyful event. In the course of 100 years no inquiry of any kind has been held in Ireland into the income-tax code although more than one inquiry has been held in England, its country of origin.

The second justification is the existence of a large volume of dissatisfaction with the present income-tax system. Since this matter was first mentioned in the Seanad in the course of other debates, I have received communications from many organisations and many individuals urging me to press this inquiry forward. If I wanted any justification I have, perhaps, sufficient in a recent resolution of the Convocation of the National University advocating that the university representatives should do something to attempt to reform the income-tax system.

I am perfectly well aware that the income-tax code cannot be treated in isolation. It cannot possibly be separated from surtax and is difficult to separate from death duty; it is also closely related, especially in rural areas, to local rates on land. I am aware that any comprehensive inquiry into the income-tax code would necessarily overflow into other parts of the fiscal sphere, and that it would be impossible to make recommendations for drastically altering the code without altering other taxes as well. Having said that and having shown that I realise the inter-relation of the different parts of the tax system, I suggest that for the purposes of this motion it is possible to deal with income-tax alone in the narrowest definition of the term.

Income-tax was imposed for the first time in this country in 1853. It was imposed in Great Britain in 1799 as part of the taxation to finance the French War, and continued until 1816. Although the Act of Union was passed in the meanwhile, there was no attempt to extend it to Ireland. In 1842 income-tax was reimposed by Sir Robert Peel as part of his policy of free trade, of reducing import duties and substituting revenue from them by direct taxation.

Ireland was again excluded from income-tax in 1842. One reason was the absence of the machinery of collection. A more fundamental and relevant reason was based on grounds of justice. Ireland as the agricultural portion of the United Kingdom stood to lose rather than to gain from the free trade policy designed to advance the cause of England during the industrial revolution, and to reduce the cost of food in the interests of low wages and industrial costs. Both from the point of view of the administrative difficulties and of abstract justice, Ireland was excluded from income-tax reimposed in 1842.

Income-tax was brought a stage forward by Gladstone in the 1853 Budget. Gladstone made it perfectly clear that he regarded income-tax as a temporary expedient. In 1853 he imposed the tax for a further term of seven years with a gradual decline in rates, hoping in 1860 the Government would be in a position to dispense with the tax. As in many other cases, the course of events upset these expectations and only two of the seven years had passed when the Crimean War doubled the rate of tax. In 1860, the final year of Gladstone's seven years, the tax was fixed at 10d. in the £, and there was no mention of repeal. Since then the tax has been renewed annually.

From our point of view the 1853 Budget was peculiarly significant because in that Budget income-tax was first imposed in Ireland. The reason was that large sums advanced for relief of distress after the Famine had become irrecoverable, owing to the impoverished condition of the country. Income-tax was imposed with the object of recouping the Exchequer for part of the loans and grants to Ireland which had become irrecoverable. Gladstone stated that the tax was calculated to produce £460,000 for seven years.

It was regarded clearly as a temporary tax, as an emergency measure to recoup the Exchequer for certain advances which it could not recover in any other way. The Financial Relations Commission in 1896 referred adversely to this development and commented on the impropriety of imposing what became a permanent tax for a purely temporary necessity. These observations of the Financial Relations Commission became of increasing importance with the passage of time, because from the turn of the century the rate of income-tax rose to quite unprecedented and unforeseen heights.

In 1884 the tax was 2d. in the £. In 1902 Mr. Winston Churchill declared that an income-tax of 1/3 in the £ was the extreme limit of practicable taxation, while in 1906 Mr. Asquith, Chancellor of the Exchequer, said that income-tax at a uniform rate of more than 1/- in the £ was impossible to justify in times of peace. Year by year the tax has been renewed and the rate increased.

The present income-tax code is a patchwork of a large number of Statutes gradually added to, but the underlying structure of the income-tax code has passed through a series of great revolutions in the world with its main structure quite unaltered to meet the changing conditions of the time. Since income-tax, more or less in its present form, with the present schedules, was imposed in England over 150 years ago the world has witnessed the industrial revolution, a transport revolution, the growth of joint-stock enterprise, the nationalisation of many spheres of production, the growth of the welfare State, several wars including two great world wars, changes in the theory and practice of taxation, national borrowing and national debt. In Ireland we have gone through successive phases of political status: the Union, Dominion status and a Republic.

Throughout these changes in the world and in Ireland, the income-tax code, although it has been amended in certain particulars and the rate raised from time to time, has remained practically the same code as that introduced shortly before the end of the eighteenth century to finance the French wars. Even if the income-tax is not in need of amendment, it certainly is in need of codification. In the interests of clarity and the administration of the tax, the time has come to clear up some of the outstanding questions, to frame something in the nature of a consolidating Statute and bring together into some sort of order this immense mass of legislation and judicial decisions which concern both the collectors and the payers at the present time.

I shall have occasion to refer to the five schedules under which income-tax is assessed. These schedules emerged from the mind of the Legislature in their present form in 1803, and have never been altered since. Income-tax has been extended or copied in the meantime in the United States of America and in most of the British dominions, but in none of these countries has the system of the five schedules been adopted. It has been inquired into, and is being inquired into in Great Britain, but, in Ireland, these five schedules have taken on something almost of the nature of sacred writings which cannot even be discussed, much less altered. Therefore, I suggest that, even if there is no need to amend the income-tax, at least there is some need for a commission to consolidate and to bring the legislation up to date.

In the course of the past year, this question has been debated in the Seanad on more than one occasion. A year ago, on the Supplies and Services Bill, some references were made to the necessity of additional taxation and to the good effect of certain types of income-tax on stimulating saving and reducing consumption. The second occasion on which it was referred to was the debate on the agricultural grant in March of this year. I do not wish to reopen the difficult problems touched on in that debate, beyond saying that I suggested that there should be some relation between the amount of direct taxation levied on the land by means of income-tax and the amount levied by means of local rates.

The next occasion on which the matter was discussed was the Social Welfare Bill later in the spring, when it was pointed out that the salaried classes, to a large extent, had made provision for their own social services and that therefore the addition of the contribution they would have to make for a State scheme would really amount to an increase in income-tax. Finally, the matter was discussed in the debate on the Finance Bill in the early summer. On that occasion, the matter to which I mainly referred was the standard rate of tax which was raised in the Budget and the effect of the rise in the standard rate on saving and investment. I did not refer to the distribution of the burden of the tax, beyond saying that, if the distribution of the tax was fairer, the standard rate could be lower. That is a point to which I will return. The converse of that point is that if there are any inequities in the distribution of the tax, every increase in the rate of tax magnifies these injustices.

The concessions which were made to some of the lower group incomes in the Budget were in the direction of a fairer distribution of the burden of the tax, but I think it is only fair to say that these concessions were mainly made to compensate the lower income groups for the reduction in food subsidies and therefore did not meet the case I am trying to make this evening. The concessions reduced the yield of the tax and tended to concentrate it on the higher incomes. From the point of view we were considering here in the Finance Bill debate, the adverse incentive effect of the tax on saving and investment, that shift towards the higher incomes did, in my opinion, harm rather than good. On this occasion I am not dealing with the standard rate, with the gross burden of the tax or with the effects of the tax on saving or investment or other incentives. I am dealing in this motion with the fact that the distribution of the income-tax at any standard rate produces injustices as between different sections of the population and that it is productive of political discontent, rising in some cases to acute indignation.

The first outstanding fact to anybody who examines the income-tax in this country is the small number of people who contribute to it. The Minister for Finance on the 30th January of the present year was asked in the Dáil —I quote from the Dáil Debates of that day, column 30—the number of persons who paid income-tax for each of the years, 1948-49, 1949-50 and 1950-51 and the answer he gave was that, in 1948-49, the estimate was 148,000; in 1949-50, 167,000; and in 1950-51, 181,000. That is to say, roughly one person in 17 of the whole population paid income-tax in 1950-51. I do not think it is an unfair thing to say that it is a matter of common knowledge that more than one-seventeenth of the population have incomes of more than £140 a year. If that is the case, the income-tax does appear to be collected from a smaller number of people than the number from whom it would be collected if it were strictly and successfully assessed.

In other words, a tax which, on the face of it, is impartial between all sections of the population, is in fact unjust to some and benefits some sections at the expense of others. There is a quite irrational and unjustifiable difference between the sections who pay tax and the sections who do not. It is exactly the same as if the tobacco duty were levied at a different rate on people with dark hair and people with fair hair. A tobacco duty of that kind would offend one's sense of justice, but nevertheless the difference between the people who are included in the income-tax assessment categories and the others is quite as unrelated to their capacity to pay as the colour of the hair of the indirect taxpayer.

The complaint is made by the salaried classes in this country, the people whose case I am mainly trying to place before the Minister, that there are certain types of income-tax payers who can evade part of the tax they should pay. There are certain sections of the population whose income arises in such a way that it cannot be seen by the income-tax inspectors. It is also suggested that there are other sections who pay every penny they owe, who do nothing illegal and who evade nothing, but who, owing to the fact that the basis of the assessment applicable to their occupation is peculiarly favourable, get off with a rather light payment. If you like, we can put it this way: there are two types of evasion—there is the illegal evasion of people who succeed in making false returns, and the legal evasion of people who do nothing illegal, who, quite rightly and properly, benefit by the peculiarly favourable and—perhaps I might anticipate by saying—obsolete method of assessment.

As against that, there are other people who pay every penny they owe. Their incomes are known to the taxation authorities, they have no escape, no method of getting out of the net. If you have a population classified in that way it is perfectly clear that the third class of people have to pay a higher rate than if these legal and illegal evasions were brought to an end. The late Minister for Finance, Mr. McGilligan, in the Dáil on 10th July of the present year, at column 755, said that if everybody who should pay income-tax paid income-tax the standard rate could be reduced by 1/- or 1/6 in the £.

That is, roughly, the question which I wish to bring to your attention; that there is a class of the population who, by the nature of their income, find income-tax pressing very harshly on them. This matter has been put very well in an address by Mr. M.P. Linehan at a meeting of the Irish Conference of Professional and Service Associations held in March, 1950, and from which I wish to give a few quotations.

"It has been repeatedly pleaded," said Mr. Linehan,

"that income-tax is the fairest of all forms of taxation in that it seeks to approximate the burden of taxation to the ability of the individual taxpayer to bear that burden. In theory, this may be so; in practice, it is the direct opposite, for a big proportion of the taxation thus raised is borne by persons whose incomes bear no relation to the tax imposed when compared with persons in other income groups. How is it, you may ask, that a system of taxation, founded on such sound principles, should be so harsh and so unjust in its effects? The answer is simple. To implement the system the revenue authorities must be in a position to know the annual income of the taxpayer. Alone among taxpayers the wages of the employees and the salary of the salaried workers are readily available. The employer makes his return to the revenue. The statutory allowances are deducted and the tax due estimated. No such easy system operates in the case of tax payable under the other schedules. Before an industrial concern can be taxed, the accounts have to be audited. There are innumerable loopholes through which much of the income can escape the taxing master. There are queries and counter-queries. The case of the agriculturist presents even greater difficulties, because there is no standard system of cost accounting for farming."

I do not wish for a moment even to suggest any reflection on the administration of the income-tax code by the Revenue Commissioners. I do not think, however, that it is unfair to state that I have been told that they appear clearly to centre their attention on people already in the net rather than to getting more people into the net; that it is their practice to squeeze the last drop of blood out of people already in their grasp rather than to go looking for new victims who might be difficult to get into the net. The recent increase in the promptitude and efficiency in collecting Schedule E is admirable from the public point of view; but the efficiency of the Revenue Commissioners in this respect increases anguish of their victims.

Another matter which I have been told, and if my information is not correct I hope it will be corrected, is that the section of the population who can make false returns, who can evade in one way or another their responsibilities, are never brought to criminal prosecution. I have been informed that the practice in England is that, if a taxpayer is found to be doing something positively fraudulent with the intention of deceiving, in such cases the commissioners will not be content merely to recover the sum due, but will make the person concerned subject to criminal prosecution. I have been told that in this country no income-tax offender is ever prosecuted but is merely asked to pay up his arrears. That strikes me as being in direct contrast with the activities of the Revenue Commissioners in regard to smuggling and other offences of that kind, where, if a person breaks the customs and excise laws, not only is he prosecuted but he is heavily fined and punished. If my information is correct it is possible to evade the income-tax laws with no penalty beyond paying up the arrears of tax.

As I have stated, the one class of people who are not able to practise any of these deceits are the salaried workers. Their income is known to the Revenue Commissioners and they have no escape. There has been a great volume of opinion in recent years in this and other countries that the increased taxation of the professional workers, the white collar workers, the administrative professional classes, has very adverse social and political repercussions.

I would like to quote from some observations by Mr. John Beavan, London Editor of the Manchester Guardian on the position at the present time. He says:—

"In all the countries I have visited since the war—and they include the United States—I have found one section of the middle class having a lean time; I mean the salaried or intellectual middle class, and particularly those members of it employed in the public service. The middle class has always been regarded as an extremely valuable class, especially so in Britain where its members have been dedicated to their work, scrupulous in their conduct and ready to devote their private leisure to the public good. Upon them has largely depended the cultural life of the country and the running of humanitarian organisations. They have provided, too, most of the hard thinking and skilled advocacy that were needed to plan and attain social advance. They have been the great basis of constitutional democracy. It would, perhaps, be wrong to say that through its vicissitudes of recent years this class has lost its moral earnestness, but its moral earnestness has been weakened. It must be a serious loss to the community if this sense of public service were to go. But when private problems press so hard upon individuals it is difficult for them to be concerned about other people's hardships. To-day the middle class is the class squeezed hardest by the inflation. Below them the wage workers have their trade unions, and since inflation is usually accompanied by full employment, they are in a strong position to protect their members. By the side of the intellectual middle class there are the tradesmen whose profits rise with inflation; and above them are the entrepreneurs, for whom an inflation period is a chance to make a fortune.

The salaried middle class is not aggressive by temperament—though it may eventually be driven into aggression—and its staff organisations are not real trade unions ready to enforce their arguments by striking if all else fails. Usually middle class salaries are not increased until all hope is abandoned by their employers of a recession in prices. Salaries, then, are well behind the cost of living when it is increasing. Before the war, however, when goods were cheap the salaried middle classes had a very good time indeed: and as unemployment was prevalent and profits were harder to earn, they were envied by all other classes except the well-to-do for their security and well-being.

Now, the salaried middle classes look back upon those days before the war as a golden age which may never be repeated in their lifetime. Even their security to-day seems to have no value, since everybody has been pretty secure—up to now.

In Britain—and in some other countries too—the salaried middle classes have not only failed to keep their earnings in line with the cost of living but also have been tightly squeezed by taxation. There is no way of shielding them against the heavy taxes which, during a period of war or reconstruction or rearmament, must be levied upon the upper ranks of the workers and upon middle incomes as well as upon the wealthy. But as the incomes of these latter groups were increasing all the time, the burden was easier to bear. The salaried middle class and some of the lowest-paid workers are the only people in Britain who have a lower standard of living than they had before the war."

I do not want to delay the Seanad by giving further similar quotations.

We are prepared to listen.

I have already quoted from the memorandum to the same effect of the Irish Conference of Professional and Service Associations. I do not think it is necessary to repeat it. It is already on the records of the House. I quoted it last spring.

As I said in the beginning, I do not propose to advocate positive concrete reforms. I do propose, however, to indicate certain definite grievances which are experienced by the people who are assessed under Schedule E— the salaried workers. I intend to touch only on these points very quickly without giving any figures which would overload what I have to say.

The first point is one on which I think there is very general agreement, that is, that the personal allowances have not been sufficiently varied with the rise in the cost of living.

As I said already, the concessions made in this year's Budget were definitely related to the reduction in the food subsidies. They were simply meant to ensure that certain sections of the population would not suffer a reduction in their standard of living by reason of the reduction in the food subsidies.

I do not think it is unreasonable to suggest that the personal allowances should vary with the cost-of-living index number. The whole point of the personal allowances is to give to every person in the population a certain minimum income on which he can live at a subsistence level. Whatever the arguments may be for varying higher incomes and wage incomes with the cost of living, it seems to me that the argument for varying that particular allowance with the cost of living is very strong indeed. If the cost of living rises, the minimum allowance should obviously be raised with it. If the original allowance was correct, then the original allowance, after a rise in the cost of living, will become too low, and the whole basis of the personal allowance will have disappeared.

I would like to make another point: that if this principle is admitted, that the allowances should vary with the cost of living, the cost of living should be calculated, not on a working-class index number but on a middle-class index number. In the Economist of the 29th March, 1952, there are calculations showing the effect of the changes in the cost of living on the middle-class in Great Britain. I do not know whether similar figures are available in this country but I have no doubt that they could be prepared. The English figures quite clearly indicate that the cost of living has risen more for the middle income groups than for the working-class. The middle income groups are the people whom I am discussing, people assessed under Schedule E. If their personal allowances are to be made to vary in some way with the cost of living, it should be a cost of living measured by the appropriate cost-of-living index number, that is to say, one based on the consumption of middle-class households.

There is another proposal which greatly affects professional people and university graduates. This proposal was put forward by the Editor of the Economist before the Royal Commission on Taxation at present sitting in England. It is that the personal allowances, instead of being at a fixed rate, should be a proportion of income up to a certain point. The particular benefit that would be derived by that change would be that professional people would be enabled to educate their children at good schools. The principal thing that a child allowance is wanted for is education, and people who wish to be able to send their children to expensive schools, to get a good start in life, should get some further concession than people who are content with a more modest type of education. That proposal would be of great assistance to certain types of professional people who find the present child allowance insufficient to give their children the type of education they wish.

Another proposal which seems to me to have a great deal in its favour is that some allowance might be made to taxpayers for necessary expenditure on medical and surgical attendance during the year. After all, a businessman is given some concession in relation to wear and tear, keeping his premises and capital in order. The only capital that the ordinary professional worker has is his own body, and if his body goes through a period when it is very expensive to keep in good order it seems only fair that he should be allowed the same remissions as the other types of taxpayer are allowed.

I would like to quote on that subject a passage from what I think can be described as a remarkable lecture by Professor de Juvenel, called the Ethics of Redistribution. He refers to this question that people who expend money on keeping their capital intact get income-tax remissions whereas people who spend money on keeping their own body intact do not. The reason I quote it is because of this rather striking phrase:—

"It is quite incomprehensible that a breeder of dogs for the race track should be allowed his cost of depreciation, etc., while the father of the family is not. It looks as if lawmakers sympathise more with the purpose of the former, that is, to sell dogs for the track, than the purpose of the latter, which gives men to society, incidentally for soldiering and for taxpaying."

I do not want to wander from the main line of my argument but I think this is relevant—that if allowances of this kind were made, if the Schedule E taxpayers got some allowance for medical and surgical attendance for themselves and their families, the case for a free national health service for that section of the population would be a good deal weaker than it is at present. I suggest, as a small contribution to the great debate on the public health services in Ireland at the present time, that the need for free health services for certain sections of the population above the working class might be considerably reduced if this principle was admitted into the income-tax code.

Let us have a suggestion on that point.

A suggestion? The suggestion is that, as in the United States of America, where it is already in existence, taxpayers should be allowed to deduct from their income money spent on necessary medical attendance for themselves and their families during the year as part of the wear and tear incurred in earning their living. Roughly, that is the suggestion. I could give Senator Hawkins further reading references on the subject if he wishes.

Another suggestion of the same kind is that the present life insurance allowances should be increased. The present life insurance allowances are calculated in such a manner as not to benefit middle-aged people, many of whom are not in a position to effect a substantial insurance on their lives until they are middle-aged. There is no more difficult problem at the present time amongst professional people than providing for their old age. Owing to the high cost of living and high direct taxation it is almost impossible for a man to accumulate a sufficient capital sum to-day to yield a decent income in his old age and, therefore, the former method of providing for one's old age has largely become a thing of the past.

A great many people at the present time are showing a preference for pensionable employment, which is bad for the professions. It is well known amongst university appointments bureaux, for example, that any job that carries a pension is eagerly accepted because of the security it gives for a whole lifetime. To drive more and more of the professional classes into safe pensionable jobs is robbing the community of a certain amount of risk-taking and enterprise which used to be a healthy feature of professional life.

I do not wish to go into details but I suggest that the basis of the life insurance allowance should be related in some way, not as it is at present, to the taxable income and to the amount insured but to the pension which it might be possible to provide combined with an endowment policy. There should be an effort to encourage thrift through life insurance to a point that would give the non-pensionable or professional worker the same security for his old age that pensionable workers now enjoy.

Another point that has been suggested to me is that, with the growth of the City of Dublin, with the great increase in the distance between a man's home and his work, travelling expenses have now become in the case of many workers a serious burden. If people cannot obtain accommodation near where they are employed they have to spend a considerable sum every year on bus fares getting to and fro. It does not seem unreasonable that that should be deducted as a working expense—whereas it is not allowed at the present time. It has also been suggested that, in the case of owner-occupiers of houses in the cities, the repairs allowance might be restored. Many people have acquired houses by instalment purchase at great hardship and now find themselves with no income-tax allowance for keeping those houses in repair.

Another point which affects a smaller section of the community but at the same time is of public importance is the need to revise the starting level of surtax. When surtax began in England in 1909 it started at £2,000 a year. In this country it was lowered to £1,500 where it still remains. With the changes that have taken place in the value of money in recent years, £1,500 a year is not the income that it was and it seems only fair to those sections of the population on whose saving we depend for voluntary thrift that their incomes should not be unduly taxed away.

Another point—and I think it is a fair one—is that the earned income allowances should be extended to surtax, at least up to a certain point. Many professional people are now earning large incomes as a result of hard work. It seems unfair that they should pay surtax at the same rate as people who enjoy incomes derived from property and investments.

All these suggestions would help the Schedule E taxpayer but none of them would help him as much as the tightening up of the collection under the other schedules. That tightening up under the other schedules, as I have said already, would probably succeed in reducing the standard rate payable by all.

There is a very curious difference in the law in relation to allowable expenses between Schedule D and Schedule E. Under D people trading for profit are able to obtain a reduction in their assessment for monies spent "solely and exclusively for the purposes of the trade, profession or vocation." That clause has been very liberally interpreted by the Revenue Commissioners and still more liberally interpreted by the courts, with the result that it has become almost a joke in Dublin that meals in expensive restaurants, large cars and other types of what I would call display expenditure, are all "on the firm." Whether that is exaggerated or not I do not know, but the impression has certainly got abroad that business people are able to get income-tax allowances for a great deal of luxury spending from which they derive a considerable personal enjoyment.

Turn then to Schedule E, the salaried workers' allowances, where the phraseology is quite different and much tighter. The phraseology there covers money expended "wholly, exclusively and necessarily in the performance of the duties of the office." That is much tighter. If a professor in a university brings a professor from another country to lecture here and spends money in entertaining him, he will receive no allowance of income-tax, because it will be said that the visit of that professor was not necessary in the performance of the home professor's duties. On the other hand, if a business firm brings over other business people to see their premises, they can be entertained lavishly and luxuriously and the firm will get a large allowance in income-tax in respect of that expenditure— because of the difference in wording of the two schedules. That undoubtedly is the cause of a feeling of grievance. Salaried workers believe that businessmen get away with a certain amount which they themselves cannot get away with.

The salaried workers also believe that a number of weekly wage-earners escape from the income-tax net. They believe that there is a good deal of evasion by means of changing employment. I suggest that the time has come in this country when "Pay As You Earn" should be seriously reconsidered. The advantages of "Pay As You Earn" are that from the psychological point of view the worker does not miss what he never gets, he is not asked at intervals to pay to the tax collector large lump sums of cash. His tax is related to his current income and if he dies his widow or his executors have no arrears to pay. From the point of view of the employer, although it does involve a certain amount of administrative difficulty, it is simpler and easier to deduct a small sum each week than to do what he is frequently asked to do now, to deduct quite large sums for arrears at the end of a year or two.

The rates of taxation and working-class incomes have both risen so much that the sums payable now by skilled workers in Dublin are sometimes quite considerable. The Irish worker has not yet acquired the habit of making provision of paying these large sums of cash at irregular intervals. The result is that their employers are faced from time to time with inflicting on them what appears to be extreme hardship. The arrears have accumulated and the employers are then asked to collect these large arrears which means that the employees get very small wages for several weeks.

I know that there are administrative difficulties. I know that the volume of working-class incomes in this country may not be sufficiently great to justify the elaborate machinery which seems to work successfully in Great Britain. That brings me to this point, which, I think, is central in the whole of my argument. If, owing to changes that have taken place in society, the existing income-tax has become unworkable and administratively impossible, if the machinery for its effective collection has become so expensive as to be prohibitive, then it seems to me that a case for the revision of the whole code has become necessary. The result of not collecting from certain classes of the population is that other classes pay more than their share. From the point of view of social justice, no one can justify the imposition of an excessive burden on any class of the population merely on the ground of administrative difficulty or expense.

I am particularly anxious to avoid any reference to Schedule B for the simple reason that I am attempting to put forward the grievances of certain classes of people of whom I have special knowledge. The seconder of the motion has a special knowledge of the issues involved in Schedule D with which he proposes to deal.

I have already stated that farmers are doing nothing that they are not entitled to do by availing themselves of the basis of assessment laid down in the Income-tax Acts. I think that, if there was any other basis of assessment, the great majority of farmers in this country——

Be careful now.

——would be exempt from tax. The case made by some of the farmers' representatives that the income-tax code in relation to agriculture, should not be altered because of the poverty of the great majority of the farmers is really a case which does not seem to me to be a very strong one. Any section of the population that has not got an assessable income is perfectly safe in the presence of the Revenue Commissioners. If any large section of the population can show that, on the average, their incomes are below the minimum assessable income, then they have nothing to fear from any revision of the law, however drastic.

I do not think I am being unfair in stating that there are some recipients of agricultural incomes who derive a benefit from the present basis of assessment. The basis of the assessment is, as everybody knows, the Griffith Valuation which is now practically 100 years old. As I said in the beginning, almost everything in the world has changed in the last 150 years.

Except man!

There are two things which have not changed—the income-tax schedules and the Griffith Valuation. I do not wish to press this point because I do not wish to introduce a false issue into this debate.

Do not split the Party.

I do not want this debate to become a debate between town and country. I introduced it in a non-political way and I am not acting in or on behalf of any Party. I do not think it is fair to the Government or the Government Party to suggest that they are hostile to fiscal reform. I am introducing the motion on behalf of constituents of mine who belong to all sorts of political Parties. If I have got any bias it is certainly not a political but a vocational bias.

The Banking Commission would tell you that.

I think the majority of farmers would possibly not have to pay, however the law was revised. I think that possibly a small number of farmers would pay more than they are paying. I can see that a case could be made in respect of those farmers. A perfectly legitimate or at least an arguable case that could be made, even if farmers did make large profits, they should get some differential basis of assessment owing to the importance of their industry from the national point of view.

You cannot pick up a newspaper now, you cannot listen to a debate and you cannot walk down the street without hearing people talking about the necessity for increasing agricultural production. I am perfectly prepared to accede that fiscal incentives may be necessary to increase agricultural production from the point of view of building up additional exports. These are the sort of matters that could be inquired into by the commission I want to have appointed but they are not the sort of matters that I propose to introduce into this debate.

I do, however, suggest that if a case for exemption on the ground of producing exports and earning outside currencies can be made by agriculture it can be made by every other export industry in the country as well. If there is a valid case for the farmers, then it is an equally valid case for the hotel proprietors and everybody who caters directly or indirectly for the tourist industry. But whatever case there may be for exempting the farmers on the ground of their poverty, on the ground that they have not got taxable income, or on the ground that they are performing a nationally useful service, I suggest that there is no valid ground for continuing to favour them because of antiquated schedules, obsolete valuations or administrative difficulties.

I have been told that the main objection to the revision of the Schedule B assessment is the administrative difficulty involved in assessing farmers by any other method. I am quite prepared to admit that those difficulties exist but what I said in relation to "Pay As You Earn" is equally relevant here. If the income-tax code has reached a point where it cannot be successfully administered in modern times, then the case for its revision seems to be conclusively proved.

The next point I want to make is, perhaps, to anticipate something which may be said by the Minister. It has been said by him in another place. It has been said that an inquiry of this kind can await the report of the British Royal Commission on Taxation. There are, I think, two answers to that point of view. The first is that the report of the Royal Commission on Taxation will not appear for a very long time. Anybody who wishes to trace the course of events of that commission has only to look at the columns of The Accountant where they will see that it will be many years before that commission reports.

The second answer to that point of view is very much stronger. The whole basis of my argument and the whole point of what I am trying to say is that English and Irish conditions are different. Up to 1853 no English statesmen ever considered applying income-tax to Ireland. It was first applied as a temporary post-famine measure by Gladstone who intended to bring it to an end in seven years. That extension was condemned by the Financial Relations Commission in 1896. Since then conditions in the two countries have diverged more and more. They have become separate political entities and the whole course of their development has developed on separate lines. Yet in the last 30 years, in spite of all the novel programmes adopted in this country—tariff protection, development of our natural resources, electricity development and all sorts of other experiments of that kind, the income-tax code, and the income-tax code alone, has been accepted as something immutable, unquestionable and incapable of serious revision. I suggest that the time has come to repair that defect. I hope that I have not wearied the Seanad; I equally hope I made what I set out to make, a prima facie case for an inquiry into this very serious and topical question.

Senator O'Brien is a difficult person to follow, because he always makes such an interesting case and is so lucid that one feels that, in following him, one is bound to be uninteresting and something of an anti-climax. I do not share his fear of being political, as I do not think we are ever going to have income-tax of any kind which is not political, but I presume what he really means is that he did not want to be partisan. At the same time, it would be almost impossible to be partisan in discussing the income-tax code because there is so little difference between the main parties and, so far as this particular motion is concerned, the proposal has been made to successive Governments, but the results have been the same, well, as far as I know, the same, whatever may have happened behind the scenes.

I would like to remind the House that, in 1945, we unanimously passed the following resolution:—

"That the Minister for Finance be requested to take steps for the revision of income-tax law and practice, with a view to general simplification and the removal of inequities in the application of that law and practice, and, in particular, the amendment of such statutory provisions or rules relating to income-tax or corporation profits tax as may restrict industrial and other development calculated to provide increased employment after the war."

Most speakers then urged the appointment of a commission and the then Minister for Finance, who is now President, made a very sympathetic reply and, while he made no promises, he expressed the definite view that some day there would have to be a revision of income-tax law. The suggestion was again raised in this House when the Minister was present in July, 1951. He was perhaps a little less sympathetic, but he did state that a good deal could be said for the plea for an inquiry into the general incidence of the income-tax, and, as you have already been reminded by Senator O'Brien, the Minister thought that it would be advantageous to await the result of the Royal Commission on Taxation which is taking place in England. The Minister then said: "I know, of course, that people will say: ‘Why should we wait on Great Britain?' but the reason is that there is no use in duplicating the expense and in involving, in particular, our taxpayers in expenditure which can be avoided if we only have the patience to wait until the inquiry now on foot has been concluded."

I want to joint issue with the Minister. I have no doubt that because we are working an income-tax code more or less based on the 1918 Act that there will be points dealt with by the Royal Commission on Taxation which will be of interest to us but I would point out to the Minister that any report it will make will be based on evidence obtained from persons of experience in Britain and any proposals will be based on British evidence. The difficulties and problems which have arisen here could not come before that commission. I do not want to develop this at length but even if I could agree with the Minister that if we had patience we should wait until that commission reports I would suggest to him or any other Government that we are not going to solve this problem by any report from any other country than our own. Even if it were the best report in the world it would not be acceptable and, in fact, I would go further and say that any Government which attempted to make any amendments to any income-tax code based on a British report would find unreasonable hostility, if only for that reason.

It always seems strange to me, and I have raised this over a half-dozen times in the House, why no serious attempt has been made during the past 30 years to prepare an Irish income-tax code. For those of us who can remember the many statements before the Treaty as to the unsuitability of British taxation here, it is strange that no Government has ever even attempted to make any substantial change in the 1918 Act, which is still our principal Act.

One of the reasons may be that any Government in power is naturally afraid of how it is going to raise its taxation. I imagine that if I were Minister for Finance, strong though I felt the need for a full inquiry, I would be tempted to leave it to the next Minister to do, because there is not the slightest doubt there would be a period of one or two years' difficulties in assessing taxes following a substantial change. I am convinced that it will never be possible for any Minister or any Party, in the annual Budget, to make any comprehensive revision in the income-tax code. I would, therefore, strongly support Senator O'Brien in his demand that there should be a commission of inquiry.

I do not understand why neither the present Minister nor his predecessor could see that all classes are dissatisfied and that the time has come when, in the interests of good Government. there should be a comprehensive inquiry. I never will be Minister for Finance and I should hate to be but I cannot help feeling that if I were, I should be glad to put off some of the problems for a couple of years. For that reason alone, I would have expected that some Minister for Finance would realise that, sooner or later, there would have to be an inquiry and that it might as well be now.

I should like to make it clear—I do not wish anything I will say to be misinterpreted—that nothing I say as to the dissatisfaction that exists—I think Senator O'Brien would agree with me —represents in any way any extensive feeling of dissatisfaction against the administration of the income-tax. So far as I am concerned, I know enough about income-tax law to know how little I know about it and how complicated it is, but a great many people, relatives and others, have come to me for assistance. I have sent them to their inspectors, and in my experience—if there were any exceptions, they were very rare—they found in the office of the inspector a full readiness to give them every possible assistance. I think it is important that, in any criticism of the code generally, it should be realised that we are not making any attack at all on the administration, the standard of which I believe to be extremely high.

I am convinced that we have in Ireland the personnel from which a good commission of a representative character could be chosen. We have experienced accountants and businessmen; we have agriculturists who would be quite competent to serve on a commission of the kind proposed; and we have trade union officials who are men of education and fully competent to serve on it. They would be important because they know how the shoe pinches in certain directions. I am convinced that the commission must have its civil service experts, but, for the purposes of the inquiry I have in mind, they should not be in the majority. No doubt, whatever Government ultimately came to consider the report of such a commission would be guided very largely by the experts as to what it would and would not accept.

I also want to make it very clear that the standard rate of tax or the total amount of money to be raised by income-tax should not form any part of the inquiry I have in mind. The assumption would be that at the time of the inquiry a similar amount of money had to be raised and it would not be for the commission to discuss the standard rate. The whole object of the inquiry would be to try to see to it that the tax, as applied, would be as equitable as practicable, that it would be as little injurious to trade, business or the public as possible and cause a minimum amount of hardship.

Senator O'Brien gave the figures with regard to the direct payment of income-tax and I think he said it was one in 17. I think that that might be to some extent misleading, because a very considerable portion of income-tax is collected from traders and manufacturers and it is collected from them on assessable profits. Except in so far as these profits are paid out of the business, the tax is a charge on the expenses of the busness and is therefore, definitely a part of the cost of production or distribution. Last year or the year before, many of our leading companies gave certain detailed figures showing the proportion of tax in each £'s worth of goods produced and sold. That year, when the tax was 6/6 in the £, taking a number of these together, I made an estimate that every purchaser of a 5/- article paid approximately 3d. in income-tax. If he buys an imported article, he does not pay the same proportion of Irish income-tax—he probably pays British or Japanese income-tax or some other form of tax. The fact remains, however, that practically every purchase made by anyone includes a proportion of income-tax. If the goods are made here and distributed here, the proportion is higher than if they are only distributed here.

One of the things which it would be very proper for a commission, if appointed, to consider—certainly its terms of reference should be wide enough to include it—is the effect of income-tax and corporation profits tax on consumer goods and price levels. When I spoke before on this subject, I caused a certain amount of amusement by suggesting that it would be possible to simplify the income-tax. I think the then Minister quoted some Chancellor of the Exchequer on the other side to the effect that it could not be simplified, but I am still innocent enough to believe that it could be done. The simplification I really had in mind was not so much simplification of the code as a simplification to make it easier for the individual taxpayer to ascertain his actual liability at the earliest possible date.

Every one knows the misery caused by spending or incurring liabilities in excess of income and I am perfectly certain that this does happen where perfectly honest young people discover that their liability, which is based on the previous year, is considerably higher than they expected. The fact is that I could not say to employees—I speak as an employer—"You should have known; you were careless." I should like to emphasise that it is extremely important, if you are to have prompt payment, with the minimum of hardship, that the taxpayer, particularly those in the lower and medium income class, should have a proper and easy method of ascertaining at an early period the amount of his tax.

For a very considerable period, our income-tax has been calculated on the previous year. Most of that time has been an inflationary period, or a considerable part of it has been an inflationary period. Over the past ten years or so, the individual taxpayer, paying on the previous year, has really gained in most cases, but this year it has changed. There has been an acute trade depression and in many cases incomes are less. There have been periods of part-time employment and sometimes periods of unemployment. To my own knowledge, quite a number of individuals are finding it extremely difficult to pay and this is partly due to the fact that they are paying on what was a good year, a year in which they had a higher income. I know that if they are totally unemployed, there could be an adjustment, but the majority are still employed, but with considerably lower incomes.

I suggest that if there were a commission—I am not certain whether I would advocate a change—there should be an examination of whether or not the system of tax being payable on the income of the previous year is the best system. It must be remembered particularly that the rate of tax on the individual's income is not fixed until after the end of the financial year. Even with the best will in the world unless he had the secrets of the Minister for Finance a person would not know whether his income-tax was going to be 10/- next year as against 7/6 for the previous year. That, in itself, is one reason why I think the whole position should be reconsidered.

Senator O'Brien referred to "Pay As You Earn." As an employer I do not know that I am particularly favourable to it. If, however, "Pay As You Earn" is impracticable I think there should be devised some system by which an employee with the knowledge of the Inspector of Taxes could come to an agreement with his employer to have his income-tax deducted by arrangement over 12 months. I do not think that there would be much objection to some such scheme. It may mean of course that the authorities might have some difficulty in collection if a man left employment in the middle of a year with the balance of the income-tax due if a similar arrangement was not made with his next employer. I believe quite a number of employers are prepared to make an arrangement of that kind which would be better than the present position in which some employers have to deduct money from the salaries of their workers on the direction of the authorities. One firm told me that it had five sheets of employees from whom moneys had to be deducted.

I do think that the arrangement I have suggested would be much better than having deductions made from employees' wages for income-tax arrears. I do not think that in a year like the present the income-tax authorities should be any more harsh in extracting payments than an ordinary businessman would be in similar circumstances. There is a fairly recognised code with which, in business, one can deal with a man who finds he is unable to pay promptly because of some changed circumstances. The businessman generally would not approve of going to an employer in such circumstances. There are certain types who might do this but that practice is looked on with disfavour by business interests generally.

In cases where there are arrears and an amount has been paid off it has been deducted from the second half-yearly payment and not from the first. The result is that a demand goes into the employers and it would appear as though the person concerned was over six months in arrears. That, I think, should not be the case and any payment made should be credited against the oldest tax due. By crediting it to the second period it makes it appear that the employee is long in arrears and by making it appear that he is very much in arrears you run the risk of damaging that man in regard to his employer. I think it is a bad practice that we have to collect income-tax through the employer except by a mutual arrangement. I think that whole matter deserves careful consideration and is one that could very well be examined by a commission.

Senator O'Brien dealt with the case of income-tax allowances so I need not refer to them in detail. Some of those I have in mind were insurance premiums, superannuation payments, medical expenses and other necessary expenses for which allowances should be made. I do not think I should allow Senator O'Brien's references to allowances to pass without stressing why it is essential that there should be a full inquiry into the whole question of allowances. He spoke for a certain section or type of taxpayer but they are not the only class with real grievances. I can speak on behalf of manufacturers and traders and I could show you that the manner in which the tax is applied in their case is not always equitable.

We had better disillusion ourselves entirely from the common and I think erroneous belief that the case for inquiry depends mainly on evasion and the failure of the Revenue Commissioners to collect taxes or on the belief that some people succeed in evading it. I think if there is to be an inquiry the whole problem should be examined and examined in public.

I think that the question of travelling to and from work is a matter that requires consideration. In these days many people have no choice as to where they will live in relation to their work and travelling to their work is a necessary expenditure out of earnings which should be deductable. I think the earned income-tax allowance is also a matter that should be examined. I have mentioned this before so I will not go into it again except to say that in the lower-income groups I am not convinced that the difference between earned and unearned income justifies the 25 per cent. but that is something which should be examined by a commission and not be debated politically.

The question of surtax is another matter which requires consideration and I do not think it would be practicable to examine income-tax without at the same time examining surtax because the two are closely related. I think a case could be made for raising the level of surtax because £1,500 to-day is worth about £700 pre-war, which no one would have then considered a level above which people should be liable to surtax. I think there should be some provision by which surtax, in cases of widely fluctuating incomes should be capable of adjustment over five years. There are certain professional men working on a small normal income but who in one year might have a particularly big job on hands which would bring them within the surtax limits and that might not occur again for another four or five years. That is not fair taxation. There should be some method of adjustment so that the tax could be equitably applied over four or five years or whatever the period may be. Some persons can so manage their affairs that they can spread income over a period while a professional man may find that a large proportion of his income comes in one year.

Senator O'Brien has referred to-day and in previous speeches to the whole question of how far income-tax discourages savings and investment. I do not propose to deal with that other than to say that it would probably come within the scope of the commission but in the main it is a matter which would have to be one of Government policy from year to year rather than a matter for examination by a commission.

Senator O'Brien suggested that I should deal mainly with the questions that would arise in connection with manufacturing and trading profits. On more than one occasion I have made fairly carefully prepared speeches on that subject in this House and I do not propose to go into the same details as before. But, lest it be thought that there is not just as strong a case and just as strong a desire for a commission of inquiry on the part of the traders and manufacturers whom Senator O'Brien thinks are favoured, I think I ought briefly to refer to several of the points which I think need inquiry. The fact that I mention any matter now does not mean that I am fully convinced that I have a solution. It means that I believe it is something that requires careful examination.

Senator O'Brien referred to the possible effect on export prices. As I said before, I do not think you can possibly have a full examination into the income-tax code without very careful examination as to how far it affects actual prices of goods produced here, whether for export or for home consumption. I have heard no speech that has convinced me that a matter that is rather a hobby of mine should not be examined. I have a very strong conviction that there should be a distinction between income-tax and profits tax. It seems to me that income-tax should be a tax on income —personal income or the income of individuals; it should be paid by businesses to the extent that they pay out income to individuals, whether by way of dividends or salaries to staffs, as the case may be.

Apart from tax on profits which are paid out it would be very much better if you had a profits tax which could be considered on its own merits when the taxation for the year came under consideration quite apart and distinct from income-tax, as the two problems are by no means the same. I do not know that it would be particularly popular with businessmen but I would like to see a careful examination as to whether it would not be possible to graduate profits tax somewhat in the way in which income-tax and surtax combined are graduated whereby the tax would be higher if the rate of profit, in relation to turnover, was high. That would encourage a low rate of profit and definitely encourage large production.

It is easy to say that, but very difficult to work out. It would be very well worth an inquiry, because, if that could be done—it could only be done if the profits tax were distinct from income-tax—we could abolish a very considerable amount of the price and profits control which operates in a rather unsatisfactory way. That is perhaps a dream. I do not think it is impossible.

Whether that be practicable or not, the commission should certainly carefully consider how far it would be possible or wise to treat profits ploughed back into a business as of a different character from distributed profits and to base the taxation on them differently. Profits distributed, as distinct from profits utilised for the development of a business, seem to me, from the point of view of the State, totally different things. It is true that the profits paid out may, perhaps, be wisely put into further development, but how is the State to know? It may also be blown on entertainment. But profits retained and used for the development of the business, which can be seen by the inspector in the accounts, are adding to the potential taxation, and, therefore, are something which it should be the clear and definite policy of the State to encourage.

If you ask the average businessman just casually as to what most of all requires examination in the income-tax code, he will probably say wear and tear allowance on plant and machinery. I am not going to develop that in detail. It seems to me that it is not so much that wear and tear allowances need to be amended as that it is necessary to reconsider the basis as to what is profit and what should be assessable profit. In the present income-tax code everyone knows that the profits on which taxes are assessed are very different from profits such as any competent accountant would pass for the purpose of showing to the shareholders or the public. An effort should be made to get these two together. That might mean a higher rate of tax on profits but, as far as I am concerned, speaking as a businessman of some experience, I would rather pay a higher rate on my actual profits than a lower rate on profits plus what I had not made at all. It is not easy to say what are the profits of a company but I am pretty certain that the present code could be improved. As a general rule, however, it may be said that the real profit in any year is the balance of income over expenditure after provision has been made for annual depreciation and for the amortisation of all moneys spent on assets which will be used up in the making of profits.

We have had a period of industrial development. Parties argue with each other as to which of them can claim the greatest credit for it but I seriously suggest to this House and to both Parties that we have been overtaxing that industrial development because of the method of taxation and that, perhaps, in some case of bad management but, in the main as a result of taxation, too much of its capital assets are being used up. I believe that any proper national industrial development should provide out of its profits the replacement of all its wasting assets so that the next generation should have a thriving, healthy, sound, modernised industry.

I challenge anyone who will carefully examine the matter to deny that with our present taxation as it is operated it will be impossible for Irish industry, taking it as a whole, to do what is demanded of it, that is, to reduce costs, increase output and attain to the greatest efficiency. To do that it must have the resources to instal the latest in plant and machinery and to be up to date. It cannot do this on the present allowances.

The commission of course would hear expert evidence from accountants and others, who would examine whether my experience is the same as that of others. They would be able to look into the whole matter and it could be carefully examined. I maintain that there is just as strong a case for a commission of inquiry on that as there is on Schedule E. I agree with what Senator O'Brien has said and I fully accept his case, except for some minor details. I think his case is extremely strong, but I do not think it is any stronger than the one I am making.

In connection with the question of allowances for wear and tear and obsolescence of machinery, any experience I have had is that the inspectors are prepared to do the best they can within the rules which they are operating and there is no question of unwillingness to realise the position and apply the regulations in the fairest way possible; but the fact remains that obsolescence and wear and tear allowance are based on the original cost. Machinery which before the war cost £100 will probably cost £300 or £400 now and unless you can find some method of dealing with that you are bound to have dissatisfaction.

At the present time, for every reserve for depreciation of plant over and above the wear and tear allowance, which is based on cost, the State takes 9/- in the £ from every company which is subject to Corporation Profits Tax. That means that in order to provide £1 for improvements you have to provide 29/- out of profits. In Great Britain and Northern Ireland an attempt was made to meet this difficulty by what was called an initial allowance on new purchases of plant to replace old. I think that has been abolished. Possibly it was too expensive. I do not follow closely the position in the United Kingdom but several firms have told me they have benefited very considerably by it. It would not necessarily be suitable here, in any case.

There is, I believe, another matter which should be examined, that is, some provision for dealing with the cost of new buildings. I think that over 50 years 2 per cent. is allowed in England, but I am not quite certain of that figure. It is only the principle I am dealing with. What I suggest is that it is in the national interest to encourage the erection of new buildings where required, in preference to repairs. If the cost of repairs are allowed, as they are allowed, for business and industrial premises it is a temptation to see if you can do repairs to make an existing building last another few years. Money is spent on repairs which in many cases would have been sufficient for rebuilding. With a better arrangement some of our towns might have been partially rebuilt. I am not quite sure of the position in Great Britain, but I think 2 per cent. is allowed on industrial buildings and I think that the recent committee recommended that that 2 per cent. should be extended to most business buildings. There again I am not sure of the exact position, but this is certainly a matter which requires consideration and examination here.

I have probably spoken long enough, but there are one or two small points which I would just like to mention and I will not attempt to argue them. I do not think there should be any restriction of the period during which business losses could be carried forward. I think that should be looked into. The losses incurred in the last year of business should be set off against profits for the previous year. That would be a big help in the case of business that have a loss. I am only mentioning these points, though they are of importance. Another small point, but an important one, is that the cost of an income-tax appeal, especially if a firm wins it, should be allowed as an expense. Another point which has come to my notice on more than one occasion is the question of legal costs on a lease, where there is a lease of business premises. If the premises are leased for, say, 25 years, I think the legal costs should be allowable over the 25 years, because that is a business expense over the period.

I have spoken too long and it is too late now to deal with Schedule A tax and the whole question of revaluations. Possibly someone else will deal with that. Any commission of inquiry into income-tax would get a very considerable amount of evidence on which they would be able to reconsider the whole position of the Schedule A tax.

When this motion was put down a good many months ago and I sat down to prepare some notes for a speech, I received a document, I think it was in connection with anti-partition, in which there was a most interesting report about the Attorney-General in the Six Counties, which provided surprising support for the point of view of some of us. Mr. Warnock was reported as saying that the British system of taxation was altogether unsuited to the Six Counties and was resulting in the over-taxation of the people in that area. It may be thought that Mr. Warnock had been reading Arthur Griffith——

He was merely referring to the existing system of tax there.

I was going to say that he was more likely to be expressing the feelings of his own supporters. No enthusiastic supporter of partition like Mr. Warnock could possibly object to paying the British rate of tax. Therefore it seems to me that it was the British system of taxation as applied to Northern Ireland to which he objected. I am not going to make any point about this except to say that it set me wondering if it would be possible to have a joint commission. In the dissatisfaction over the operation of income-tax I have a sort of feeling that we might have a united Ireland.

At this late hour I do not intend to speak at any great length. I rise to support the motion and I hope the Minister will find it possible to accept it. I wish to compliment Senator George O'Brien on the masterly way in which he spoke to the motion. It was indeed a pleasure to hear him speak on a subject which he has studied so exhaustively. It is hard to find any new argument which would add emphasis to the need for an inquiry.

When Senator Douglas also put his name to this motion it was obvious that he would deal with those matters which he and I have in common, matters under Schedule D. I will content myself with emphasising what he urged in connection with undivided business profits. I think the Minister knows the part that undivided profits are playing in small businesses in keeping those businesses alive. I know, of my own knowledge, of businesses where profits have been left in the business by the owner and these have been heavily taxed by the State. The business has then fallen on evil times and the net result has been that in advancing years the owner has found himself without a business. He could have taken out the profits when they were made and exhausted them but he left them in for development and they were taxed, and the evil result of that has been to leave him high and dry. I would stress that as one of the many things which could be debated at length.

I have promised not to go into this question at length. I will content myself with saying, as Senator Douglas has said, that businessmen, manufacturers and industrialists join in welcoming this call for an inquiry just as enthusiastically as Senator George O'Brien and the white collar salaried classes to which he refers. In conclusion, I hope the Minister will agree that this is something that is divorced from party politics in every sense and I hope that he will find it possible to accept the motion and implement it.

I would like to congratulate Senator O'Brien on the very able case he has made for an inquiry relating to the revision of the law in connection with income-tax. I would like to support the case he has made with reservations. I was particularly struck by a lot of the defects which both he and his seconder brought to light. I really think they made a very good case for an allowance in the case of sickness. We all understand that sickness in a family reduces the income very much while the illness continues. If possible, I think an allowance should be made for travelling and such expenses.

There was also a very good case made for a reduction in the taxation on profits which go into a business. It would be a very good thing for the State if it were possible to refrain from taxing profits which were ploughed back into a business. In agriculture people live from hand to mouth and for many years there were no profits, with the result that our agriculture and economy were reduced. There is a very strong case from the national point of view to refrain from taxing profits ploughed back into industrial production.

Senator O'Brien raised the question of the extension of income-tax to farmers. He pointed out that the objection to this might be the fact that agriculture is of supreme importance to the country. That is true. To-day, above any other time, when agricultural production is absolutely necessary, is not the time for imposing any additional burdens upon the agricultural population. It may not be realised but the real trouble with agriculture for the last 100 years was that the land was absolutely devoid of capital. The urban people did not seem to realise that agriculture production could not go on without any capital any more than a bed of seeds could be made to grow unless it was watered. That condition of affairs has existed almost up to the present day. Even to-day the farmer's position is not at all what some people think it is.

A few days ago the Minister for Agriculture announced an increased price for wheat. This will result in a good deal of taxation on the consumer. There will be demands from other branches of agriculture, but all those are necessary. Additional taxation will be imposed on the consumer in order to maintain, not alone to speak of increasing agricultural production.

There is one branch of agricultural production which is very prosperous. I refer to cattle, the prices for which have gone up within the last 12 months. But that is only a temporary phase. Cattle prices were low up to a few years ago and the moment this temporary scarcity is over prices will go back and it would not be wise to interfere with the prosperity of the cattle trade at the present. Dairy farmers and tillage are in anything but a prosperous condition. They require additional help from the State and it would be unwise to impose any fresh burdens on the agricultural community as you would have reactions by way of decreased production.

Another point is that rates are increasing year by year. So far as one can see they are bound to continue to increase. The burden of these rates is very heavy, especially on large lands where the valuation is high. Some of these valuations were imposed as long ago as 100 years. The valuation is too high on some land that has deteriorated in the meantime.

I suggest to the House that there is a graver issue involved than that of the revision of the income-tax code. I refer to the general burden of taxation. If it were possible to reduce the burden of taxation by agreement it would be very beneficial. This burden of taxation has been growing year after year. It is not a question of this Government or any Government, since every Government will henceforth come into office at a time when taxation is increasing and inflation is prevalent.

An Leas-Chathaoirleach

I think the Senator is straying from the motion.

If it were possible to reduce taxation the burden on the income-tax payers would be less. An effort should be made to simplify administration generally but that is a very big question. I think a very good case has been made for an inquiry into the present income-tax system.

Senator George O'Brien has certainly put us all in his debt with the very interesting discourse he made this afternoon. He said he was speaking principally on behalf of the salaried workers. I hope that his appeal for an inquiry into the income-tax code and the tax system generally will be effective and that a commission will be set up.

It ought to be abundantly clear to everybody that what is wrong with this country is that the tax imposed on both industry and agriculture is far too heavy. Recently many of us have read reports that have been published by the E.C.A. which have stressed the fact that the tax on industry in this country is amongst the highest in the world.

An Leas-Chathaoirleach

What has that to do with the income-tax motion?

This income-tax is not called a profits tax. Various Senators have referred to the tax on industry. They have referred to wear and tear and other matters. They were allowed to do so in full without the Chair stating that they were in any way irrelevant.

An Leas-Chathaoirleach

I do not like the Senator questioning a ruling of the Chair. The Senator is referring to industry.

I am referring to the tax on industry, but if the Chair considers I may not deal with that I will not continue on that line. I will conclude by asking that the request made by Senator O'Brien and Senator Douglas be granted:—

"That Seanad Éireann is of opinion that the law relating to income-tax is in urgent need of revision and requests the Government to appoint a commission of inquiry on the subject at an early date."

I would add my few brief words requesting the Government to set up this commission. The motion is very wide in scope and if the commission is set up I think that the Minister for Finance ought to give it terms of reference as wide as possible.

I just want to reinforce the appeals made by the previous speakers and the arguments put forward by Senators O'Brien and Douglas for the appointment of this commission. I want to preface my remarks by making an appeal to the Minister and his officials that at this festive season they might, as it were, remember that circumstances are very difficult and desist in the present intense drive on a number of city workers for collection of income-tax until after Xmas. I am not suggesting that I defend the postponement of these payments; I do not.

An Leas-Chathaoirleach

Is the Senator dealing with the motion?

It is arising out of taxation and I am talking about income-tax.

What about the commission?

It is one of the reasons why I am asking that the commission should be appointed. However, I will desist now that I have made my point. I would like to point out that if the continuance of that method of collection was intensified many industries that are making immediate payments to meet claims properly sustainable against their workers will find themselves in bad odour with their bank managers before Christmas is finished.

I want to stress the amazing popular chorus of disapproval of what is happening. I do not say it is an injustice but it is unwise, I will admit. Might I say that one of the things which the commission should do is to bring about some change in the income-tax forms so that the ordinary man may be able to interpret them? It is known generally that the average man finds it nearly impossible to understand the forms sent out by the Revenue Commissioners. I do know that it is asking for the moon to request a simplified form so that everybody can understand it, but at least the form making a claim on an individual for return should be simplified much more than at present. As regards my own form, I had to send it to my auditor to be satisfied that my replies to questions on it were correct.

It seems to me that so long as we have a country which is costing one-third of our total producible wealth to run we must have some form of taxation. It seems we are starting at the wrong end of the stick and, instead of inquiring into income-tax, we should inquire into the whole of our country's economy and find out what justification there is for running a country which is producing, between agriculture and industry, £340,000,000 at a cost of £110,000,000. We might in that connection consult some of the bigger businessmen who can run their businesses on a smaller percentage than that.

So long as we are running the country in a wild fashion, we shall have to have taxation and no matter what Party is in power taxation will be necessary. I agree with Senator O'Brien that we took over a system of taxation and of income-tax in this country which was entirely unsuitable and we did not set out with imagination and fresh thought to see how we could adapt to our economy a system of taxation much more suitable instead of one inherited from an industrial régime. We shall have the people with business technique on the commission and a psychiatrist as well, because only a psychiatrist can explain to me why we have this system of taxation.

This system of P.A.Y.E. might be investigated. I know from my own experience that there is more discontent amongst the workers of this city who have been suddenly called upon to pay their taxes than I have ever known before. Some of them said to me that if they had been told what time they owed income-tax it would have been paid. I know of a man with several children who will not get a penny piece of payment until next January. P.A.Y.E. would obviate any misinterpretation and income-tax harshness.

There is general appreciation of the fact that some people and classes are not paying their proper proportion of taxes. I do not know why that should be allowed to continue and I am not going to argue for any particular class. The economists who are much more able to do so than I am have argued and said that if taxation were paid on the basis of all who should pay contributing, then the tax would not be higher than 3/- in the £. If that is the position I suggest we should examine the whole matter and see that in the cause of social justice, such as Senator O'Brien argued for, people who are overtaxed should be relieved of some of their taxation by people undertaxed or not taxed at all. I do not think that the Minister, with his sense of social justice, would object to any investigation on that line.

The proportion of taxation which has been taken out of industrial profits is, to say the least, having an extraordinary effect on our whole economic structure, and it seems to me a form of cock-eyed economy where we have the Ministers and the Government straining these industrialists to work hard and build up a new industrial arm and no sooner is that industry set upon its feet than it has to give a blood transfusion to keep the whole country going. In other words, it is being seriously overtaxed, as Senator Douglas says. I think that these people who make wild statements about the extraordinary profits made by manufacturers and industrialists ought to examine their returns to find out what they are actually making; they would discover that many of the industrialists who started from patriotic motives are now in the doldrums trying to survive and paying taxation at the same time. The Minister is fully aware of the statements made by chairmen of public liability companies——

An Leas-Chathaoirleach

I would like to remind the Senator that we are not dealing with taxation but with the setting up of a commission to inquire into the income-tax code.

I am giving the reasons why I agree with Senator O'Brien that a commission should be set up and I am arguing that the statements made by company chairmen, showing how taxation affects the progress of industry, constitute reasons for setting up such a commission.

An Leas-Chathaoirleach

That is not the point in the motion.

It seems to me, then, that all one can do is pray for the dead and leave it at that, because if I am not to be allowed to talk about the things I am aware of, I will not be able to carry on with my arguments. Speakers before me referred to the allowance for depreciation and wear and tear of machinery and I hope that I will be allowed to reinforce their statements in that regard, that it is having a most deleterious effect on industrial progress. It has been argued for many years that there should be a greater allowance for buildings and we have argued until we are sick about the necessity for a greater wear and tear allowance in respect of machinery. We have pointed out that, in other countries, and particularly in America, there is a quick write-off and, in my opinion, and it is the opinion of the Federation of Irish Manufacturers, no great industrial progress will be made or any export market developed, if we do not face up to that question.

We cannot continue to produce goods on old machines without fresh capital, but hoping that, in time, when we get an obsolescence allowance in respect of the old machines, we will be able to replace them at a higher price. Only yesterday I saw a company report in the papers which stressed that fact, that wear and tear and depreciation are matters of paramount importance to the industry of the country and I hope that portion of the examination by this commission will be devoted to that aspect. I am quite certain that this Government, like its predecessor and all previous Governments, are vitally interested in the development of an export trade. I know that the Minister, as Minister for Finance, trying to balance his Budget, is anxious that our imports should, so far as possible, be balanced by exports, but I assure him that I cannot understand the Oliver Puff attitude of preserving a type of income taxation which, on one hand, deprives the industrialists of the opportunity of producing goods efficiently and competitively and of finding an export market and, on the other hand, charges them to the limit in income-tax for doing so.

This is a many-sided question and there are a good deal of arguments to be put forward one way and the other, as to whether the present system of collection of income-tax is the right system or not, but it is quite obvious that the time has arrived when it is necessary to inquire into it. Senator O'Brien has stressed that, in this changing world, the one thing that has remained static is our income-tax code, and it is an extraordinary commentary upon this new Ireland of ours that the one thing we possibly disliked most in the days of our rebellious youth is the thing that has remained longest with us. I am quite sure that the present Minister, in his rebellious days, or his associates or any of our Governments, never wished that we should preserve a form of taxation which was an anachronism. It is rather strange that we should do so and in that connection I again stress the necessity for a commission of inquiry.

I should like that commission to face its task with an open mind and with a completely non-Party attitude, and, so far as I am concerned, I want to reiterate what Senator O'Brien said. I am not speaking from any Party point of view. I give credit to the Minister and his associates for being just as much interested in national progress as I am. For many years, I thought they were wrong in clinging to a fiscal system of which this income-tax code is part. I still think that. The one mistake we made was that not alone did we import and absorb a wrong fiscal system but we took this tail-end of income-tax, too. I still remain of that opinion and so long as we have that system, with this part of it which affects our whole economy, there is a necessity for this commission. I hope the suggestion will be taken in the spirit in which it is offered, a spirit of regard for good national considerations. An excellent plea was made for it by Senator O'Brien and I hope it will be accepted in the spirit in which he offered it to the House.

This motion was very ably proposed by Senator O'Brien and I should like to congratulate him up to a point. Up to that point, I should be very strongly in favour of the arguments he advanced. He wants to inquire into the law relating to income-tax, which, he says, is in urgent need of revision. I suppose that everybody paying income-tax is convinced that it is in very urgent need of revision. The learned Senator said he spoke for his constituents, but I do not think he spoke for all his constituents, because I have the feeling that quite a number of his constituents came from the rural districts and were quite enthusiastic supporters of his. I know quite a number of them, but I do not think they would be just as enthusiastic in support of all the case he has made here. From the history we have been given of the law relating to income-tax, that law is very old. It is an import and it is unfair in the times in which we live. So the argument has been advanced by Senator O'Brien. It might not be a bad thing to have this inquiry, but it might happen, at the end of the inquiry that Senator O'Brien would not be any better pleased with the results than he is to-night.

I am concerned about one aspect of the argument he made when he indicated that he thought some members of the farming community were not making their just contribution under the existing income-tax law. He did, it is true, say that any effort made to spread the net wider would still permit the great bulk of the farming community to escape, that there was, in fact, only a limited number of farmers who would come within the scope of any new laws drafted. If these are the only people whom he wants to catch in his net, is it worth while trying to spread the net at all? He might go fishing and bring home no fish. I do not know that the section of the class for whom he speaks would be very much better off in the end.

He indicated a view which he thought might be advanced in defence of the farmer, namely, that he was engaged in an occupation very vital to the country, especially in regard to our balance of payments—the amount of the productivity of the land which goes abroad to pay for exports. He went on to say that there were other producers in the country and they, too, might make a similar claim and he asked where would that get us. If such a commission as suggested were being set up, I should like to see the terms of reference and I think I should like to see stated in those terms of reference the importance of each class in the community to the community as a whole. That would be a very vital consideration in any terms of reference and I think the farmers would occupy a very high position. I think the exemptions which that class could rightly claim for the welfare and benefit of all the community would be so high that the burdens the other would have to carry would, in the end, not be any lighter. I suggest that, if we are to have an equitable tax code, it should be related to the importance of each section to the community as a whole.

What would the country do without agriculture? Where would our industries, our professional men, and our white collar workers be if agriculture was not bringing the benefits which it is bringing to the nation as a whole? The suggestion that there are some farmers not paying their fair share of income-tax is one that cannot be allowed to pass. I agree with Senator O'Dwyer who has stated that there are some farmers paying heavily. I think even Senator O'Brien will concede that there are some farmers paying a great deal of income-tax. They had the right to say whether they would pay on their profits or their valuation, and I would remind Senator O'Brien that when they are paying on their valuation the farmers are, in fact, paying twice, for, in addition to their income-tax, they have to pay rates to the local authority on that valuation. A farmer with a valuation of £100 or £200 is to-day paying at the rate of 27/- or 30/- in the £ as compared with 2d. or 3d. in the £ many years ago.

The Griffith valuation has been referred to during the course of the debate, and nobody knows better than Senator O'Brien who has made a valuable contribution to the economic side of Irish history, that land was valued at £2 an acre and on that £2 an acre the farmers who paid 1/- in the £ at that time are to-day paying 27/- and 30/- in the £.

That is the picture as I see it. These are the sections of the community who, Senator O'Brien thinks, are not making a fair contribution to taxation to-day.

I will make this concession to Senator O'Brien, that he made an able case, giving us a clear indication of what the motion could do for a particular type of worker in a narrow way. That is what his case was so far as I could picture it. He was very concerned about one section of the community who can escape income-tax, and he was inclined to the view that sections of the agricultural community were escaping and obviously he is attracted to this point of view because he has adverted to it before in this House, though this time he was a little milder in his approach to it.

Senator O'Brien will, I think, be answered by the Minister for Finance on the issue which he has raised. I think it ought to be within the competence of the Oireachtas to examine the income-tax law as it is. I am certain that there are evasions and that some people are paying more than they are able to pay in a particular year. I do not think that any of us thinks that the income-tax law as it relates to ourselves is equitable. At the same time, I think that it is important for Senator O'Brien to realise that, as far as that section of the farming community is concerned, they are bearing their fair share of taxation. One of the greatest handicaps of the agricultural industry is the lack of capital, and if they were making the high profits which are suggested it was a wonder that there was not some evidence of their ploughing those profits back into their farms. I think that if we want to do the best possible service to the nation we would not try to get the farmer to pay more money to the Minister for Finance from whom he would not get it back, but to plough it back into the land. In that way it would show results and the nation would be richer by increased production and increased exports.

The speech of Senator Baxter and the discussions generally are a most healthy symptom in the Seanad, because they indicate that we are beginning to divide on a vocational basis. Usually we have been divided on a Party basis, and I have always deplored that. For that reason, and that reason only, I say that Senator Baxter's speech is encouraging, but it was an exaggeration of Senator O'Brien's reference to the farmers.

Senator O'Brien's speech was balanced and, in the course of a balanced survey, he referred to the farming community. But to imply that that speech was mainly destructive criticism of the farmers is simply absurd. The object of the motion is to have a general survey of the field and the whole purport of Senator O'Brien's speech was that in any general survey of the field—and Senator O'Brien will be the first to act honourably on the results of that survey—the whole problem should be examined.

It seems to me that we have to face three different kinds of injustice in the present code. There is the injustice that some people are not paying income-tax who should be paying it; there is the injustice of the various forms of taxation as it bears on the various types of payers; and, thirdly, there is the injustice between the various sections of payers. There are these three classes of injustices and I think we must bear that in mind. There is, for example, the general injustice to payers of income-tax that if the Revenue Commissioners make a mistake and it is not detected within three years, that mistake is irrecoverable, whereas if the payer makes a mistake the Revenue Commissioners can correct it at any time. On the other hand, if we, the payers, make a mistake and it is detected at any time later we must pay up. If the income-tax collectors were infallible, that would be a just rule, but the fact is they are not. I know from direct evidence within the last two years that mistakes are quite often made. In one case the whole of an earned income allowance was omitted, to the extent of £250, in an assessment. It was detected by the payer and was put right, but if he had not detected that within three years he would have lost the best part of £120.

In this year the whole remission for life insurance was omitted in an assessment. A letter was at once sent to the income-tax collectors correcting that point. No reply has been received within six weeks.

I want to make something quite clear. I entirely agree with those who have stated that on the whole the income-tax authorities do their very best to see justice done and to show courtesy to all their clients. But the fact is they are overworked at the moment. They are in arrears in many cases and some of them are making mistakes. When there is this injustice that if those mistakes are not rectified within three years we must suffer for it, such injustice should be put right.

There is a second point, a more specific point in connection with Schedule D. It involves a general principle of taxation on notional incomes. It has been pleaded in many quarters that taxation should simply be of actual incomes. In some cases it happens like this: if the notional income is less than the actual income then the taxpayer has to make up the difference; if, on the other hand, the notional income is more than the actual income then the taxpayer has no redress. He has to pay on the higher figure in both cases. That is an injustice.

There are other special points—the dependants' allowance of £50, for example. How can that be considered sufficient in the present state of affairs? A friend of mine has to support two elderly female relatives. He gets the princely remission of £100 a year for supporting them. It is quite grotesque.

There is the general point that Senator O'Brien emphasised, that is, the differences between Schedule D and Schedule E assessment. Why should Schedule D and Schedule E have the difference that those who pay under Schedule E must necessarily incur their expenses—why should that word "necessarily" be added—when those who pay under Schedule D simply have to incur them wholly or exclusively?

Let me illustrate that by relating an experience I had travelling in a train from Cardiff to Swansea last year. I happened to be an extern examiner for the University of Wales and had my modest expenses for that. Opposite to me in the dining-car was a commercial traveller. He began with sherry; he went on to a bottle of wine; he ended up with brandy, while I sipped the local variety of water as contentedly as I could. When I discussed the desirability of being in his situation he said: "Oh, it all comes out of the expenses." And eventually it will all come out of the income-tax allowance because he is on Schedule D and I am on Schedule E.

I am not highly skilled but I think that is not right.

I am sure Senator Hayes will develop that in argument later on. Some businessmen friends of mine send me very pleasant Christmas cards and I welcome them but they get them out of their income-tax allowance, I understand, because they are Schedule D. I, being Schedule E, may not send Christmas cards out of my income-tax allowance. It is a simple illustration which drives home the injustice of the code. That is the kind of injustice that exists between Schedule D and Schedule E.

To turn to something and to be more serious in its treatment, although the other matter is equally serious in its effects, surely the present taxation of husband and wife is wrong. I could quote the Constitution on this but I will spare you. The fact is this: At the moment a brother and sister, both earning an income and living together, can, I understand, get considerably greater relief than a husband and wife. If I am wrong on that, please correct me. So I am informed. If that is so, it is against several clauses in the Constitution which insist that the wife's duty is to work in the home and to keep the home together. But if the husband who is bearing the financial burden of this gets no consideration for the very great deal of work that the wife is doing in the home, is that justice under the Constitution? I think not. In the case of husband and wife, they should at least be given twice the single personal allowance, just as brother and sister both working would get twice the single personal allowance.

I see that the officials present are looking at me askance at that point and I am open to correction, but I do argue that the wife is working just as hard in the home as that sister in the office, and the income-tax code should take account of that. The wife gets no earned income allowance just because her husband has produced all the income.

These are general points. I shall omit one or two others I would have liked to mention. We need a commission on income-tax. There is no doubt about it. I hope the Minister will concede that. But, it will take a good deal of time, as the Royal Commission in England is bound to take a good deal of time. Meanwhile what can be done? I do suggest that the Minister for Finance and the officials of his Department, in preparing for the next Budget should keep in mind what has been said in this debate and be merciful on Schedule D.

I wonder if every Senator is supposed to demand this commission and if every Senator is supposed to know what alterations are required in the income-tax code? Judging by the debate so far everybody seems to want an inquiry into the iniquitous income-tax code. Every speaker wanted certain alleviation for one section and possibly extra contributions from other sections. A former Parliamentary Secretary to the Minister for Finance, the late Mr. Hugo Flinn, once wanted abolition of income-tax. In this debate, nobody has suggested the abolition of income-tax. It would be a great idea, if we could get on without it.

Senator O'Donnell did.

He would have to be original. I thought I was being original in the suggestion. Actually I do not suggest it because we as a people must pay our way and the Government acting for the people must pay its way and must get the money to pay its way. Unless there is some alternative method of getting the money to carry out the duties of the State, income-tax must remain. Another point that occurs to me in connection with an alteration in the income-tax code or the possible abolition of it is the unemployment that would be created.

An Leas-Chathaoirleach

We are not on the abolition of income-tax. The subject matter of the debate is a revision of the present income-tax code.

Abolition would be a very drastic revision. I am one of those salaried officials who have no means of escape from income-tax. We naturally assume that other people have some means of escape. The debate has been an education to me, to find that other Senators speak of other groups who allege they have no means of escape either and who demand redress. The businessmen, for whom Senator Douglas has spoken, demand an inquiry also with, of course, the idea of redress to suit themselves. Senator O'Brien also touched on other vocations towards the end of his speech and I am not going over the points which he put so magnificently, all very relevant and showing how hard it is on the salaried official or white-collar worker to make ends meet when this income-tax code lies so heavily on him. He mentioned the display expenditure in industry and I was wondering when Senator Stanford was speaking if the Christmas cards he spoke of were included as display expenditure for businessmen and in that way they got the cost of their Christmas cards allowed in the income-tax claim.

The third section of the community Senator O'Brien mentioned is the agricultural community and I must say he referred very softly to them to-night. I agree with Senator Baxter that he was not so soft on previous occasions. I do not know how many farmers pay income-tax, but they must be very few. However, until every farmer has the same display expenditure as the businessman he should not be asked to pay income-tax. I want to see all industry prospering, but there is a form of thought to-day that if a farmer has a motor-car he is opulent, yet no little business will be a business at all unless the owner has a big car to display that he is doing well. Possibly that is display advertising. Until the farmer is able to take a fortnight's holidays or most of a month—as I am able to do, though I have to take something in coming here to the Seanad— he should not be asked to pay income-tax. When he is able to pay £4 a week in agricultural wages and put by £5 a week for every son and daughter working on his land and still have a surplus afterwards, let him pay income-tax, but not till then.

Even when prices are good—and they are better to-day than in years gone by—he has a long way to go before his standard of living and his general status in the community are such that he can be designated as liable for income-tax. At present he cannot allocate for each child the same amount as he has to pay the agricultural labourer that he employs, he has to get that labour from his family free gratis and for nothing and hopes for the best in the future, to be able to educate them. When he is in a secure position, with a standard of living comparable to that of the salaried earners like ourselves living in the city, he may be charged income-tax.

We who are salaried officials hope that when we reach old age we will get a pension. We have that security. Until the farmer is in a position to hand over his house to his son and has sufficient money to build a dower house or cottage on the land for himself in his old age, there should be no question of asking him to pay income-tax. When that day comes it will be an admirable one for agriculture. Then we will not have those late marriages, the younger people will be able to go to work, with the older ones in a comfortable position enjoying what might be compared to superannuation in the salaried classes. That I would say is the day when the farmer may be asked to pay income-tax to supplement the revenue of the country.

I started by saying the salaried official is in a difficult position, with no means of escape. I am passing over the arguments made by Senator O'Brien as to whether industry does or does not escape the rigours of the income-tax code. Even though I feel we are in a difficult position for income-tax ourselves, I deprecate the idea that the farmer has reached the stage where there should be a general demand from any part of the population that he should pay income-tax while his present burdens lie heavily on him. I hope the day will come when the farmer will be able to do it.

In moving the adjournment of the debate, may I say that this debate should be known as "O'Brien's Miracle"? It united Senators Seán O'Donovan and Baxter.

Debate adjourned.
The Seanad adjourned at 10 p.m. until 3 p.m. on Thursday, 4th December, 1952.
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