This debate is primarily concerned with taxation in contrast to the Appropriation Bill which is primarily concerned with expenditure; but it is extremely difficult to draw a rigid line between the two because the amount of taxation in the country depends upon the amount of expenditure and each individual tax is related to the total amount of taxation required. It is the expenditure which really calls the tune to which the taxpayers must dance. It is the volume of the Estimates that determines the problems in the Budget.
The Budget in modern times performs more than one function. It is, of course, the housekeeping account of the State for a single year. From that point of view, it is important that current revenue and current expenditure should balance and that the State, like every other prudent householder, should pay its way. From that point of view, the relevant period for consideration is the financial year. But the Budget nowadays looks forward. It looks towards the general trend of the economy.
The Budget can be used, in conjunction with other measures, to regulate the pace of the economic machine. If inflationary symptoms are developing, it is possible to apply certain brakes, and if deflationary symptoms are developing, it is possible to put on the accelerator. These changes in regard to the pace of economic expansion are largely operated under the capital Budget and not under the current Budget. These short period changes must always be related to the longer period policy. In other words, the aim of the Budget in the short period is to obtain balance but the long period economic policy in every country is to try to ensure growth. Therefore, an endeavour must always be made in some way to make these two aims harmonious.
The fact of the matter is that in modern times the best financial opinion throughout the world is that there is no real antithesis between the aim of balance and the aim of growth. The maintenance of monetary stability is looked on as essential to growth; and inflation, which may seem to give a certain temporary spur to the economic system, produces such crises and the need for such corrections that in the long run it may be inimical to growth. This view is generally held to-day by the International Monetary Fund, the Bank for International Settlements and by central bankers generally.
Looked at from these points of view, the present Budget merely regarded as a household account is probably balanced. Merely regarded as the annual revenue expenditure of the State, it does meet the criterion of the State paying its way. From the point of view of influencing the pace of economic development, it is on the expansive side and not on the restrictive side. The Minister in his Budget statement in the Dáil said that the general conclusion to be drawn from a study of the current economic position and the immediate prospects was that this Budget should not be restrictive in character.
With that opinion I would agree. I think that the lack of restriction in this Budget is justified by the economic and financial background. The main feature of the economic background is the balance of payments. Although there was a deficit of £8,000,000 in the balance of payments in the year just closed, there was no loss of external reserves because there was an inward capital flow of at least the same amount. Therefore, the out-turn of 1959 did not call for anything in the way of restriction in the Budget in so far as it might be necessary to correct the balance of payments.
As regards the current year, 1960, the general forecast, as far as one can make it, is that the balance of payments will not be less satisfactory than it was last year but, of course, these forecasts are subject to a great many uncertainties. I think it is really almost one's duty to call attention to some of the dangers in the situation before a feeling of too great complacency is allowed to develop. In the first place, it cannot be sufficiently emphasised, I think, that a mere equilibrium in the balance of payments is not an aim in itself. In a country aiming at industrial expansion, based on the imports of considerable amounts of industrial raw materials, the balance of payments should be in equilibrium at a high level. As the prosperity of the country improves, as we hope it will, the necessity for more imports will grow and, therefore, the necessity for paying for them by exports will also grow. The mere balance between imports and exports, though desirable, is not sufficient in itself. It is desirable that the balance of payments should be in equilibrium at a high level and not at a low level.
Another thing we must take into account is the uncertainty regarding the future of the export market. The whole pattern of trade in Europe to-day is being altered by new economic groupings. That is a matter into which I do not propose to enter in this debate. I do not think it is altogether relevant. We can say this. The export situation for every country which is exporting industrial products is liable to be injured by these developments in the next few years. Therefore, we should make our export forecasts on the basis that we may run into unexpected developments in other countries over which we have very little control.
Another thing that must be borne in mind is that the terms of trade have been moving in our favour consistently for some years. The country has been extremely lucky. From 1957 to 1959 import prices fell quite materially, whereas export prices rose. And reversal in that trend, which would be the result of factors entirely outside our own control, could, without altering the volume of our external trade, produce a very different picture in regard to the balance of payments.
Another thing which should be borne in mind is that we cannot be sure of the continued influx of capital and that the influx of capital last year prevented us losing our external reserves. That influx of capital depends on the decisions of people outside the country which we cannot influence or control and therefore any drying up of that flow of capital might result in the loss of external reserves which would call for corrective measures.
The Central Bank refers to the satisfactory position of the balance of payments in the last three years, taking the three year over-all period. While I would be prepared to agree that, in general, there is nothing sacred in the calendar year from the point of view of measuring the balance of payments, at the same time, one cannot get away from the fact that during those three years, the trend was in an adverse direction. If that trend continues over the whole of the five or six year period, the balance of payments might deteriorate quite substantially and if it is not set off by inward capital flow, the kind we cannot control, the situation might become quite unsatisfactory. However, as I say, these are rather warning notes to counter the optimistic forecasts made by the Minister in his Budget speech and by the Central Bank.
To pass from the economic to the financial background of the Budget, the financial year which has just closed has been a very good year. The Minister deserves congratulation partly for his foresight and partly—and I hope he will not be offended by my saying this—on his good luck that the revenue was unexpectedly buoyant and that his estimate for over-estimation proved to be even short of the mark. Therefore, the financial year turned out even better than he forecast in the 1959 Budget. We certainly all hope his luck will continue in the present year. At the same time, a buoyancy of revenue cannot last for ever. The Minister himself stated in his Budget speech that he expected buoyancy to be lower this year. Many of the changes made by the Budget will not show their full effect until the full year; some of the taxation and revenue relief, some of the increased expenditure, will come home to roost only in the next financial year, not in the present one. Therefore, the picture presented in the Budget may perhaps err on the side of over-optimism. The large allowance for over-estimation in last year's Budget was more than justified, but we have no guarantee that the allowance for over-estimation in the present Budget will prove equally justified. We hope it will, but if it does not, the outcome of the Budget will not be as good as the forecast made by the Minister.
I want to make a more serious criticism of the present Budget, that is, that the surplus which has undoubtedly resulted from the last financial year should have been used to reduce taxation rather than to increase expenditure; that, if the aim of the Budget is expansion and not restriction, that expansion can be better secured by reducing taxation than by increasing expenditure. Direct taxation in this country has a disincentive effect. It is so high it reduces the power of people to save and reduces their will to save. The income tax code has been considered by a Commission, the report of which will soon appear, but we can certainly say that, whatever is in that report, income tax is full of injustices and inequities and that no reform in the income tax code which does not result in a substantial reduction in the amount of tax collected will have any really good effect on the country and on the taxpayer.
I should suggest that the outcome of the last Budget was so favourable that the Minister might have left himself some elbow room for making some adjustments in income tax, to reduce the amount of tax in anticipation of the Commission's report.
Another tax in this country which causes dissatisfaction and which is unjust is death duties. We hear people complaining that there is no taxation of capital gains. I can never understand why people say that in view of the death duties. The death duties are a very potent and perhaps unfair—it is a matter of opinion—and effective method of taxing capital gains. Death duties on top of income tax and surtax have got an extremely disincentive effect on the sections of the population who would normally provide capital for industry.
I should like to quote just one or two sentences from a book—which if I might say with respect should be required reading for the Minister for Finance—by Parkinson, "The Law and the Profits". On this very question of the effect of high direct taxation, the author says, at page 85, and I paraphrase his words, something which I think is true in this country, that is, that the code of direct taxation for income tax and death duties is so high that a number of the best brains are now employed on the side of the Revenue Commissioners in collecting tax and on the side of the legal and accountancy professions, not in trying to evade it, but to avoid it. Mr. Parkinson says that the tax has reached such heights that now a great struggle is going on between the Revenue Commissioners and the professional advisers of the public to try to ensure that during a man's life, on the one side, he has no income, nothing but capital, but at his death, that he has no capital, nothing but income. That may be a slight exaggeration but it is only a slight one. It is certain that a great deal of unproductive labour is devoted in this country to-day to dealing with direct taxation and that, owing to the economic structure of the counrty, to the lack of many rich people and the very narrow range of the number of people who pay direct taxes, the result to the Exchequer may not be worth the great amount of litigation and disturbance and disincentive that their collection involves.
I am glad to see that the present Budget raises the minimum amount of estate which is liable to death duties but that adjustment really does no more than make allowance for the change in the value of money. I would suggest that the Minister should seriously consider making broader and more far-reaching changes in the death duties. They have an adverse effect on small savings, on small businesses, and a change in the death duties might quite easily attract here a certain number of British residents. A great many people who are not prepared to advocate sweeping reforms in income tax are prepared to advocate very sweeping reforms in death duties. The disincentive effect is much greater than the yield which the Exchequer gets from them.
There is another objection to death duties—I know what I am saying now has been said over and over again for many years but it does no harm to repeat it—that they are a tax on capital and are used by the State as current revenue. From the point of view of financial prudence, in the case of an individual or a business man, nothing is more imprudent than spending accumulated capital for current revenue and yet, year after year, the accumulated savings of the people are taken at one fell blow by the Exchequer and used as current revenue. That has always struck a great many people as being extraordinarily imprudent, and as being an example of applying a different standard of financial probity to the Exchequer and to the private individual. If any private person lives on his capital, he is looked on almost as a monster of extravagance, whereas, year after year, the savings of the community are taxed heavily when people die and have to be expensively liquidated, very often at a loss, and those savings are then used for current revenue instead of being used for repayment of debt, or capital purposes which would be less objectionable.
That may not be the only example of the different standard between private and public finance. Another difference which bears, I think, on this Budget and on every Budget, is the reversal of the roles of income and expenditure. The private individual has to live within his income. He estimates what his income will be and tries to regulate his expenditure so as to be within it, but, curiously enough, the State proceeds on entirely different lines. As I said at the start this afternoon, it is the height of the Estimates that decides the problems of the Budget. The State decides how much it will spend and, having made up its mind, then decides where it will get the revenue from. If that were done in the case of a private individual, of course, wholesale bankruptcy would result. A man who tried to regulate his income to his desired expenditure would be looked on as improvident.
I do not want to weary the House but I should like to quote from the same book, which I recommend to the Minister, if he has not already read it. The quotation is:
But between governments and individuals there is this vital difference, that the government rarely pauses even to consider what its income is. Were any of us to adopt the methods of public finance in our private affairs we should ignore the total of our income and consider only what we should like to spend. We might decide on a second car, an extension of the home, a motor launch as well as a yacht, a country place in the Cotswolds and a long holiday in Bermuda. All these, we should tell each other, are essential. It would remain only to adjust our income to cover these bare necessities.
That is exactly what the Government do. They decide that they must have armies, social services and subsidies and then, having decided on these various extravagances, they decide how much income they require. And it is the taxpayer who has to find the necessary income.
I do not wish to go outside the bounds of this debate on the Budget, but, as I said, it is quite impossible to disentangle income and expenditure for the reason I stated, that the total amount of taxation depends on the total amount of expenditure: It has been agreed in every country today that the control of expenditure has got out of hand. I should like to quote from The Economist of 21st May. I think this is relevant to this country. On page 730 we read:—
...there has been a failure to restrain Government expenditure this year, at a moment of threatened inflation ... What is needed instead is a radical overhaul of the machinery, both parliamentary and administrative, for determining and timing government expenditure—a process that should require some awkward and discriminate jumping upon departmental toes.
Actually I do not think that is a fair statement in the present situation because the suggestion made there is that high Government expenditure is the result of laxity by the Exchequer or of extravagance by these spending Departments. The real fact of the matter is that the evil is much deeper and high Government expenditure is the result of demands by the public for that expenditure. In other words, that expenditure and extravagance are the result of political decisions, and these decisions are taken very largely in order either to woo the public at election time or to carry out some policy or other which the Government, rightly or wrongly, consider would be desired by the public.
I should like to refer to a very important lecture which was delivered this month to the Institute of Municipal Treasurers and Accountants in London by the Comptroller and Auditor General in Great Britain. This lecture was reported in The Times of 16th June and some of the matters in it seem to bear directly on the present debate. I do not propose to quote the whole of it. In fact, I hope to paraphrase it. The Comptroller and Auditor General said that the man in the street agrees that public expenditure is unduly high and that it is unpopular because it leads to high taxation. If he were asked what could be done about it, he would be inclined to say, first of all, that there was not enough check on it by the Treasury and, secondly, that actual expenditure itself is wasteful and that business checks on extravagance are not applied to it.
He goes on to say—and I think this explanation is the correct one—that the true explanation is that the man in the street himself is very much responsible because he wants expensive services and that to apply the blame to the Treasury for not imposing greater economies on the Departments, or to blame the Departments for wasteful administration, or to blame the Comptroller and Auditor General for not being more severe, is a rather shallow explanation of a much deeper problem. What really keeps expenditure high is the intractable nature of public expenditure itself on account of the high content of continuing long-term commitments.
These commitments are the result of policy decisions, political decisions which are themselves a result of the democratic choice of the electorate. I should like to quote from the leading article from The Times of the same date. Dealing with this lecture, the leading article says:
The truth is that in any but a narrow technical sense the only effective means of controlling public expenditure are political. The electorate will go on wanting to eat its cake and will continue to believe the cake can be made larger and larger merely by sweeping up the crumbs that are dropped in Whitehall. The fewer crumbs that are dropped there the better. Yet it is not likely that the absence of them altogether would take a penny off the income tax. Indeed, often enough all the savings painfully accumulated over a long period can be swallowed up by a single political act... The taxpayer cannot have too much private spending money in case he upsets the national economy.
That, I think, is true, and the reason I bring it in is that I think it is a political argument and that is why I address it to the Minister. High taxation is caused by high expenditure by the Government, and high expenditure by the Government is not caused by lack of effective control by the Exchequer or the Department of Finance, or by wasteful expenditure, so much as by policy decisions of the Government which, in their turn, reflect the wishes of the electorate.
It may be said that what I have been saying is relevant to other countries but not to ours. I think there can be no question that the level of public expenditure in this country is unduly high. The Minister attempted to meet this argument in the Budget speech. He said that public expenditure in this country expressed as a fraction of the national income is lower than in Great Britain, France, Switzerland or Holland. These are all much richer countries. The richer a country is, the more of its income it can afford to spend on public purposes.
A new phrase has come into fashion recently in economic literature and discussion—"the affluent society". The main complaint against the so-called affluent society as it exists in the United States is that an insufficient fraction of the national income is spent on public purposes. This has been used by socialist propagandists in other countries as a criticism of capitalism in general. A striking pamphlet was recently published in England by Mr. Crossman pointing out that in affluent societies, the private sector spends too much and the public sector spends too little.
This may or may not be true. Many countries in Europe spend a great deal in the public sector. Even if it is true, it is not a criticism of capitalism in itself. It is only a matter of shifting the margins. In England, under the influence of the Labour Party, the margin has been shifted possibly too far in the direction of public expenditure. In the United States, it may not have been shifted far enough. The only point I want to make here and the reason I mention it at all is that this is not an affluent society.
Ireland is not what it is known as an affluent society judged by any comparisons of national income. Therefore if it is correct, as the affluent society propagandists say, that the richer the country is the larger the fraction spent on public purposes should be, the opposite is equally true: the poorer a country is the smaller the fraction that should be spent. Therefore, to compare the fraction spent in this country with the fraction spent in countries such as Great Britain, Switzerland and Holland is an unfair comparison.
The fact is that it is not only in relation to wages that this country suffers from trying to keep up with richer neighbours. We discussed that recently in the Seanad, the effect of high English wages on Irish labour standards. It is equally true in relation to social services. In relation both to wages and social services, we try to keep up with a nation which is much richer than ourselves. Therefore we condemn ourselves to expenditure which possibly we cannot afford and which certainly does result in high taxation.
Therefore, I suggest to the Minister that the fact that we spend a smaller fraction than the other four countries he mentioned is not in any way conclusive. Another thing which must be remembered is that practically every other country in the world has had large expenditure on war and on defence. We have escaped a great deal of that. The figures given recently in the Dáil in answer to a Parliamentary Question revealed that out of every £ in the British Budget, 5/8d. represents army and police, whereas in Ireland the figure is ?d. In other countries there must be similarly large expenditure on the debts from the second War and on defence at the present moment.
It is also relevant to call attention to the fact that owing to—I do not like to say "stagnation"—the comparative stability of our national income, the fraction of our national income spent on taxation is actually increasing, whereas in other countries it is decreasing. For example, in Great Britain, the percentage of the national income taken by the State revenue was 37 in 1948 and in 1959, it was only 29. No similar reduction in the fraction spent has taken place here during the same period.
That brings me to the main point I am trying to make in these remarks, that is, that the current expenditure and therefore the current revenue and taxation which is the matter we are mainly debating tends to be too high because of the stagnation in our economy. Our population is not increasing. Perhaps the best way to show the lack of expansion of taxable capacity is to quote some figures given by the Minister in the Dáil on 14th June last as reported at column 1169 of the Official Debates for that day. This represents the consumption of certain dutiable commodities as a percentage of the 1953-54 figures. In 1959-60, that is, six years afterwards, tobacco, 88 per cent.; beer 99 per cent. and whiskey 93 per cent. That shows that in the course of six years the consumption of these, you might say, representative luxuries has actually decreased. That shows a lack of expansion of taxable capacity.
The population of the country is decreasing and will continue to decrease. We must face that fact. The full employment in Great Britain has caused a shortage of labour there. Everybody knows that emigration is taking place at a very high rate. Without in any way denigrating or belittling the recent industrial developments, one must accept the fact that increased employment in industry is not absorbing the people disemployed in agriculture. The industrial expansion is to be welcomed in every way. It has been of the greatest value to the balance of payments. However, it does not absorb the unemployed.
This is not a criticism of policy because it would be only a criticism if the aim of an industrial policy were to give employment quite regardless of the standard or the quality of the employment and that, as I said here recently, is a test I do not accept. Therefore, we may take it that, if the policy of industrialisation is successful, it would give highly paid employment. There is no reason to believe that the numbers displaced in agriculture will be absorbed in industry. Therefore we must look forward in the immediate future to a decrease in the population. That being so, even stationary Government expenditure increases the burden per capita. That is something which cannot be sufficiently stressed. The expenditure is increasing but the size of the population is not increasing. Therefore the per capita burden must automatically increase.
If a great deal of our Government expenditure was of a productive nature, it might perhaps be more justifiable. However, the greater part of it is of a transfer nature. The agricultural subsidies and the social services bring about a mere redistribution of income. I do not suggest for a moment they have not a social justification. However, I do assert that they add nothing to the national wealth and that the taxation which is necessary to finance these various transfers of income may have a disincentive effect. Therefore the net result of the transfer may be a reduction in the national income rather than an increase.
Nothing is more important to the Minister when framing his Budget than to try to balance the social benefit of additional expenditure against the social evil of additional taxation. Therefore, what I am trying to suggest is that it will be impossible to reduce taxation, unless an attack is made on the expenditure side. The situation might easily become dangerous if circumstances arose outside our own control. If there were a severe change in the economic climate in Britain, some of our prosperity might begin to disappear in sympathy. Furthermore, as I said already, we may experience difficulties in exports, through no fault of our own, owing to trading arrangements abroad. A change in the consumption habits of the population might affect the yield of taxation. A serious decline in the consumption of alcohol or tobacco, two items on which the Minister relies for a great deal of indirect taxation, might bring about a serious decline in the yield of taxes over and above the decline to which I have already referred which reflects the stagnation of the economy. Any decline in yields of that kind could bring about a need for higher rates of taxation, and those higher rates of taxation would have an extremely disastrous disincentive effect on the economy.
Therefore, to come back to what I said before, I suggest that the Minister has not made enough allowances, has not left enough elbow room in the Budget for disagreeable developments, that all his forecasts are on the optimistic side. We all hope that they will be justified, and nobody wishes for a moment that they will prove false, but at the same time there is an element of danger in them, and changes in the situation outside our own control could easily change some of his pluses into minuses.
The same is true of the capital Budget. While it is correct to say that there has been a shift from social to more productive investment, at the same time, a great deal of the investment from public funds still results in deadweight debt. It may be productive in the very long run, but at the same time, in the short run, it does add to the burden on the Exchequer of deadweight debt. I quote from the report of the Central Bank on page 29:
The social needs have now, to a substantial extent, been met and, as a natural consequence and a matter of deliberate policy, measures have been initiated to devote a larger proportion of public investment to productive purposes, defined in the Programme for Economic Expansion as ‘yielding an adequate return to the community in competitive goods and services'.
The programme also draws attention to the desirability of economy in the use of capital, of conserving existing capital assets and of obtaining the utmost value for new outlay. It has frequently been stated and may readily be agreed that scarcity of sound projects is a more immediate problem than scarcity of capital but this obviously does not allow of an uncritical attitude towards particular capital proposals. The State is committed to the proposition that the lack of capital will not be allowed to prevent the initiation or the success of any soundly based scheme. The requirement that a project must be soundly based should never be overlooked. Neither should it be forgotten that expenditure is not necessarily productive, in any true sense, merely because it yields a continuing return in goods and services. There is still an element of economic waste if the return is inadequate or if the goods and services produced can be made competitive only by means of permanent subsidies, open or hidden, from the community as a whole."
A good deal of the Government investment may produce a flow of goods and services, but it is only maintained by subsidy, open or disguised. That is shown by the figures in the Central Bank Report on page 14 showing that the amount charged for debt service has risen from £7.4 million in 1953 to £18.7 million in 1961. That figure must be read against the background of falling population and high rates of interest, a matter referred to already in the Seanad. We can assume that rates of interest will not be less than 6 per cent. in any European country in the '60's. There are the ever-rising claims of the Supply Services, so that both the current and the capital Budget seem to point in the direction of growing burdens on weaker shoulders.
Finally, there is a consideration that tends to be overlooked, that is that Government expenditure can be inflationary. It can affect the balance of payments quite as much as rising wages or over-expenditure on durable goods or other commodities. This has recently been admitted by the British Chancellor of the Exchequer, who has followed a series of disinflationary measures—a rise in the bank rate, compulsory deposits, and control of hire purchase—by the announcement that the Government's capital programme is going to be prevented from expanding. Assuming for a moment that the Chancellor of the Exchequer is correct in his diagnosis that an inflation is endangering Britain, that is a very proper step to take, and one from which we should learn a lesson.
We must at all costs avoid inflation, for the simple reason that the rest of the world has more or less succeeded in bringing its inflation to an end. When we were living in an inflationary world, we could afford a certain amount of inflation without getting out of step, but the world now has ended its inflationary period as far as one can judge, and therefore any individual country that indulges in inflation is exposing itself to the extremely difficult task of correcting the bad results of that inflation.
To come back to a matter which I dealt with very early this evening, that is, the possible disharmonies between a shorter period and the longer period programme, it is generally agreed now that a lack of balance in the short period may act as an impediment to growth in the long period. On that, I should like to quote the report of the O.E.E.C on Ireland. On page 26 it says:
The success of the Programme for Economic Expansion will depend not only upon completion of the specific projects it contains but also upon the maintenance of overall equilibrium in the economy. In particular great damage can be done to longer-term prospects by drastic restrictive measures which become necessary if the economy gets seriously out of balance.
That is in harmony with general thinking in the world today. Therefore it behoves us to avoid inflation not only from the point of view of the short period balance of payments problem but from the long period problem of reducing the rate of economic growth.
To conclude what I have been trying to say, in a world where inflation has been checked, each individual country must attempt to avoid inflation. Government expenditure, either current or capital, can be a cause of inflation. Therefore Governments should aim at restrictions of expenditure as an object of policy in itself. This may sound very old-fashioned and conservative, but I do not apologise for it on that account. New fashions are not necessarily good, and it must be remembered that it is the duty of the economist to speak for the community as a whole as against individual sectional interests. This is true in the case of trade in regard to protection. Every industry that wishes protection is able to make its case vocal, but the community as a whole must be represented by people who have no sectional interest, and that is why economists on the whole have always leaned in the direction of freer trade.
Similarly in regard to the Budget every individual claimant on the Exchequer is able to make his case vocally, whether it is for social services or for education, health services, pensions, or defence. Every section of the community is able to make its case. Every section of the community is able to raise its voice but the general taxpayer is represented by nobody really except by the Deputies and the Members of this House. I hope that his point of view is also put by the economists who happen to be in these two Assemblies. Both in regard to protection and to the Budget it is always necessary for somebody to raise his voice on the side—I will not say of the under-dog—but of the person who has to foot the bill for protection in one case or for increased expenditure on the other.
It must be remembered that, when one talks of public expenditure by the Government, the Government are not spending their own money. They are spending the money of other people. The Government have no money of their own, luckily for us because if they had they would inflate. When a Government are spending other people's money, therefore, the onus is on everybody who requires additional Government expenditure to justify taking more money out of the pockets of the people.
I am quite used to being called old fashioned, conservative, archaic and prehistoric. Therefore, I should like to end my contribution by quoting from a Select Committee on Public Expenditure in the year 1828, an extract which, I think, could be well taken to heart by the Minister to-day:
... No government is justified in taking even the smallest sum of money from the People unless a case can be clearly established to show that it will be productive of some essential advantage to them and of one that cannot be obtained by a smaller sacrifice... nothing requires more wisdom and prudence than to fix public expenditure at such an amount that the real wants of the People shall not be made to give way to any imaginary wants of the State.
As I said earlier, this can only be realised in a modern democracy by the people themselves. If democracies wish to enjoy low taxation, then they must not clamour for extravagant expenditure. We are not in a position in this country to tax the foreigner. We have no rich class in the community who can be further taxed. Therefore, if the general public in this community demand more services, they must be prepared to pay the necessary taxes. If people will the end of heavy expenditure, they must also will the means of heavy taxation. As I said at the beginning of these remarks, it is the expenditure which calls the tune to which the taxpayers have to dance. In a democracy the people who have to dance are the people who call the tune.