Wednesday, 28 May 1930
Dáil Éireann Debate
Mr. Blythe: I move the Second Reading of the Finance Bill, 1930. There is very little in the Bill which has not been the subject of a financial resolution or which was not referred to in the Budget statement. The matters that are new are matters of relatively minor importance. There are two section—Sections 2 and 3—which give certain relief in cases where hardship would arise in consequence of the basis of assessment on the three years' average being changed to the basis of the preceding year. I think that those reliefs are more a subject for discussion on the Committee Stage. The other matters which were not dealt with in the Budget statement are contained in Section 16, in which provision is taken, if a suitable opportunity arises, for redeeming Compensation Stock. The outstanding amount of Compensation Stock is beginning to grow small. It is issued in seven series, and a complicated system of drawings has to take place. If it were possible to extinguish that particular stock and to bring to an end that particular system of drawing it would be desirable.
In Section 15 power is taken to invest in British short-term securities the Exchequer balance. Heretofore, when there has been a substantial balance in the Exchequer, we have been generally able to arrange to get special rates of interest for that balance. Occasions might arise when better returns could be obtained by investing the whole or part of the balance than by simply having it lying in the Exchequer account. Section 18 provides for the discharge of death duties by tendering stock of the Third National Loan. That was part of the conditions of issue of the Loan. It is to enable the promises set out in the prospectus to be fulfilled. If the Loan were to remain at issue price it is possible that there might be a loss of six or seven thousand pounds a year arising out of that particular position, but as the market price of the Loan goes up the amount to be met out of the Central Fund will be growing less. After a year or two I think that that particular provision will prove to be of little consequence from a financial point of view.
Mr. MacEntee: With regard to the novel features of this Bill to which the Minister has referred, I think, with him, that they could best be dealt with and argued on Committee Stage, but I must at the outset take leave to doubt the Minister's statement that the loss to the Exchequer under Section 18 of the Bill will not exceed more than six thousand or seven thousand pounds.
This Bill, like all previous finance measures for which the present  Minister has been responsible, is characterised by a pernicious improvidence. Time and again, we, in this House, have criticised the Minister's policy and have asked him to face fully up to the responsibilities which the Government's continuous extravagance involved. The Minister has consistently declined to do so. Instead of meeting the burdens of the State as they accrue from year to year, he has adopted the doubtful practice of selecting certain items of expenditure, classifying them as abnormal and defraying them out of borrowed money. He has continued this course year after year until, on his own showing, the dead-weight burden of the public debt is now over £25,000,000. The consequence of the Minister's policy in this regard is seen in the growing amount which must be set aside each year for the service of that debt. In 1925-6, the amount required for interest and sinking fund charges was £899,572. In 1929-30, the debt service, expressed in terms of money, required £1,708,222. It is well to point out, however, that these two figures do not give a true comparison between the public debt charge in in 1925 and the public debt charge in 1929-30, because in 1925-6 the cost of living index stood at 188, as compared with the basic figure of 100 for the year 1914, whereas in 1929-30 the same index stood at 176.25. If the service of debt, therefore, instead of being expressed in terms of this variable money unit, be expressed in terms of the commodities which the money would have purchased in the two years under comparison, the service of debt in the year 1929-30, instead of being £1,708,222 is actually £1,823,592, or more than twice as much as it was in the year 1925-26.
One of the claims put forward by the present Government has been that they have decreased the burden of taxation during the last four or five years. It has been argued that as the Government in 1925.6 collected £21,597,000 in tax revenue, and in 1929-30 collected only £20,601,000, there had been an actual and relative decrease in taxation in  the year 1929-30 as compared with the year 1925-26. If, however, the relative purchasing value of money in these two years again be taken into consideration, we find that whereas the Government collected £21,597,000 in 1925-26, on the basis of the commodity values prevailing in that year, they actually collected in 1929-30 £21,974,000, or an increase of £377,000 over the figure for the year 1925-26.
In the course of his Budget statement, the Minister took occasion to refer to the cost of the social services in the State and to express the fear that we could scarcely afford to maintain these even at their present standard. I should like the House to consider for a moment what the effect of this continuous policy of borrowing has been so far as the social services are concerned, how this increase in the annual debt charges has reacted upon such things as Old Age Pensions, Education and the like. Of the moneys which were collected in the year 1925-6, there were available for the services of the State, other than the service of the public debt to which I have referred, the sum of £20,697,428, whereas in the year which has just closed, 1929-30, notwithstanding the fact that the absolute burden of taxation increased by £377,000 over what it was in the year 1925-6, the actual amount available for the same services—the general services of the State, excluding the service of the public debt— was only £20,150,000, so that, because of the policy of reckless borrowing which the Minister has pursued, there is available at the present day for social and other services approximately £1,000,000 less than there was in the year 1925-6. Small wonder that the Minister, having these facts to deal with, should come to the Dáil and tell us we are unable to maintain the social services in this State at the same standard as they are maintained in Great Britain and Northern Ireland.
The policy which the Minister has pursued of increasing the public debt might be excusable if it had  been unavoidable and inevitable but, in the very years during which he was mortgaging the future of our people, the Minister and his Government paid over to Great Britain over £20,000,000 in respect of land annuities and over £9,000,000 in respect of pensions to ex-members of the Royal Irish Constabulary. If it had not been for these unwarranted and unjustifiable payments, the State, notwithstanding the general extravagance of the Government, would be free from debt and would have available to undertake such capital works as might be deemed desirable no less a sum than £4,000,000. There would be £4,000,000 to defray the cost of any further capital development, allowing for the cost of rationalising the creameries and the cost of developing the Shannon, which are responsible for some portion of the present debt. In addition to this £4,000,000 of free capital available, there would be released from the service of the public debt the sum of £1,708,000 or, expressed in the terms of money of the year 1925-6, £1,823,000—a sum more than sufficient to provide social services in this State at the same standard and upon the same scale as they are provided in Great Britain and Northern Ireland.
We [that is the Labour Party] say that there are thousands of people unemployed, thousands of people who require houses and who require food and clothing, and we state clearly and emphatically that we are satisfied that within the Treaty we have all the freedom which we require for the full economic development of this country. We are satisfied on that point and if we find, at any time, there is anything in the Treaty which will prevent us from giving full effect to our economic policy and our social policy, then we propose to get the best brains  of this country, the best intellects that the country can produce— the very best men—to go across to England and have it out with the English people on the question of the Treaty.
There is no question of the Treaty involved in this issue of the land annuities and R.I.C. pensions, but the whole economic and social policy of the Labour Party is—as the figures which I have stated prove— involved in it. The figures which I have given for the dead weight of the Public Debt and for the amount of the tax revenue devoted each year to the service of that debt show that unless this question of the land annuities and R.I.C. pensions can be reopened in favour of this State, there is no hope and no possibility that this social and economic policy about which Deputy Morrissey talks so much will ever become effective.
Deputy Morrissey is prepared to have a show down with the British on the question of the Treaty if he finds that his Party are prevented by it from giving effect to their social and economic policy. Now that we have shown that that social and economic policy cannot be given effect to so long as the present position prevails—so long as the present ultimate financial settlement is accepted by the Labour Party and the majority in this House—is Deputy Morrissey and his Party prepared to have a show down with England on these comparatively minor items, from his point of view, of land annuities and R.I.C. pensions? If he is, then Deputy Morrissey and his leader, Deputy T.J. O'Connell, must have changed their minds. We welcome the change, remembering how they voted against the motion introduced by this Party to retain these annuities in this country pending a re-investigation of the whole question as to the liability to pay them.
Mr. McEntee: It was clearly explained, in the course of the  speeches introducing the motion, that that was the course which should be adopted in order that we might compel this question to be reopened. I hope that when Deputies T.J. O'Connell and Morrissey are speaking in Longford-Westmeath they will announce their conversion to the policy of Fianna Fáil in this regard.
I have referred to the fact that we regard this Bill as unsatisfactory, because it gives effect to the policy enunciated by the Minister in his Budget statement of meeting his deficits by borrowing. Section 18 of the Bill empowers the Minister to take steps to fulfil certain conditions attaching to the recently floated Third National Loan. I propose to consider, from the point of view of the taxpayer, some features of that loan. It is remarkable how sensitive the Minister for Finance and the Government are regarding this question. One would almost think that they regard the borrowing of money as a sacred rite or as a religious ceremony, the conduct or significance of which may neither be questioned nor gainsaid except under the odium of blasphemy. For the last three weeks, members of the Government have postured on public platforms as though they were sitting on eggs, and have proclaimed their alarm lest a chance word or an acute criticism would cause them to lose their balance and create havoc and destruction in the Government nest. From their speeches it would almost seem as if the Minister for Finance and his colleagues, and other members of his Party, regarded themselves as so many golden geese whose fruitful ovaries are enriching the State, instead of so many greedy gobblers who have devoured its substance. Of course, the Minister and the Government resent criticism when they are endeavouring to delude people that this loan has been issued upon more favourable terms than the first and second loans. They have made capital out of the fact that the nominal rate of interest is 4½ per cent., instead of 5 per cent. as in the case of the earlier issues. Therefore, since they were anxious to secure all the kudos  they might get from this misstatement of the real position, they attempted to prevent criticism by raising a hullabaloo about the damage that might be done to the loan then in issue. But the loan has been issued; it has been closed. As the Minister has told us, it has been oversubscribed, and whatever we may have to say about it now cannot in any way damage it and need no longer be restrained.
I should like, however, to make quite clear at this stage that what I have to say about the financial wisdom of this operation is not to be taken as indicating that if it comes into office a Fianna Fáil Government will in any way shirk the burden which the financial improvidence of the Minister will have left to it. I should like to make it clear that we shall honour to the full the whole liability, whether for sinking fund or for interest, which the Minister has incurred in respect to this and preceding loans.
Now what are the real facts as to the terms upon which the money recently borrowed was secured? The first 5 per cent. national loan was issued on 24th November, 1923. It bore interest at 5 per cent. and was issued at £95 per £100 of stock. It was redeemable in 1935-45 and the actual interest on the assumption that it would be redeemed at the first available date in 1935 was, I think, £5 8s. 6¾d. per cent.; but the actual interest, if it were redeemed at the end of the term in 1945, would have been £5 6s. 10d. per cent. The second loan was issued on 3rd December, 1927, bearing interest at 5 per cent. at an issue price of £97 per £100 of stock. It was redeemable at any period between 1950 and 1960. If that loan be redeemed in 1950, the actual interest charged during the period will have been £5 2s. 7¾d. per cent. If the redemption is deferred until 1960, the actual interest will be £5 1s. 10½d. The third loan, the loan just issued, bears interest at 4½ per cent. and was issued at £93 10s. per £100 of stock. It is redeemable from 1950 to 1970. The actual interest if the loan be redeemed in 1950 will be £5 0s. 7d. per cent., and if the redemption  is deferred until 1970 will be £4 17s. 6d. per cent.
I should like the House to compare these yields. The first loan, if it be redeemed at the earliest date, will bear interest of £5 8s. 6¾d. The second loan if it be redeemed at the earliest date, will bear interest at £5 2s. 7¾d. The third loan, if redeemed at the earliest date, will bear interest at £5 0s. 7d. per cent. At first sight it would appear that the third loan has been borrowed upon slightly more favourable terms than either of its two predecessors, but we have to take into consideration the cost and the value of money on the occasions on which these loans were floated. In the case of the loan just issued, the English bank rate stood at 3 per cent. In the case of the second loan, upon the date of issue the English bank rate stood at 4½ per cent. In the case of the first loan, the English bank rate stood at 4 per cent. What, therefore, is the fact? That actually when you take into consideration the cost of money at the present day and at the dates of the first and second loans, respectively, the interest on the present loan is from 13s. 1¼d. to 10s. 8d. per cent. higher than the interest on the first loan and from 27s. 11¼d. to 26s. 7½d. higher than on the second, taking into consideration the value of money at the respective dates of issue.
There is another feature about these three loans to which I should like to advert, and that is the fact that they have all been issued at a discount. It has been the custom of the Minister continuously to do that. He has seemed to think that there was some political advantage—there certainly was not any financial advantage—likely to accrue to his Party if he were able to delude the public into the belief that the credit of the State stood higher than it actually did. He seems to think that the people will lose hope and will give up heart unless he is able to ensure to them a dose of financial spoof every time a financial operation has to be undertaken by  him. It seemed to those of us who take an interest in this question that when the advisability of issuing a loan was under consideration and the time seemed opportune the Minister, in view of the general position of the State and of the general position of the money market, would have thought it opportune to discontinue this policy of issuing loans at a discount, and that instead of issuing the last loan at a discount and bearing interest at the nominal rate of 4½ per cent. he would have taken the bull by the horns and issued it at 5 per cent. at par. That, I think, would have been the sounder course for him to have adopted, because then we should have known where we really are and we would not have been mortgaging the future, the future which is the only thing that the people of this country have to look to or have any hope for.
(1) that the inducement offered to the investing public is such as to ensure that the State will be able to make the issue upon terms which will at least compensate for the resultant disproportionate increase in the public debt, or
Now with regard to the first of these considerations, the offer of such inducement as will enable the State to make the issue upon terms which will compensate for the disproportionate increase in the public debt, we must ask ourselves whether in considering such inducements as may be offered to him in connection with the issue of any loan the investor takes into account and truly evaluates all the factors which determine the true value of the issue. If he does so, then the exact form of the issue searcely matters. But, if he does not, if he omits to take into consideration every privilege and every advantage, remote as well as immediate, which the State offers.  or if he estimates these at anything less than their full true value, then the issue at a discount will not have served its purpose and the State will lose, for it will have given something for nothing, or at least something for which it does not receive adequate return. That the investor does in fact assess all the factors of a discounted loan at their true and correct value is very much to be doubted. In these matters the very long view which is necessary is seldom taken. The average man looks first to the immediate return for his money and he scarcely ever looks beyond that. Even in those exceptional cases in which he does take the long view, we may be sure that the investor heavily discounts the ultimate benefits which he is promised.
Now the assumption which underlies an issue at a discount is that the public will pay more for it than for one giving an equivalent real yield issued at par. The principal inducements offered are, as in the case of this loan, a guarantee that the capital invested in it at the outset will appreciate in value and a certain assurance against a diminution of income when the stock is redeemed. Possibly the guarantee that this capital would appreciate would be a decided attraction for an investor in the case of a comparatively short-term issue. But the attraction diminishes rapidly if the period of the loan is extended, and in the case of a loan issued, as the third national loan has been issued, for a period of from thirty to forty years, it is practically non-existent. Therefore, the offer of a long-term loan at a discount and at a nominally lower rate of interest than would be demanded if the stock were issued at par will, in nine cases out of ten, involve the sacrifice of the discount without ensuring in return any commensurate reduction in the interest charges. I think the figures I have cited show that while money is cheaper in 1930 than it was in 1927, we are borrowing money at practically the same rate of real interest.
As against the statements which I  have put forward, it may be contended that one of the features of the capital appreciation is the immunity from income tax which is offered to certain investors and that that immunity makes the possibility of capital appreciation a very real inducement to subscribe to the loan. But, if all the circumstances be examined, it is very doubtful whether this assumed immunity is a very active factor. For one thing, it does not extend universally to the subscribers to the loan. In the case of the small investors, who presumably in a country like ours would form the bulk of the subscribers, it does not operate at all, since they would probably not be assessable for income tax in any case. But, it is precisely those investors who are least likely to gain from exemption from the tax who are the chief agents in fixing the price of the stock, so that the price will be fixed, irrespective of whether the stock immunises a certain deferred income against taxation or not. Again, what the investor gains in exemption from income tax is lost by the State, so that the more effective the exemption, and, therefore, the more effective the inducement to invest become, the higher the real cost of the loan. But, as I have endeavoured to show, it is questionable whether the privilege of partial income tax immunity offered in a loan really operates to appreciate the price of the stock and therefore reduce the real interest charge upon the State, so that although the State loses by the exemption it is questionable whether it receives anything like commensurate advantage in return. I think it will be generally admitted that a lender in considering a proposition to borrow generally looks to the immediate return which the intending borrower offers for his money. But when a loan at a discount is offered to him the lender is asked to take something less than the full market return which he might otherwise secure on his capital and is asked to forego that difference in return for a certain appreciation at the end of a term of years. But life is uncertain and  the investor to whom this inducement is offered may never see the end of that term of years, may never live to reap that appreciation. Therefore the stock so issued tends to become for him something of a speculation, and he asks a correspondingly increased yield from it and generally secures it.
A comparison of the real yields given by British Government securities which have been issued at par and issued at a discount respectively will make that case quite clear, and will support and substantiate the argument which I am making that discounted issue at a lower nominal rate of interest than would be offered if the issue were made at par, seldom, if ever, justifies itself, and I believe certainly does not justify itself in the case of this State. So much for the effect of an issue at a discount upon the investor. What is the other ground on which an issue at a discount may be defended? Is it that there will be a consequent decrease in the annual burden of the State charges? The expedient of issuing a loan at a discount has been adopted in those cases in which it was desired to maintain the appearance, the mere appearance, of a steady and consistent policy of debt redemption, while, at the same time, securing a reduction of a total debt charge without directly appearing to scamp the sinking fund provision. But in fact the effective operation of the sinking fund provision is reduced just in the same way as if part of the charge therefor were to be met by fresh borrowing. In order that the sinking fund might operate really effectively it would be necessary to compensate for the discount at which the loan is issued by an increase in the contribution from the revenue to the sinking fund. Apart altogether from this, however, it is clear that the issue at a discount is founded on two separate views of the future trend of economic factors which are scarcely consistent with each other. The first of these conflicting views is that the trend of interest rates will be downward, for  it is only upon that supposition that the issue will prove attractive to the investor; the second of them is that during the currency of the loan the general price level will tend to rise. But if the interest rates go down, so also will the price level and, in such circumstances, the burden of the debt will be increased. The more closely, therefore, we examine it the less justification there appears for the course which the Minister has adopted.
It may be pleaded that the premier security of the State ought to carry a lower nominal rate of interest than five per cent., so that cognate stock, such as the bonds of the Agricultural Credit Corporation, might be issued on nominally more favourable terms than they are at present. The fact of the matter, however, is as a general rule people who invest in these stocks are not people to be deceived by appearances. They look under the more or less insubstantial inducements which the Minister offers; they go to the root of things and they determine the price at which they will lend money, not by whether the Minister has issued a loan nominally at four and a half per cent., but by the real interest charge of five per cent. which he does pay on that security, a higher relative charge in 1930 than he had to pay for a larger sum of money in the year 1927. They go, as I said, to the root of matters, and it does not matter whether there is an issue on the market of stock nominally at four and a half per cent. What is going to determine them when they come to lend money to the State is its financial and its economic stability and the real burden of the public debt. They are not going to be deceived by the Minister's continuous propaganda that we have only a public debt of £25,000,000. They are not forgetting about the land annuities or the ex-R.I.C. pensions, and it is precisely because these things are not overlooked in the money market that the Minister in the year 1930 has to pay more for his money, I repeat, than he had to pay in 1927. It does not matter whether or  not Deputy Morrissey implores us not to hit the Minister with the loan in his hands, it does not matter what the Minister or the Government may say, they will not be able to borrow money for this State on more favourable terms than they are doing at present until they tackle the real financial problem in this State, the problem which is written in the ultimate financial settlement.
Mr. T.J. O'Connell: Whatever the House may think of the elaborate statement made by Deputy MacEntee, I fancy that the Party managers in Longford and Westmeath will not be very thankful for his abject confession of failure so far as the social services of the country are concerned in the future, for he made an admission here to-day—I do not know whether or not he is conscious of it— that cannot but be damaging to his Party interests, not alone in Longford and Westmeath, but in the future. He presumes that Deputy Morrissey and myself have changed our minds in regard to the question of the land annuities. We do not happen to have such a record for changing our minds as the Party to which Deputy MacEntee belongs. But we have not changed our minds on the matter.
Mr. O'Connell: I apologise. I should not have minded that. Deputy MacEntee said that he has now conclusively shown that the social and economic services of this country cannot be improved to the position we would like to have them improved to and that he says he would like to have them improved to unless this question of the land annuities and the ex-R.I.C. pensions are settled. We have from the Minister for Finance, of course, a definite statement that he can see no chance in the immediate future of improving the social and economic  conditions of this country or of raising them to a standard equivalent to what they are in Great Britain and Northern Ireland. Deputy MacEntee comes along and says he, too, can see no hope. In fact, he has shown, he says, conclusively that it is impossible to raise the social and economic services of this country to the standard of Great Britain and Northern Ireland unless they get the land annuities and the ex-R.I.C. pensions. That is where Deputy MacEntee and ourselves disagree. We believe that the social and economic services of this country can be very much improved even though we have not the land annuities and the ex-R.I.C. pensions. It is quite obvious that they can be improved to a still greater extent if and when these moneys are available, but we have it now from Deputy MacEntee, the shadow Minister for Finance in the Fianna Fáil Party, that we must wait for the land annuities and the ex-R.I.C. pensions before we can effect an improvement in our social and economic services. So that all the fine talk we heard in 1923, 1924, 1925 and 1926 about the improvement of the social conditions that could be effected goes by the board, because at that time the land annuities had not been discovered as an issue in party politics.
Mr. O'Connell: The ultimate financial settlement has been mentioned. We have repeatedly stated that we would have been very glad if we had the assistance of the Fianna Fáil Party at the time the boundary settlement, out of which it arose, was being made. But that is history into which we do not want to go at the moment. I was especially glad to hear Deputy MacEntee's statement with regard to the loan and the future of the loan. That is a change of mind and a change of heart that one is always glad to notice.
Mr. O'Connell: I was thinking of the statement made on the first loan and of the criticisms that were issued about the people who did invest their money in the first loan. I think that a statement such as Deputy MacEntee made is all to the good, and personally I was very glad to hear it.
Mr. O'Connell: I am not alluding to Deputy MacEntee personally, but I certainly say that people in his ranks to-day did make such statements and did issue statements urging that the first national loan should not be subscribed to.
Mr. O'Connell: These things are on record, as Deputy Davin states. I am in some difficulty to discover exactly what Deputy MacEntee's financial policy is, because he objects to increased taxation of any kind and he urges that the present taxation ought to be reduced very considerably. He objects at the same time to what he calls the reckless borrowing policy of the Minister. If the industries of the country are to be set going and if the people are to be set to work—if there is to be a general revival and general activity—we must have the life blood, the money or credit; it must be provided in some way. After all that is what make the wheels go round, that is the petrol that keeps the engine running. If it is not to be provided in one or other of those ways I cannot at the moment see how it is to be provided.
I am not one of those who charge the Minister with reckless borrowing. My criticisms have rather been in the other direction, that the credit of the State, which is high, is not being used to a greater extent than it has been used, because I feel that money saved and invested in profitable enterprises which would be of  national benefit would be money very well used, and my complaint against the Minister always has been that he has been too conservative in that particular direction. Now if he is going to be attacked because his borrowing has been reckless and because he has been conservative in the raising of money, I cannot quite follow what Deputy MacEntee has in mind; it is one of these inconsistencies we are frequently up against. There is another matter I would like to refer to for a moment. I was expecting I would hear something further from Deputy MacEntee on the matter, but he has not referred to it. I believe he has changed his mind in this matter too since he spoke on the 8th May. On the 8th May he made, what I think for Deputy MacEntee at any rate, a rather extraordinary statement. In column 1549 Deputy MacEntee is reported as having stated:—
“When the Finance Bill is before the House on the Second Stage we may take an opportunity of referring to some of the abuses in the present administration for the Act. I hope to hear from the Minister some justification for the steps which the Revenue Commissioners are taking to collect income tax at the present moment, particularly for the procedure relating to those cases where fraud is either alleged or where false returns are made. We are informed that the fact has been concealed from the taxpayer that in cases where a wrongful return has been made, if the taxpayer subsequently withdraws that wrongful return and substitutes a correct one he is not subject to any penalty. We are informed that that practice is not made known to the public, and that in consequence many people under the impression that they were liable to penalties in respect of returns that, if they were aware of the law, they would have taken steps to amend, have, rather than incur penalty, accepted the alternative of allowing a full investigation dating back many  years before 1922. That and some other matters we will take an opportunity of raising on the Second stage of the Finance Bill.”
Mr. O'Connell: I would be very much surprised to hear if it was the law. I venture to say it was not the law. I hold it would not be the Revenue Commissioners' duty to point out to any person who is guilty of a fraud the fact that he is guilty of a fraud: “We have discovered now you have been guilty of a fraud, and, therefore, if you like, you can mend your hand now that we have discovered you.” That would be an extraordinary thing to ask the Revenue Commissioners to do, but who are these people who have been discovered to be guilty of these frauds? We have repeatedly here, and the Deputy also, made appeals for the small income taxpayer. It is not the small income taxpayers who are affected here or that the Revenue Commissioners are after. People have come to me and asked me to appeal for them. I have not done so. They were people who made big profits in 1920, '21 and '22, and concealed these profits from the Revenue Commissioners in their returns. Some of them invested their money outside this country and some lodged their money in banks outside this country. These are the people who, through the detective efforts of the Revenue Commissioners have been discovered in their frauds and have been mulcted, and, in my opinion, rightly mulcted, for their frauds. I have no sympathy whatever with them and I am surprised that Deputy MacEntee should have any sympathy with them. These are not people who are stuck for a few shillings,  a pound, or two or three pounds, or who owe the Revenue Commissioners one or two pounds. In 1923, in spite of the protests of the Labour Party, the tramway drivers and railway men were got after because a section was inserted in the Finance Act of that time making it compulsory on the employer to stop the wages of the working man who was not paying his income tax. It is not at all impossible that employers who were stopping the wages of the working men and acting as collectors for the Minister for Finance were themselves defrauding the revenue.
I would like to enter my protest very strongly against any sympathy whatsoever being shown these people. If I felt and believed that the Revenue Commissioners were finding these people out and getting the money that was often made by profiteering in the past when such things could be done with impunity I would be inclined, instead of blaming them, to clap them on the back because all the money that was got in in that way will relieve the burden on the shoulders of the smaller income taxpayers whom we are all very anxious to relieve. I do not believe as I say that Deputy MacEntee seriously had any sympathy with them but I do not want to see them encouraged and I certainly do not think there is anything in the point which Deputy MacEntee makes that the Revenue Commissioners are bound any way to point out to them what their privileges are if they discover them in fraud.
There is a matter which has been brought to my notice and that of many other Deputies in regard to the Finance Bill which I would like to mention for a moment and ask the Minister what his views on it are. It is in connection with a circular issued by the Football Association of the Irish Free State. I do not think that a discrimination should be made between any games in so far as the financial policy of the country and the collecting of taxes are concerned. We may all have our view and be supporters of one particular game or another. People  are entitled to play any games they wish to play and I do not think there should be any discrimination made in the Finance Act between one game and another. There are certain reliefs given to one form of football and to hurling and they are not given to other forms of football. Personally I can see no justification for that. As I say, we may have our views and be supporters or followers of one particular form. Others may prefer to support, follow or play, another form but I think in so far as the State is concerned it ought not to make a discrimination against one particular form of sport as against another unless there is some sound or good reason and I have not heard any sound or good reason for such discrimination.
As to this new provision introduced here about the hawkers, it was pointed out to me in the financial resolution, I do not know where it comes in exactly, that there is a provision that where vegetables are sold—I cannot see the definition about vegetables at the moment— the tax will not be payable. That was as it appeared in the financial resolution in any case but I think the wording has been changed.
Mr. O Connell: The exemptions make it clear because as it read originally it did appear that a person taking corn to market and selling it from a cart would have to pay a licence duty. I know that was never intended but the words “farm produce” will cover that.
Mr. Lemass: It appears to me that Deputy O'Connell is inclined to anticipate events. He devoted the greater portion of his remarks to criticising and enquiring about the financial policy of Deputies on these benches as if the General Election had already taken place. He had, in fact, nothing whatever to say about the financial policy of the Executive Council.
Mr. Lemass: In the course of his remarks he mentioned only the matter dealt with in the circular of the Football Association. I do not know if that means that the location of the Labour Party flag has been shifted in any way and whether we are now to reckon Deputy O'Connell as an ally of the Government or not. I hope not.
Mr. Lemass: Deputy O'Connell, however, is entitled to the information for which he has asked and I think it will be very easy to give it to him. He quotes Deputy MacEntee as saying that the social services of the State cannot be improved unless its right to retain the land annuities and the amount now expended in respect of R.I.C. pensions is asserted successfully. I do not think that the truth of that statement requires any very elaborate demonstration. The social services of the State can be improved in certain particulars, but I doubt very much if it would be possible to carry into effect the programme of improved social services which we would like to see in operation until the expenditure of this huge annual sum has been stopped. The Fianna Fáil policy in respect to social services has been made clear in this Dáil on many occasions. I might remind Deputy O'Connell and other Deputies that we believed that the old age pensions services should be extended even under existing circumstances and introduced a Bill designed to effect that improvement, which Bill passed its Second Reading here by a majority. In so far as the old age pensions services were sought to be improved under that Bill, we believed it could be done even before the question of the land annuities and the R.I.C. pensions had been settled. We believe that it is possible considerably to extend the benefits payable under the National  Insurance Act by effecting administrative economies. There is a large sum expended every year in a wasteful manner administering these Acts which could be more usefully devoted to increasing the benefits payable under them. We believe that social services should be extended even within the existing conditions. We do not believe, however, that it will be possible to establish here the state of affairs we desire to see, the state of affairs Deputy O'Connell professes to desire to see, unless this annual drain upon our resources is stopped. There is no need for the drain. It has been amply demonstrated that the payment of this money is not required under any existing international agreement of a binding nature. Long ago the advocates of the payment, whether on the Government Benches or the Labour Benches, abandoned the pretence that such legal obligation exists.
Mr. Lemass: There was no repudiation policy ever advocated in this House. You cannot repudiate a debt that does not exist. A motion was introduced here asking that the amount received by the Government in respect of land annuities should be paid into the Central Fund instead of being paid automatically to the British Treasury as at present. We did not even ask the Dáil to stop payment; we merely asked the Dáil to make an internal arrangement which would require that a separate vote would be taken each year before payment would be made. Seven members of the Labour Party refused to do that. The entire Cumann na nGaedheal  Party refused to do it. Deputy Davin and his allies, Deputy Heffernan and the members of the Farmers' Union, stood loyally shoulder to shoulder on that issue.
Mr. Lemass: As the Ceann Comhairle says, that motion has been decided. The Dáil refused to give the Irish people the benefit of the doubt. There are quite a number of people who were very silent in that debate now prepared to admit that there is a doubt. I have said that the pretence that there is any legal obligation to make the payment has long since been abandoned by those who, nevertheless, insist that payment must continue. The Minister for Finance gives as his reason for continuing the payment the fear that he says exercises his mind——
An Ceann Comhairle: There are. Deputy MacEntee introduced the matter quite relevantly and he kept from discussing the pros and cons. We cannot discuss the pros and cons on this Finance Bill, because if we did so we could discuss them on every Finance Bill until the matter was settled.
An Ceann Comhairle: I did not hear Deputy Davin, but if the Chair had the power the Chair would rule out of order any mention of the names of the counties in the by-election now taking place and the names of all or any of the candidates.
Mr. Lemass: The purpose of this Bill is to impose certain charges on the taxpayers of this State. In the discussion on that Bill it is desirable that Deputies should bear in mind the fact that there is being paid out by the Irish people a sum exceeding four millions a year under the socalled Ultimate Financial Settlement made in 1926. We cannot lightly impose additional burdens on our taxpayers while that other burden has to be carried. But if that other burden is removed, as it will be removed before long, then it will be possible for us to finance schemes of social service beyond the wildest dreams of the Labour Party. It is not necessary for me to say that the Fianna Fáil attitude towards the social services of this State is at least in accordance with the attitude of the Labour Party. We hope to make the social services of the State equal to, if not better than, those prevailing in the six north-eastern counties and Britain, but particularly in the six north-eastern counties. By doing so we will be giving practical effect to the policy that the Minister for Finance has given lip service to-to make conditions here so attractive that the people in the  other part of the country will desire unity with us. The Fianna Fáil Party can do that, because the first act of this Party when in office will be to stop this payment; automatically with the election of a Fianna Fáil Government this payment will stop and the money will be available.
Deputy O'Connell said he was in some difficulty in his efforts to discover what was Deputy MacEntee's policy in relation to borrowing. Deputy MacEntee used the term “reckless borrowing.” There has been reckless borrowing. There has been borrowing to meet expenditure which could not be regarded as nonrecurrent expenditure. Every year certain sums have been deducted from the Estimates for supply services and provided for out of borrowed money. That was reckless finance. That operation was one which has damaged the credit of the State and limited the facilities for borrowing for other and productive services.
Mr. Lemass: Look it up and see. There are certain services for which we would like to see money provided on a much more lavish scale than it has been provided heretofore, and in respect of which we would place no limit upon the amount the Minister for Finance might seek to secure. The service of housing is a case in point. Apart from the wisdom of embarking upon large development schemes during a time of depression and unemployment, and for that purpose borrowing money, the social  need of improved housing is so great that the problem should be faced as one of first magnitude, and all the resources of the State, if necessary, should be mobilised in order to solve it. The census of 1926 showed that housing conditions in the Free State area were probably as bad as, if not worse than, in most other countries in Europe. In that year some 55,000 houses were shown to be needed for the proper accommodation of the people of this country. Again and again we have tried to make the Dáil realise its duty in connection with that matter. I have frequently tried to impress upon the minds of Deputies that in the city in which we are meeting there are 68,000 human beings living in dwellings that have been described in the cold official phrase as “unfit for human habitation and incapable of being made so fit.” I would like if I could to make every Deputy here repeat those figures and words so that they would become impressed upon his mind.
Despite the fact that this great housing problem faces us the Government appears to be absolutely indifferent to it. They have secured the erection, since 1922, of 17,830 houses. The need is 50,000 houses. Of the houses which have been built under the Housing Acts only 31 per cent. are situated in urban districts where they are most urgently required. The number of families living in single rooms in tenement dwellings in Dublin has increased by 5 per cent. since this Government came into office. The Government's only reaction to the publication of the housing figures ascertained by the census was to reduce the amount hitherto available for the encouragement of building. The number of houses built under the Housing Acts in 1929 was 2,733, which figure is to be compared with 3,644 built in 1927. It cannot be argued that houses are not being built more rapidly because the resources are not available. There are lying derelict in this country deposits, which are not being worked, of the materials required for the construction of houses. Unemployment amongst the skilled building trade  operatives is rapidly increasing. In 1926 there were 891 skilled building trade operatives unemployed, and in 1929 that figure had increased to 1,286, an increase of 44 per cent. in the three years. To deal properly with a problem of that kind borrowing is necessary. We cannot finance any adequate housing schemes out of revenue. We cannot possibly get such a scheme under way so long as we are content merely to give small building grants to private individuals or local governing bodies. If we are going to get the houses that are urgently needed constructed within the next ten years the State must undertake the job as a State job. There must be some authority established by the State, financed and controlled by the Government, given all the necessary powers either to engage directly in the building of these houses or to arrange for their construction under contract.
If there was a great disaster here, a great flood, a great earthquake or a great fire, as a result of which 68,000 people in one city had to live in conditions unfit for human habitation, we would all agree that no effort should be spared to repair the damage as quickly as possible and provide proper accommodation for these people. There has not been a great disaster, but we nevertheless have that number of people living in dwellings unfit for human habitation. The attitude of the Government towards this matter appears to be one of callous indifference. For the borrowing of money to finance housing operations on a large scale there would be unanimous approval from all sections. For the borrowing of money to balance the Budget and meet recurrent expenditure there can be nothing except criticism.
If there was a great disaster here, a great flood, a great earthquake or a great fire, as a result of which 68,000 people in one city had to live in conditions unfit for human habitation, we would all agree that no effort should be spared to repair the damage as quickly as possible and provide proper accommodation for these people. There has not been a great disaster, but we nevertheless have that number of people living in dwellings unfit for human habitation. The attitude of the Government towards this matter appears to be one of callous indifference. For the borrowing of money to finance housing operations on a large scale there would be unanimous approval from all sections. For the borrowing of money to balance the Budget and meet recurrent expenditure there can be nothing except criticism.
When Deputy MacEntee described the Government's borrowing policy as a reckless one, he was expressing an opinion held by a number of other people in this country. It is a haphazard policy proceeding from day to day and not based upon any considered plan. Deputy O'Connell referred to certain remarks of Deputy MacEntee concerning the steps  taken by the Revenue Commissioners to collect arrears of income tax. We have no sympathy with anyone who has tried to defraud the revenue, but we want to see the Revenue Commissioners operating under the law as laid down by the Dáil. The point raised by Deputy MacEntee was that in certain respects the Revenue Commissioners were so straining their powers as in effect to be acting in an illegal manner. That opinion is not merely held by Deputy MacEntee; it is held by a very large number of the most eminent senior counsel in Ireland. If Deputy O'Connell has any doubt on that matter let him consult some of them. There is, in fact, in legal circles an impression that the Revenue Commissioners have taken to themselves powers which no statute, either of this Parliament or the British Parliament ever gave them. We are also concerned with the fact that because of the drastic methods that they applied in some cases industries have been closed down and the unemployment problem aggravated. Whatever might be the justice of forcing from certain industrialists the arrears of tax which they did not pay, expediency should also be taken into account, and if the forcing of the tax from them will result in the collapse of their industries, then expediency would show that it should not be done and some arrangement for deferred payment should be made which would enable the industries to keep operating.
Attempts have been made by many Cumann na nGaedheal speakers at public meetings to twist a certain speech made by me and a speech made by Deputy O'Kelly into an attack upon the Third National Loan. The speech which I made and which was so criticised was one in which I gave figures, taken from official Government publications, to show that since 1922 the area under every crop has substantially declined and that, simultaneous with the decline in the tillage area, the number of cattle of all classes has decreased  also. Is it seriously suggested that this State's credit stands so low that it cannot possibly borrow money except on false pretences and by the suppression of relevant information that the people should have? That apparently was the idea that animated the writers in the “Irish Independent” who addressed themselves to this matter. I do not know what idea animated certain others who spoke, except perhaps a desire to say something that the “Independent” would publish.
The Third National Loan was a good investment; Deputy MacEntee has adequately demonstrated that fact. I think he has even proved that the State is paying more for the money it is getting than it need pay under existing market conditions. Because it was a good investment it was fully subscribed. If the Government now want to redeem their prognostications and send that loan over par let the Minister for Finance, in concluding this debate, announce an early general election. I quite seriously suggest that the country was not perturbed by the publication of the statistics relating to the decline of agricultural production, because it knew that in a very short time a serious effort would be made to repair the damage done. In any case, a comparison between the agricultural situation of to-day and the agricultural situation in 1922 will at least serve the purpose of showing the scope for improvement that exists. If we boast that as a result of our policy the area under tillage will be increased within twelve months by 213,000 acres, then we are merely claiming that we can reproduce in 1930 the situation that actually existed in 1922, before the blighting effects of this Government came into operation.
I can understand members of Cumann na nGaedheal being anxious to suppress the information which official publications give concerning the effect of their government. It is no pleasure to the Minister for Agriculture or to the Minister for Finance to learn that productive enterprise here has been almost  sterilised by their incompetence and inefficiency. The whole country can recognise that incompetence now by its results. It is for that reason I say that the Third National Loan will probably jump over par on the day on which any Minister announces the early approach of a general election. The early approach of a general election will mean the exit of this Government from office. The money raised by the Third National Loan was required in the main to meet commitments already entered into and which any Government would have had to honour. I am aware that certain Cumann na nGaedheal speakers, either by direct statement or by insinuations, have attempted to convey the impression that a Fianna Fáil Government would repudiate one or other of the National Loans, and some Labour Party speakers were not slow in following that example. Those statements are, of course, untrue, but I doubt if there is any use in trying to impress upon the minds of those who uttered them that they are doing irreparable damage, not to the Fianna Fáil Party, but to the credit of the State, by making them. Supporters of Fianna Fáil do not believe these statements, but there are people who know very little about Fianna Fáil who are inclined to believe them, and who, consequently, believe that a financial crisis will follow a change in the majority of this House.
Deputies must reconcile themselves to the fact that that change is going to take place, and if they are anything more than party politicians, if they have any desire to serve the interests of the country irrespective of party, they will not make the path of their successors more difficult than it will be by irresponsible statements of that kind. The biggest offender—not in that matter, but in matters of a similar kind—is the Minister for Finance. He has not hesitated to attempt to provoke disloyalty to a Fianna Fáil Government in the ranks of the Army and the police force by stating that in his opinion the first act  of a Fianna Fáil Government would be to dismiss efficient officers. The first act of a Fianna Fáil Government would be nothing of the kind. The Minister for Finance knows that well, but he does not care, so long as he can gain a vote for his Party, whether the whole future prospects of this State are jeopardised or not.
I was very glad to learn that the issue of the Third National Loan was successful. I would remind Deputies that there was another issue of stock equally good from the point of view of yield and equally good from the point of view of security, which was not so successful. That was the issue of stock recently undertaken by the Agricultural Credit Corporation. The failure of that issue, and the failure of other Irish issues in recent years, brings to the forefront the serious problem of the export of Irish capital. The Minister for Industry and Commerce estimated that in 1926-27 this State received in income from investments abroad the sum of £12,500,000. In the following year that income had decreased to £12,000,000. The decline was not due to any repatriation of capital for use here, but to the realisation of foreign holdings for the purpose of meeting the adverse trade balance. There is, however, a very large volume of Irish capital now held abroad which is required here, if not the whole of it, at any rate a substantial part of it. Money is required to finance agricultural credit; money is required to finance other semi-State schemes; money is required to finance ordinary private industrial enterprises, and it is not forthcoming. It is hard to say how much money is required by Irish industry, because the Trade Loans Act, as Deputies are aware, was not fully availed of, and in fact there are guarantees which can be given under that Act if applications are made for them. Speaking from memory, there has been no issue within the past twelve months, although the Act was continued last year. I would like to know if it is the intention of the Government to  continue that Act this year, or if they intend to allow it to expire at the end of June when it falls due for expiration?
Irish capitalists who go abroad to find openings for investing their money have several reasons, the most important of which is, possibly, the fact that the tradition of seeking investment abroad is very strong among the Irish capitalist class, and also because the lead is given in that direction by financial institutions here. It is also, of course, an important factor that better opportunities for investment exist abroad. There is nothing approaching a capital market here, and there is not the same opportunity of capital appreciating as obtains abroad. We think, however, that the Government should be concerned to break down that tradition and should force the financial institutions of the State to give a proper lead in the matter when national interests so require. It is an extraordinary fact that the Irish joint stock banks invest a much higher proportion of their funds in long-term investments than the banks of most other countries. In the year 1928 the investments of Irish banks were 43.8 per cent. of their total deposits and note liabilities. and that figure falls to be compared with the figure of 16.8 per cent. for English banks, excluding the Bank of English, and 30.5 per cent. for Scotch banks. The greater part of the investments held by the Irish joint stock banks are foreign investments, and they constitute one of the easiest channels through which Irish capital can be exported. I do not know if they are following that policy out of anti-Irish prejudice or because they believe it happens to suit their financial interests best, but I think that this Government should seek to devise some means of ensuring that the policy for the banks which would be in the best national interest would also be the policy which would be best in their own financial interest.
The revenue authorities have estimated that a sum of approximately  £15,000,000 is invested abroad in respect of insurance business done here. I do not think it is unreasonable to ask the Government to take steps to provide for the investment of all, or at any rate the greater part of that money in Irish securities. In that connection a Departmental Committee was established by the Minister for Industry and Commerce in 1924 to consider the question of industrial insurance business only. That Committee produced a number of important recommendations dealing with industrial insurance in general, but with particular reference to the problem resulting from the fact that the greater part of the business is in the hands of foreign companies.
In the year 1923 the British Government passed an Act which prohibited Free State insurance companies from doing industrial business in England. The Committee did not propose retaliatory action here, but they did suggest that these British companies should be compelled to lodge with the Accountant-General of the Free State securities equal in value to their liabilities to their clients in this country. That Committee reported in 1924, but as in the case of most of the other committees established by this Government, its report is lying, probably covered with dust, in the Department of Industry and Commerce ever since. In any case there is a serious problem to be faced here arising out of the fact that Irish capital goes abroad to seek investment, and that when money is required for improvement purposes here, such as financing agricultural credit, it is not available.
The Banking Commission established by this Government reported that the machinery for financing industrial enterprises of all kinds in this State was adequate. I think that events have proved the Banking Commission to be wrong. It would, at any rate, be advisable that the whole question should be reexamined soon in the light of our experience of the five years that have elapsed since the Banking Commission  was established. I think that national interests require also that the policy of remitting income tax on incomes derived from investments in Irish securities should be more favourably examined than it has been in the past. It is, of course, the official policy of the Fianna Fáil organisation so to alter the rules governing the assessment of income for income tax purposes as to discriminate in favour of investors who invest capital in Ireland as against those who invest it abroad.
It would be much more desirable that a policy of that kind should be embarked on with the consent of all parties, and as a result of impartial inquiry than that it should be enforced on the country as the result of a purely party vote in the Dáil. All parties profess a desire to give encouragement to Irish industrial enterprise, and, in so far as we proclaim that aim in common, it should not be impossible to devise some means by which we could work in common for that end. If we are going to remove the great social evils of unemployment and emigration, we cannot do so while we are at the same time wasting our strength in factional strife. However we may disagree on the big issues that split the country, we can work together in this direction, but so far no indication of willingness to do so has come from the benches opposite. Ministers and those associated with them appear to be more anxious to score party points in debate than to do anything for the country.
Mr. Lemass: The problems of unemployment and emigration are very serious here. I wonder whether Deputies realise that they are much more serious here than in most other countries. Those Deputies who read the news in the papers know how greatly the failure of the existing British Government to remedy the  unemployment situation is perturbing the people of that country. Deputies who study the American and German newspapers in the library here know how greatly the unemployment problem is disturbing the people of those countries. Here we have an unemployment problem which is just as big as theirs and an emigration problem which they have never known, yet the Government appear to be anxious merely to pretend that those problems do not exist. They talk nonsense about them both in the Dáil and country. One Cumann na nGaedheal Deputy, in fact, stated that we were living in the happiest and most progressive period that the Irish people have ever known.
The net loss through population suffered by the Free State is four times higher than that suffered by Great Britain, the next highest country in Europe. I cannot tell the number of unemployed, as the figures disclosed by the Census have been suppressed, but no estimate has put that figure below 50,000. While serious economic problems like those exist, it is the duty of the Government to concentrate all their energy on finding solutions, yet the Government appear to treat them with indifference, and it is because of that that the Dáil should not be satisfied to allow them to remain in office. Apart from political differences, which are now being debated in the constituency in which a by-election is taking place, there are economic differences which would, owing to the policy of the Government, justify the Dáil in voting against this Bill, thus putting an end to the existing régime which has so weakened the vitality of the Irish nation that, unless it ends very soon, a revival will be almost impossible, no matter what party takes office or what policy is put into operation.
Mr. J.X. Murphy: Is Deputy Lemass not aware that the banks must keep a large proportion of their funds in readily realisable securities? Where are they to be found in Ireland? There are not  enough of them to go around. They do not go far enough. Some of those funds must therefore go abroad.
Mr. Lemass: I pointed out that the joint stock banks in the Free State invest in long term securities a much higher proportion of their funds than do the banks of other countries and that the majority of their investments are in foreign securities. Securities are available here. There is, for instance, the Agricultural Credit Corporation Stock.
Mr. Esmonde: In the course of one of the strongest election speeches which I have ever heard in the Dáil, Deputy Lemass, I think, followed Deputy MacEntee in criticising the Minister because of the fact that he is paying a higher rate of interest on the new loan than he might reasonably be expected to pay. I do not think that that is logical criticism coming from Deputy Lemass, who has been announcing throughout the country that we are on the verge of a bog of bankruptcy. In his statement to-day, however, he very carefully avoided referring to that interesting phrase, “bog of bankruptcy.” He has not yet explained to the House how near we are to that bog and what effect our floundering in it will have on us. When I asked him to give an instance of ordinary expenditure paid out of borrowing, he mentioned Army pensions. According to Vote 56 the amount of such pensions is about £200,000. I would like the Minister to tell us whether we are paying that amount out of borrowed money.
Mr. Esmonde: That is the only instance which Deputy Lemass gave. Both he and Deputy MacEntee tried, perhaps unconsciously, to damage the credit of this State by saying that we are living above our income and that we are meeting expenditure out of borrowed money. Perhaps they would give other instances. Deputy Lemass mentioned that the first step that was to be taken by the Fianna Fáil Government was in regard to the repayment of land annuities. On the other hand, the leader of his Party announced that their first work would be the establishment of a Republic for all Ireland and, secondly, the development of their new economic policy. As to which is the correct theory, whether Deputy Lemass or Deputy de Valera is right, we cannot judge. I was very grateful to see Deputy O'Connell supporting the plea for the exemption of football players from Schedule D in regard to income tax. If the Minister goes to Phoenix Park any Saturday he will see thousands of the youth of Dublin playing football there. It seems a pity that he should tax them when in other countries large sums are spent on providing facilities for games and athletics. I think that the Minister should not differentiate between different sections and different codes of sport in the remission of this tax, which provides a comparatively negligible sum. It is an irritating tax, and it is regarded as a grievance by many hundreds of thousands of young people in Dublin who play this particular form of game. I hope that the Minister will consider what Deputy O'Connell has said.
An Ceann Comhairle: Suppose I agree that it has a bearing on the debate, would it not be better if Deputies did not quote from by-election speeches? It may be a counsel of perfection to ask Deputies to keep away from statements made at by-elections, but could we not keep out quotations?
An Ceann Comhairle: I will allow the Deputy to make the quotation, but I think that the House would prefer that we should not have quotations from by-election speeches. I cannot, of course, rule the Deputy out.
Mr. Davin: That is the position which several speakers who spoke before me have referred to. I do not think that there is any necessity for Deputy Lemass to apologise, either in the country or here, for changing his mind if he can give good reasons for having done so.
I am glad you realise now, sir, that there is nothing in the quotation I referred to. I merely quoted this portion of his reported speech to prove to the House that the Party to  which he belongs have changed their minds on several occasions on this question of the Land Commission annuities. Personally, I regret that the Land Commission annuity question should be made a party question either in debate here or in discussions outside the House. I have faith enough in every member of this House to believe that we would all be glad, as representatives of the citizens of this State, to save the State the money involved in that particular payment, provided—this is where I come in—we could do so without associating our own names or the honour of this country with the policy of repudiation.
I myself and other members of this party spoke to prominent members of this House on both sides before, and about the time the motion to which Deputy Lemass referred came up for discussion. It was suggested—I challenge him to deny it—that the best method to approach this question was by way of conference between party leaders—that leaders of all parties in this House should find some way of taking national action to have this wrong, if there is a wrong, righted. That suggestion was turned down.
Mr. Davin: My statement stands. If you are open to approach the solution of this question on national lines, conference between Party leaders is the only way to do it. Discussion here and at the crossroads  will only prejudice the people of this country in dealing with a neighbouring state on a serious national issue of that kind.
Deputy Lemass said that they had moved somewhat from the position that they took up in 1922. They have moved forward and backward to suit the varying views of the different sections of their own party and their own followers in the country. When this issue of the Land Commission annuities was first raised in the country—we find a great many converts on this issue—it was certainly conveyed to the people who were mainly concerned that if they could hold up the payment of these sums they would not have to pay the annuities.
Mr. Davin: That apparently was going too strong in the country and we had the further statement that although the money should be withheld and paid into the Central Fund that would not enable the annuitants to get rid of the responsibility for payment.
Mr. Davin: I have as much right to draw on my imagination as previous speakers of the Fianna Fáil Party had. The Deputy who has stood up behind me can explain clearly and to my satisfaction the present position of the Fianna Fáil Party in relation to this matter and whether or not they are prepared to go into a national conference for the purpose of approaching a national problem in that particular way.
Mr. Davin: At a particular period, when the issue became a burning one as between the farmer who did not pay his annuity and the fellow who did, it was made quite clear—the Party opposite were gaining knowledge by their experience in the country—that although the proposal was that the money should be withheld, notwithstanding that, the annuitants would have to pay. They said: “We will take it from you in the way of Land Commission annuities with the left hand and we will give it back to you with the right hand in the way of de-rating.” That is the gist of the speeches made to the farmers at the crossroads. Deputy Lemass and Deputy MacEntee come along and introduce the question here. They say that the social services could not be improved if they got into power unless this money was withheld. In other words, they say that they could not build houses or engage in any other social work unless the annuities were withheld. In the towns they say: “You cannot have houses built unless the annuities are withheld.” In the country they say: “You cannot have your land de-rated unless the annuities are withheld.” You cannot have it both ways.
Mr. Davin: I am always glad to hear Deputy Little elaborating on these big questions. No doubt, he will give us the benefit of his ripe experience as a lawyer on this matter. Speaking for myself, I say that this Party stands for peace at home and abroad, for friendly intercourse with neighbouring nations——
Mr. Davin: What about your friend Jimmy Geoghegan? The members of this Party believe that the proper way to approach this question of the Land Commission annuities is by opening up negotiations with the people with whom this agreement was made. The Ultimate Financial Settlement, of which the Land Commission annuity section is only a part, was never submitted for the formal approval of this House. It was, therefore, never ratified by this House. It is not an uncommon thing in a conference between State and State to re-open agreements of this or any other kind, but that can only be done by ordinary, recognised, international procedure—friendly discussion, negotiation and agreement. Supposing the British Government, acting as the Fianna Fáil Party propose to act in the case of the Land Commission annuities, said when a Fianna Fáil Government was in power that they would not continue to pay to the British Ex-Service men here the millions of pounds per year which they pay them at present, what would the Fianna Fáil Government say? So far as I am personally concerned, if I thought that the majority of the people of my constituency stood for the policy of repudiation, which is what the Fianna Fáil Party are standing for, I would resign my seat in Leix-Offaly rather than submit to it.
Mr. Derrig: I think Deputy Davin should have sufficient respect for his friends in power across the water to speak more carefully about what he calls “repudiation.” He will remember that the present Chancellor of the Exchequer of Great Britain stated on a celebrated occasion that a certain financial agreement, in which his country was involved, should be revised because it did not do justice to his country. He was attacked, as we are now attacked, and it was said that he was standing for a policy of repudiation. Yet when he went to the Hague and fought his country's battle—he got only two millions pounds a year as a result, whereas we are looking for three million pounds—friend and foe  applauded him. In this country, we have quite a different attitude.
If Deputy Davin wants this question to be discussed as a national question, why does he not himself give the impression that he is sincere in the matter? I deny Deputy Davin's statement that there were any proposals afoot with the Fianna Fáil Party for the discussion of this whole matter by the leaders of the different parties in this House. I know nothing of that. My colleagues know nothing of it, and when Deputy Davin comes here to make statements of that kind, he ought to produce some authority in support of them. If, as he says, the issue is being prejudiced—I hold it is not being prejudiced; I hold the Irish claim is being strengthened as time goes on—by a certain amount of misrepresentation, it is precisely because some of those people whom one would expect would look upon this as a national matter refuse to do so. They prefer to take up a party attitude, and to dismiss the whole question arbitrarily and summarily, with such phrases as “embezzlement.” I cannot believe that Deputy Davin is sincere when he says that he wants this question discussed as a national matter. This question was brought before the House very solemnly and very formally. When a resolution in the widest terms in which we could draft it was brought before the House in order to get a verdict, as far as possible without committing individuals or parties in the House, on the general policy of revision of the agreement—when such a resolution was brought before the House Deputy Davin voted against it——
Mr. Derrig: I do not. I said it was drafted in the broadest possible manner so as to make it possible for those who could not see eye to eye with us to vote for it on broad national lines. The resolution was worded in such a way as to enable the whole House to vote for it.
Mr. Derrig: If the issue has been prejudiced by being misrepresented in various ways, the reason is that the country was not given an opportunity by the Government in power, who wanted to make the issue a party one lest it should be said that they had made a mistake or that they were not as infallible since they took up office as they have tried to make the people believe. If we have to go round platforms, it is not that we want to use that method to deal with the question of legal rights and wrongs with an international aspect. They cannot be properly dealt with on by-election platforms. We have no other opportunity of dealing with the matter. So long as the Government and the Press refuse to discuss the question as a national issue in the way in which it ought to be discussed, we have no other method open to us. As I said here when discussing the question on the motion, the old Irish Unionists—the old landlord party—whenever a question of Ireland's financial rights in the days of the old Parliamentary Party arose, stood shoulder to shoulder with their Nationalist fellow-countrymen. They were against self-government, but they said: “If we are to have self-government let us not be fooled on the financial side; let us see that we get our fair share.” That ought to  have been the attitude of every member of this House, as I said on the motion. Deputy Davin is not doing himself justice in this matter. Whatever the rights and wrongs of the question may be, I do sincerely hope the change of attitude on the part of Deputy O'Connell and Deputy Davin——
Mr. Clery: Not being satisfied with the ground covered, Deputy Davin spoke of a change of attitude on the part of Fianna Fáil. My impression of Deputies O'Connell and Davin is that they need never change their attitude in order to be understood by the people. The people understand quite well where Deputies Davin and O'Connell stand now, and always stood in national matters. As far as the Labour Party is concerned, and Labour in general, it is quite good and national if it only focussed more of its attention on its leaders nationally and otherwise to get them to come up to the expectations of the Labour Party. Deputy Davin and Deputy O'Connell are always crying out for peace at home and abroad—even peace at any price. If they would take my advice, in their own interests, they would cease to be always imagining places for themselves on the Front Bench of a government party, and then their outlook would not be so blurred on national matters and they would be better leaders of a genuine Labour Party, which we could and should have in this country. They always talk of the two big Parties. and try to say something different from the two big Parties, regardless  of whether Labour in the country wants it or not. I am afraid they both fail to appreciate, and very often ignore, what would make a genuine James Connolly Labour Party in this country, if they wanted to. They put it on their placards when they want to have a popular demonstration, and then come back to the House and talk about peace at home and abroad.
Mr. Clery: Probably we are all out of order in talking of war and peace, but it certainly comes badly from the leaders of the Labour Party who are now talking about it. I only wanted to make a few remarks about matters contained in this Bill. Perhaps it is time that I should come to them, but if Deputy Davin is not satisfied I am quite willing to go on a little longer. What I want to object to particularly is the imposition of a £10 tax on lorries doing business through the country. My impression is that it will do no good to the small towns or to the people who are doing the business and who will be taxed and no good to the consumer. It will do good only to the Minister, because he will get quite an amount of revenue which will be collected easily and cheaply. The tax will bring no extra business to the small towns in the West, or I believe in any other part of the country. As I said here before, if these people find it profitable to do business throughout the country in travelling shops they can easily find means to make it profitable to pay the extra £10 per year. The small towns in the West are doing perhaps 50 per cent. less trade than they did ten or twelve years ago. I believe that that is not over-rating the loss suffered by the small towns. You have a very large number of small business people in these towns barely existing at present, business is so  bad. When we consider the amount of income tax and other taxes squeezed out of small business people during the last four or five years, we should at least come to the conclusion that something is due from the Government to those people. To impose a tax of £10 on travelling shops is not the way to build up these towns again, give them back their business, and some of the little prosperity they had years ago. If a tax of £40 or £50 were imposed, it might be said that less business would be carried on from door to door.
When we pleaded here for some help for the flour milling industry, and asked for protection for it in order to build up some industry in the country, we were met by speeches from Cumann na nGaedheal Deputies, both in the House and throughout the country, that we were attempting to raise the cost of living. They stated that if our proposals in regard to the flour milling industry and other industries were carried out the consumer would have to pay. That argument is often put up, even by the Labour Party, that the consumer will always have to pay. If you put a tax of £10 on travelling shops the only effect it will have is that the consumer will be made to pay. The owners of these travelling shops will get the extra £10 from the consumers. In very remote parts of the country the people who will have to pay the extra tax will be the very poorest of the poor. The well-to-do classes have the means of transport to take them to the towns to do their shopping, but the poorer classes have to be content with the travelling shops. There is, perhaps, no other method for them of getting their requirements. The men who run the travelling shops are aware of that, and can always put something extra on the price, and these people will have to pay. In that way these people will be hit by this tax, and the cost of living for them will go up.
If the Minister goes ahead with this new tax and decides not to make it such as would bring business to the towns by increasing it, there is  one way in which the proposal might be improved, and that is by inserting some clause which would force the people who do business by means of these travelling shops to carry scales around with them, and prevent them from carrying around parcels of goods already made up and weighed. Whenever they sell goods they should be compelled to weigh them in the presence of the purchaser. If that were done, it would be an improvement on matters as they stand at present. At present the people very often are compelled to buy parcels of goods already made up, and they do not know whether they get full weight or full value for their money.
Mr. Little: Deputy Davin suggested that we were trying to have it both ways on the question of the land annuities. It is a simple sum in subtraction. If we succeed in getting the four and a half millions, which is the total of the land annuities and the R.I.C. pensions, which we are paying under the Ultimate Financial Settlement, retained in this country, it will only take about £2,000,000 to deal with de-rating, and we shall have a surplus over for social services.
Mr. Little: After all, we have succeeded in intriguing the Labour Party into supporting it. They are now posing as being even more ardent than we are in re-negotiating the question of the Financial Settlement.
Mr. Little: I never quarrel with a man once he comes towards me. If he is coming towards me, I will leave him so—we will wipe it out. On the whole, I think it is a moral victory for us, who first raised that question, to find that we have at last got the Labour Party in agreement with us on the question of the land annuities.
Mr. Little: Deputy MacEntee suggests to me that perhaps we might not despair of Mr. Snowden agreeing when we have converted Deputy O'Connell, but I do not know that Mr. Snowden would be so willing to do things for the blue eyes of the Labour Party unless there is a very big and strong majority of the people behind this demand. In approaching this problem we should require a tremendous amount of strength and conviction to carry our point when the time comes. I admit that, because, although the English Labour Party are given to expressing themselves in sentimental terms, when it comes down to “brass tacks” they are just as hard as any other party in England with regard to outsiders—I do not care who they are.
Mr. Little: I do not think that is intelligible. It will require a very serious national effort on our part, and, in the next general election, on the part of the Irish people, to back up that demand. I still have hopes that those amongst the Unionists who, after the Childers Commission, formed a Commission under Mr. Arthur Samuels, who later became a judge, and who were making an attempt to settle the question of over-taxation in Ireland, will support this. I believe that on a financial issue like this, when the time comes, the Fianna Fáil Party will have at least the moral backing, if not the public backing, of every party in Ireland for withholding these land annuities. I think it is not the proper way to raise this question in a court of law as if it were a domestic question. It is begging the question to ask us to raise it in a court of law, because it is not a domestic issue but an international one. The very fact that it was the subject matter of an agreement which is called the Ultimate Financial Settlement shows that it is an international question, and a question dealing with public debt, which is our case. The very fact  that it has been dealt with before in that way means that it is an international question and must be a matter ultimately for re-negotiation.
In the meantime, as Deputy Lemass has said, the Irish people are entitled to the benefit of the doubt. We are entitled to hold these land annuities until England questions it, and then it is a question for re-negotiation. I cannot understand Deputy O'Connell. He seems to think we have nothing but war in our minds—that we are incapable of negotiating anything with any other country.
Mr. Little: Another matter which interested me greatly was Deputy O'Connell's attitude in regard to the Revenue Commissioners. The Revenue Commissioners have gained a considerable amount of unpopularity in this country, not because they collected revenue in the ordinary way, but because they exceeded the limits of ordinary common sense in the matter of looking for revenue. It was discovered in the course of  last year that the Revenue Commissioners were really only entitled to go back six years, and they had been going back twenty years. When they were pressed on that point they then discovered a reason for going back twenty years, that it was in the nature of a penalty. If they were trying to act in accordance with the principles of law in England they would have known that judges had stated emphatically that going back for years, instead of claiming a penalty, was improper from the point of view of law, because the first effort was to try to fool the people into the belief that they were entitled to go back——
Mr. Little: Giving him the full measure of the law is going to create greater respect for the law, and a Government Department should not be allowed to play upon the people's lack of knowledge of the law. Also, as Deputy MacEntee says, no Government Department should try to conceal the rights of an individual under the law.
Mr. Little: I think it all to the good from the point of view of the stability of the State that every man should feel that he has got a fair crack of the whip. I think Deputy O'Connell is badly advised in the attitude he takes up, because in the city of Galway I know there has been an enormous amount of money collected within the last year or two in back payment of income tax.
Mr. Little: As a matter of fact. I was wondering whether the time has not come for the Minister for Finance to introduce a clause indemnifying  the Revenue Commissioners in respect of their actions, which have been a complete breach of the Constitution. They have been exercising judicial powers for the last five or six years which they, under the Constitution, are no more entitled to exercise than, say, the Master of the Court. The same question could be raised there at the present time. They claim, without having regard to the Constitution, to have a right to impose penalties. They know that the District Justice has power to reduce that penalty to a certain extent, but he has no power to exercise his discretion; if in a certain case the Revenue Commissioners insist upon the issue of a body warrant a man can be put into gaol and kept there for an unlimited period. If the District Justice has no power to vary any decision he has no discretion. Where a judge has no discretion he is not exercising a judicial act; he is exercising an administrative act. Therefore, the judicial act is carried out by somebody else, and it is carried out by the Revenue Commissioners, who are not entitled under the Constitution to do anything of the sort. There is a nice bunch of cases awaiting someone against the Revenue Commissioners for a breach of the Constitution.
Mr. Little: What the Revenue Commissioners may do is this: they may impose penalties for fraud; that is their duty. But what they do is; they tell people that they owe the Revenue Commissioners money for 19 years. In that case they are trying to mislead the people into the belief that they have to pay back  income tax no matter whether they owe the money or not. That is an issue that should be tried by itself, every party understanding that the Revenue Commissioners are only entitled to go back six years. Anything like fraud is a thing that should be tried by a court of law as a case of fraud and nothing else. It should not be done in a bureaucratic way by saying to a man: “You have committed fraud and you must pay up here and now, whether you have or not any defence to the case.” That is a case that should be tried by a court of law. Deputy O'Connell appears to be living in the moon sometimes. He does not seem to have heard of any of the cases where people have been outraged by the action of the Revenue Commissioners. Everybody has heard what has happened to people who have had to pay. I have in mind a case in the City of Waterford where a man had to pay £300 in revenue duty where under a clause in one of the previous Finance Acts he could have appealed and got out of that payment. The time had lapsed, and it had been forgotten that he could plead that he had been ill, or could give other reasons. Recently that clause has been re-enacted, still the Revenue Commissioners will not allow an appeal in reference to that particular £300.
Mr. Little: I think it deals with this particular case that I have before me at the moment. I think Deputy O'Connell forgets that type of case where a man may say to the Revenue Commissioners: “I have made an incorrect return; I am correcting it now.” A man is entitled to do that.
Mr. MacEntee: As the law stands I believe they have that right. Certainly I would not stand for the contention that any Department of State is entitled to conceal from any citizen his rights under the law as is being done at the present moment.
Mr. Little: There is one matter I would like to mention to the Minister for Finance in reference to the moneylenders. I thought at first that we might be able to make it more severe for the moneylenders of Ireland, that we might be able to get more taxation out of them. I am afraid on the evidence we may have to make certain concessions in that matter where there are a firm of moneylenders. I think that enquiries into it will show that it will be necessary to make certain rebates in respect of several moneylenders acting together in a firm. It has been very interesting in this debate to see the attitude that Labour has taken up, first of all because they have out-Heroded Herod by backing up the Revenue Commissioners and secondly  they have stolen the thunder of the Fianna Fáil Party on the question of the land annuities. It is very difficult to see what position they are in at present. I think on the whole it will be seen that they are simply trying to make their price with both parties with a view to the next general election.
Mr. O'Connell: As a personal explanation, would you allow me to say that anything I have said to-day or yesterday on land annuities is not different from what I said when the motion was before the House. If the Deputy reads the debates he will find that that is so.
Mr. Moore: I hope Deputy O'Connell will decide to make a speech at an early date describing how the Labour Party would improve the social services without interfering with the annual payments to England. I think it would be one of the most interesting speeches ever delivered in the House, and I promise him that these benches, at all events, will be packed to hear him.
Mr. Moore: If there is a method of substantially increasing the present social services within the limits of the present system of economy in the State we would all like to hear it. When one realises that the present expenditure is something like £26,000,000, of which about £21,000,000 is raised by taxation, and that local government costs something like £5,000,000 a year and about £3,000,000 have to be paid annually to England—that is altogether practically £30,000,000 a year to be paid out of production, which is. I think, less than £80,000,000, adding both agricultural and industrial production—I think one would be an optimist who would say that there is room for taking any greater amount from production in order to improve the social services. Certainly from Deputy O'Connell's  point of view there would be a good deal of difficulty in proving such an assertion. I think it would be roughly true to say that Deputy O'Connell holds that no salary paid in this State is an excessive salary.
Mr. Moore: There is then not a lot of difference between us. I hardly think it is worth Deputy O'Connell's while pulling me up when he admits that much of my statement. He holds I think that a pretty large number of State servants are not sufficiently paid, consequently he would want more revenue in order to bring them to a fair standard. His speech then describing how he would do that and how he would at the same time have more money for existing and new social services would be an extremely interesting speech. There is no good, I think, in any party pretending that even with a change of Government to-morrow and as efficient and as capable Ministers in power as the Labour Party could provide, there would be a tremendous increase in agricultural production. There is no good in pretending that even with such Ministers in power there would be a great advance in industrial production. There could be more hope and there could be a stimulus to increase production but that stimulus is not going to have its full effect for a good many years.
I hold, therefore, that anybody who is interested in improved social services for the State must feel very keenly on this question of the annual payments to England. If there be a genuine case for withholding these payments or part of them then it would be the first duty of anyone having the responsibility of Government in this country to see to that  case and to make the most of it. I think anyhow that having got so far the arguments on the question should be rather more reasonable than they have been heretofore. I, for one, hope that we have heard the last about embezzlement, fraud, non-payment of debts, and all that sort of thing. It is rather curious coming from a Government that has lamented so often the demoralisation that took place in the country a certain number of years ago and has talked about the terrible consequences of that demoralisation that they should now treat a serious subject in that fashion and try to make believe that a number of responsible representatives in this country are actively encouraging ideas of embezzlement and fraud.
To come back however to the immediate subject I would like the Minister for Finance to give us a little more information in support of one of his statements when replying on the financial resolutions. He stated then “Tariffs broadly speaking impose extra charges on the people.” I dare say the House is pretty tired of tariff discussions although judging from the reports of other Parliaments it is doubtful if we discuss them more than or even as much as other Parliaments. Anyhow, I do not propose to open a discussion now on the merits of tariffs. I am only asking the Minister to give us some evidence in support of his generalisation. It is important that the country should have guidance on the question. A great many people of all parties when they realise the lack of industry in the country, when they see great numbers of people unemployed and so on naturally ask themselves: “Why should we allow such great quantities of goods to be imported into this country without restriction?” The reply of the Government is “if we interfere with these, prices are going to rise and the production of the main thing upon which the country depends will increase in cost.” Now I think before very long the Government will have to explain its reasons for that claim. It is hardly a reasonable claim. On the surface  it does not look convincing, that if you guarantee a market to a manufacturer where previously he had only his own wits and energies to help him in getting a market and if you give him State protection which is enabling him to have greater security in his work that his prices must necessarily go up. The contrary would seem to be much more convincing and the contrary has proved to be the case as the Minister himself has admitted in regard to a good many things. Where then has the Government got the grounds for that assertion and when did they make up their minds that that is the case?
Only a fortnight or three weeks ago Deputy Dr. Ryan quoted the Minister for Agriculture as having said I think in 1925—“While the immediate effect of a comprehensive system of protection would be an increase in prices he did not say that ultimately that would be the case. It is quite possible” he said “that ultimately things may adjust themselves. Indeed not only is it possible but with anything like efficiency it is probable and that you will get your goods at the same price in a protected country.” Then he says “When I say immediate and ultimate I am not thinking of a time far ahead. I am really only thinking of this year and next year.”
We all know the Minister for Agriculture has made a statement within the past twelve months very different from that statement, that he has made a statement leaving no doubt with anyone who took it at its face value that the Government's belief in regard to protection was that prices must rise permanently and that consequently industrial protection could not be enforced because of the danger to the cost of production of farming products. If that view is the result, as I said before, of increased observation and increased knowledge on the part of the Executive Council I think the House is entitled to know. The country is entitled to clear guidance on that question. It is being debated at every cross roads, in every hole and corner in the country, and it is  not fair if a rough generalisation, that has nothing behind it but perhaps a certain amount of prejudice, or that is only half or quarter truth, is yet put down as the objection to so valuable a reform as general protection would be. Of course I can see that it may be a useful thing to a Government in guarding against an overwhelming rush for protection on the part of every enterprise in the country; that it is a certain camouflage they have got to adopt. To tell the truth, I would admit that there would be some reason for adopting such a camouflage in certain circumstances, but if it is otherwise I hope the Minister will be able to give us a case for it.
I do not think this Finance Bill should pass without a much bigger defence than has been offered for it. The circumstances of the country do not indicate that such a large bill can be met. The Minister for Finance himself admitted, I believe, again only last Sunday or Sunday week, that no more people can live on agriculture. That indicates that the prospects in agriculture are, to his mind, not very brilliant. We all know from recent statements by the Minister for Agriculture that in the most important branch of that business there is anything but a hopeful outlook. In such circumstances there ought to have been, to my mind, a tremendous effort to cut down expenditure, because it is altogether unreasonable—it is even irritating to those who are the mainstay of the country—that a Government should take no note of the national income, that in framing its Budget they should decide “whatever the circumstances of the people are, whatever their actual income is, we cannot afford to do without this money. Pay they must, whether they have got it or not.” That is altogether an unreasonable attitude, and I think the Minister cannot justify it.
In the face of such circumstances in agriculture I think the Government owe a duty to the people to make a much more vigorous effort to improve the industrial production of the country. It is strange that  although the Shannon scheme has now got a long way, although it is established in a number of fairly large towns we have not yet heard a Minister appeal to the people to start relating it to production, to start thinking in terms of production with the aid of electricity. Assuredly it is not too soon to ask the people to realise that so valuable an asset as the Shannon scheme is expected to be applied industrially, and assuredly the circumstances of the country require that an appeal should be made to the country to make use of it in that way.
I am afraid it is not realised sufficiently by Ministers that in very many towns the state of employment is extremely bad, that you have great numbers of young people who have never yet, though they have long ago reached the age when they should be at work, even learned to work. I have met young men of 22 and 23 who have told me that they never did a day's work in their lives simply because they could not get it. You have that in a great many towns all over the country. You have in the same towns a constant demand for increased home help. That demand is causing a great deal of worry to those who are charged with the administration of local affairs, because on the one hand you have got your ratepayers crying out against heavy rates and on the other hand you have those who have to live by home assistance appealing for a little more in that direction. There is room therefore for a much more determined effort to get industry going in the country and it is because I believe the Government is not doing enough in that direction that I propose to vote against this Bill.
Mr. Maguire: Last week I asked a question here which was not answered, to my mind, satisfactorily and I gave notice that I would raise it on the adjournment. Subsequently I was informed that there was no Minister directly responsible for that type of business, but that there might be an opportunity on the Finance  Bill to mention the matter. I would like to know if I would be in order in referring to it now.
An Ceann Comhairle: It was in reference to the necessity for compensating depositors in credit societies that failed. It is a very detailed matter to raise upon this Bill without notice being given to the Minister. I do not know that the Deputy could do any more than merely state the bones of the case. I am prepared to allow him to do that. I know he was ruled out in the other case, but I will permit him to mention the matter now.
Mr. Maguire: This refers to credit societies established all over the country and dating back a great number of years. From time to time, up to the year 1920, they increased their business and their membership. Prior to the Treaty being established these societies assumed such dimensions that some Department attached to the Government took responsibility for an annual audit of their accounts. In that way some control was exercised over their administration. The societies invariably consisted of a small committee and a secretary. Subsequent to the Treaty the Department whose office it was to carry out these annual duties ceased to function; at least, if it functioned at all it functioned irregularly, with the result that the audits were carried out very spasmodically. In some cases two, three and five years elapsed between audits. The result was that a great number of the societies found themselves, because of lack of supervision on the part of the State, in financial difficulties. A number of the societies have gone into bankruptcy during the last two or three years, with very grave results to the local depositors.
These depositors are a very important factor in the formation of any society that would be of benefit to agricultural interests. In any cases that have come to my knowledge the local depositors were men of very small means with £50, £100 or £200 to invest. They invested their money  partly on the understanding that those credit societies had a State guarantee behind them. It must be understood that the depositors in these cases are not people with a very great knowledge of finance, nor are they very keen on investigating the soundness of a proposition. These credit societies, inasmuch as they were established by the I.A.O.S., which was a semi-official body, and also inasmuch as they were subject to audit each year, gave the local depositors the impression that there was behind them a State guarantee. As a result the societies were able to function with very cheap money. They paid the ordinary rate of interest paid by banks on deposits. Compared with the present time the societies were in a position to operate at an advantage. If to-day the credit societies possessed the confidence they secured in the first years of their existence they would be able to borrow money at one and a half or two per cent. and in that way they would be in a position to do a very much wider line of business and would be of greater advantage to borrowing farmers.
I suggest that it would be only reasonable in the interests of the small depositors who were deceived partly by the State at the time, because of the semi-official recognition they appeared to give the credit societies, that some compensation should be given them. Because of the impression that there was a State guarantee the local depositors were encouraged to invest their money. There is the other point that the failure of the societies was more or less due to the negligence of the Government within the last ten years in not keeping as strict supervision as they exercised before in the auditing of the societies' accounts. We must also consider the loss of confidence on the part of small depositors, and the serious effect this will have in the future in connection with the establishment of other societies. In view of all these considerations I suggest that this matter should be tackled from a national standpoint. The Minister should make some effort to give compensation  to the depositors, and in that way seek to re-establish the confidence of the people.
Mr. G. Wolfe: In Section 9 of the Finance Bill the Minister has given relief in the taxation of cars over five years old. For a very long period of time I have been trying to induce the Minister to do this. I think the relief given is very fair in the case of cars over five years old. I was surprised when I saw the proposal. There is one point that I would like to bring to the Minister's notice. In the case of cars that just escaped the relief applying to the 1913 model this does not apply at all. I would like to refer to high-powered cars, the taxation on which would be extremely high. They have been lying up for many years, and for a long time low-powered cars have been used. The chassis of the high-powered car cannot be sold for anything. The cars are extremely powerful and could be used for many things if the taxation were not so high. I suggest that in the case of cars over ten years the taxation should be reduced to half. In these days no one would pay the enormous tax that would apply to the high-powered car. These cars, if the taxation were reduced, would be brought into use. They are in perfect repair, and if they could be utilised it would mean bringing more money to the Exchequer, and it would also mean considerable benefit to the people.
Professor Thrift: I would like to remark generally that I think the best answer to the charge that has been made that the country has been committed to a policy of reckless borrowing lies in the success of the recent loan. I would like to congratulate the Minister and the country on the success of the loan, and I would emphasise the success which has attended the Minister's efforts in the matter. I wish to put a small question to the Minister. I want to know what would be the position of motor rollers under this Bill. No doubt they are mechanically-propelled vehicles and therefore would be liable to duty; but I  think it is undoubtedly clear that they are not mechanically-propelled vehicles in the sense ordinarily accepted; they are not used for carrying people or goods. Though it is the essence of their purpose that they have to move from place to place, it is an accident rather than anything else that they do not come under the category of ordinary machines. I think they ought to be no more liable to duty than ordinary machinery. I would like to know the Minister's view upon that matter.
I desire to support Deputy O'Connell in what he had to say in reference to athletics generally. I entirely agree with his remarks that no discrimination ought to be made between different forms of games. This is a matter which ought to be left to the wishes of the young people of the country and it is very important that they should be encouraged to undertake these different forms of athletics.
Mr. Good: I would like to put a query to the Minister in connection with the burden placed on industry through the collection of income tax. I have heard a number of employers complain from time to time about information they were asked to collect and give to the inspector of income tax. I have in my hand one of these demands that was made on an employer in this city. In this list there are the names of sixty-seven employees. The employer was asked to supply the amount of wages paid to each one of the employees during the financial years 1926, 1927, 1928 and 1929. We are all anxious that these workers should pay their share of the national burden, but is it fair or reasonable to make the employers the collectors of income tax? Anybody who is connected with industry will know what collecting information of this nature entails. All the different wages sheets of each one of the sixty-seven employees will have to be gone through week by week. I understand that in connection with this one demand alone it will mean taking up the time of a  couple of members of the staff for a couple of months. We have complained—I hope not unreasonably— of the burdens that are placed from time to time on industry; but is it fair to place a burden of that kind without giving any recompense whatever? I would like to hear the views of the Minister on that particular matter.
I had a complaint within the last few weeks that the collectors of income tax are not allowed to receive payments on account. In connection with the collection of the national income there is actually in the Department an order refusing to allow the collectors to take payments of income tax on account. Let the Minister dwell on that matter, think it over for a few moments, and I am sure he will agree that through the making of an order of that kind the Exchequer is bound to lose. The case to which my attention was drawn was the case of a man who was in very difficult circumstances. He was unable to pay the full amount of income tax with which he was assessed and the collector was not allowed to take a payment on account. That man became insolvent, and I am not quite sure what happened eventually, but as to how much the Exchequer got out of his assessment I do not know.
An Ceann Comhairle: But the people who deal with the collection of the national finance are the Revenue Commissioners. There is a special Vote in the Estimates for them, and all matters of administration in connection with the collection of income tax can be raised on that Vote. If the Deputy raises it now it can be raised again, and I have no doubt but that it will be, on that Estimate.
Mr. Coburn: I do not wish to say very much on the Finance Bill because it is the instrument through which the Minister for Finance will obtain the revenue to meet current expenditure, but I have some criticism of it to offer, because the Minister has given me the impression that at any rate for some time to come he will budget for the same amount. In other words, he is stabilising the revenue and stabilising the expenditure. In view of the general position of the country I do not think that that should be the policy of any Government.
One matter in connection with the Bill with which I would like to deal is the very high excise duties that are placed upon spirits and beer. I do not indulge very much in either spirits or beer, but I do say that two very important industries such as the whiskey and the beer industries should not be taxed out of existence. These industries have given a very considerable amount of employment for a long number of years, and no Government should put them out of existence through excessive taxation unless it has some alternative industries to take their place. It is very difficult to understand why the duties should be so high. In view of the prevailing prices for the agricultural produce that is used in their manufacture, the prices prevailing for beer and spirits at the moment are much the same as when the distillers had to pay 45/- per barrel as against the 16/- that is paid now and the 14/- in many cases, and as far as my information goes farmers  have found it extremely difficult this year to dispose of their barley crops at all. I think that the time has arrived when the Government should do something by way of reducing the duties on beer and spirits. They could very well reduce the duty on home spirits and leave the present duty on foreign spirits so as to stop the importation of Scotch whiskey. I do not know why the Minister cannot see his way to do that, except that it might be argued that the trade of the firm of Messrs. Jameson, which is largely export, might be injured by England taxing it in the same way. But I think, taking everything into consideration, including the large amount of employment that is given by distillers and brewers and by the trade generally throughout the country, that something should be done.
So much has been said about the collection of income tax that I will not delay the House further with it, and the Ceann Comhairle has ruled that the matter may be brought up on the Vote for the Revenue Commissioners. But I might remind the House, in regard to Deputy O'Connell's contribution to the debate, that many of the people to whom he referred were advised by their political leaders at the time not to pay income tax, that immediately after a slump took place, and that they were not in a position to pay the arrears when the collectors called on them. It is just as well to remind the House of the fact that many of the people who, on the advice they received, refused to pay income tax to the British Government, found themselves, in view of the slump in prices that took place in recent years, in the bankruptcy courts, and therefore were not in a position to pay their arrears.
I was rather pleased to hear Deputy O'Connell refer to the tax on sport. Certain references have been made to the fifteen Deputies who are supposed to be Unionists, men who object to the teaching of Irish. and so forth. I suppose that when this tax was put on, if those fifteen had said that it should not be put on they would still have been stigmatised  as West British. I now find that the opinions that have been expressed by these fifteen were very much the same opinions as have been expressed in the debate on the Education Vote. Deputy O'Connell also referred to the fact that no differentiation should be shown by the Government in dealing with different kinds of sports. I believe that a man should be allowed to play any games he likes. I am one of those who played all sorts of games, and I say without fear of contradiction that the national games were very much more prosperous when there was no such thing as differentiation than they are to-day.
I also criticise the Bill because the Minister for Finance has made absolutely no reference to the question of housing, and has not provided money for housing. I thought that he would have made some reference to the question of the provision of long-term loans for people anxious to build houses, especially for people who have not the necessary capital to build, but who, if long-term loans were at their disposal, would build houses for themselves. I think this question of housing is one of the most important things at the moment, and the Government, and more particularly the Minister for Finance, should do something to expedite building, that they should, either themselves or with the assistance of men who have a knowledge of the business, start the manufacture of bricks on a national scale here. I think that that would be one of the best industries that could be started by the Government, and one that would give much-needed employment.
I also notice that no provision has been made in the Bill in regard to the very vexed question of reciprocal arrangements with the British Government with reference to unemployment insurance. I thought that by this time something might be done in order to remedy many of the grievances that our working-people who have to emigrate to Great Britain and other countries suffer  from. I think that it is about time for the Government to give serious consideration to this question. It is a rather significant fact that reciprocal arrangements can be procured for the professional classes, but that when it comes to a question of the ordinary working-classes no such arrangements of any kind can be made. I consider that that is class legislation of the worst kind.
I do not intend to vote against the Bill. It is most imperative that it should be passed, and I feel I am more or less responsible for its provisions. After all, Deputies ask the Minister for Finance to provide certain services and to incur certain expenditure, and it is only right that, having asked him to do that, we should give him the necessary means to meet that expenditure. But I do think that the time has arrived, in view of the general economic condition of the country, when some reduction should be made in national taxation. I look upon this country, which, after all, is divided in two, as Mother Erin, who has been a sick patient for the last eight or nine years. She was engaged in war previous to the Treaty and after the Treaty. She has been broken and bleeding and suffering, and she is not in the same position to provide everything for her children as she was in previous years.
Consequently it is only right and proper that her children should not ask her to do too much, and I believe that what is really wanted is a spontaneous act of national self-sacrifice on the part of the people, something similar to what took place in France after the war with Prussia in 1870. It seems to me that what is really wrong with the country is that one section wants everything, without taking into consideration the position of the people in general, and until the people are prepared to make some sacrifice I believe it will be impossible to solve the unemployment problem. In my opinion the only way in which that can be solved is by a reduction of national taxation. It has been urged that as long as the money raised by  taxation is wisely spent it is all right, but I do not believe in that; I believe that the money that is raised by taxation and that is taken from industry, while it may give employment to one or two may be the means of disemploying seven or eight. The unemployment problem cannot be solved by a Government, no matter what Government it is; it can only be solved by the men engaged in the industries of the country, and in my opinion, the time has arrived when the people should be presented with a Finance Act which will show some reduction in national expenditure.
Mr. Haslett: I support the Second Reading of this Bill, not because it is any particular pleasure to me to participate in the imposition of fresh taxation, but having listened very carefully to the whole debate I cannot find any alternative to it. It is a matter of keen disappointment to Deputies on all sides of the House that in the studied statements that Deputy MacEntee, Deputy Lemass and others have made they have not been able to put forward any way in which expenditure could be reduced, except one way, around which the discussion of the Bill has largely centred, and that is a hypothetical question. To my mind, no matter from what angle the subject may be approached in future, at present this Government and this State is bound to honour the arrangement which exists, and if the only suggestion for the reduction of taxation is the retention of the land annuities I say that is a keen disappointment to Deputies.
We heard from those who profess to be experts that expenditure should be about halved. Even if these land annuities were retained the expenditure would still be over £20,000,000. That is far beyond what we heard, in some quarters at least, the National expenditure could be brought down to. Thus, as there is no alternative and as everyone in this House has been pressing for more social services, we cannot ask the Minister for Finance to provide the money for such services except we give him the means of doing so.  We cannot ask him to make bricks without straw and as we have been pressing for many social services there is nothing for it but to face up to the situation that if we ask for such services the country has got to pay for them.
There is one change to which I desire to refer, and which I think will be welcomed by the vast majority of the people, namely the change in regard to the hawkers. Transport in this country has hit some people very hard, especially people in smaller towns where on a market or fair day hawkers come in with stuff on motor lorries and take the trade away from local people. The people in charge of these towns are being asked to improve water supplies and sanitation, and to give other social services, while at the same time they have to do with less business, as a good deal of it is being taken from them. The hawkers come in and do a handy business, leaving the other people to carry on with a smaller amount of business. Buses have also militated against the smaller towns. I think it is a step in the right direction to deal with those hawkers and I am sure that the new tax will be received with pleasure throughout the length and breadth of the country. As I say, I have no particular pleasure in imposing fresh taxation on anybody, but as there is no alternative I support this Bill.
Dr. Ryan: I believe that the Minister has claimed to have reduced the expenditure on certain departments and has claimed that in this year's Estimate the deficit on the Post Office is reduced. I would, however, like to know whether he is going to reduce it by sending from his own Department to me a letter on which I have had to pay fourpence.
Mr. Blythe: I do not think that that is a very serious financial matter. Deputy MacEntee has talked a great deal about the reckless policy of borrowing. I think that his remarks on that point have already been fairly well answered. I will just say one or two other words with reference to it. If we  take the normal cost of advances for the Saorstát at one and a half millions per annum, since 1922 there has been an excess payment above that amount totalling about nineteen millions. In addition to that, very nearly seven millions have been paid in respect of post-Truce compensation. If we take only those two items alone, as representing what we might call war expenditure, the amount is over twenty-five millions. I showed in my Budget statement that, apart from liabilities in respect of Dáil Eireann Loan and liability amounting to somewhere near five millions, or an annuity of £250,000 a year, which is being paid to the British Government, and which represents also sums paid in respect of compensation and is in the nature of war expenditure, our net debt is just in the neighbourhood of fourteen millions.
We have fourteen millions as a total debt, whereas war expenditure, which might reasonably have been borrowed without any recklessness, ran to a sum approaching double that amount. That entirely disposes of any suggestion that there has been a policy of reckless borrowing. The main sums in the amount which we set aside for borrowing in each Budget for a few years past are things in the nature of war expenditure. In the beginning there was compensation, there was the re-erection of destroyed buildings, and excessive Army charges. A few other items have been included. There is purely capital expenditure, such as advances to the Local Loans Fund, money used to make advances to local authorities, but we have reached a point where, within a year or two, pursuing the policy we have pursued for the last few years, no item will be set aside to be provided for out of borrowed money except items like advances to local loans, money for afforestation, by which we are creating an asset, and items of that nature which should at all times be provided out of borrowing.
There is no reason why the taxpayer should provide out of taxation  money to be advanced to the Local Loans Fund. There is no reason why the taxpayer should pay out of taxation the full amount necessary for afforestation, seeing that a definite asset is being created thereby. It seems to me that it would have been entirely wrong to continue the policy which we adopted in the first few years of charging a large proportion of what I might call war expenditure to the taxpayers of the present day. I think that compensation charges are things that ought to be borrowed for. Apart from the fact that the credit of the State is good and that people who have to lend can examine these matters for themselves, it is clear enough to anybody that there has not been anything in the nature of reckless borrowing. Deputy MacEntee spoke at great length about the terms on which the Third National Loan was issued. It seems to me that he was hard up for something to say and wandered along just to try and say something.
Mr. Blythe: I do not think that they require dealing with. I think that anybody who knows anything about the matter will recognise and admit, if he is candid enough to do so, that the terms on which the last loan was issued were extraordinarily good.
Mr. Blythe: From the point of view of the State. They were better than the terms on which most countries, with the exception of one or two, could have borrowed. They were an improvement on the terms of one or two previous issues. Deputy MacEntee argued in favour of withholding the land annuities and indicated that not much good could be done in this country until the land annuities were held and until we ceased to transmit them to Great Britain for the purpose of paying the usual dividends on land stock and for meeting the ordinary provision for Sinking Fund. The  Government is satisfied beyond doubt that the land annuities represent the payment of a just debt, that they ought to be paid, that, in addition, they must be paid and that, even if we were to try and take a course which we think would be unjust and wrong, we would be unable to take it. We are satisfied that the day will not come when Fianna Fáil or any other Government will be able to give extensive social services by withholding land annuities.
Mr. Blythe: With regard to the point which Deputy MacEntee raised about the way in which people who have been guilty of fraud on the revenue are dealt with, I would like to say to him, first, that in the great majority of revenue cases, cases where considerable amounts are involved, the taxpayers have advice from professional accountants, and often have legal advice. Questions which arise in regard to income tax law are very frequently litigated. If there was anything in Deputy MacEntee's contention it would be very easy to have the matter tested in the courts. Somebody who has put in a fraudulent return could put in a new return, and could refuse to make any compromise in his case. He could let the Commissioners sue for penalties and have the matter definitely decided. The section in the Act which Deputy MacEntee referred to but did not quote is as follows:—
A person who has delivered a statement or schedule and discovers any omission or wrong statement therein may deliver an additional statement or schedule rectifying the same, and shall not  thereafter be liable to any proceeding by reason of his omission or wrong statement.
I should like to draw the Deputy's attention to the word “discovers.” It seems to me that the word “discovers” rules out entirely the possibility of a person who has wilfully and deliberately put in a false and fraudulent statement getting out of the difficulty into which he may have landed himself, by delivering an additional statement.
Mr. Blythe: The Revenue Commissioners are advised that that is the meaning of the law. As a matter of fact, there was a case dealt with before the House of Lords in the year 1909. I will just quote a paragraph from the judgment of Lord Atkinson in that case:
If a person discovers that the statement he has lodged, though framed according to the best of his judgment and belief at the time he made it, is wrong in fact, he might be guilty of a fraud upon the Revenue if he allowed himself to be assessed on an estimate which he subsequently discovered to be erroneous. Accordingly, Section 129 provides that when he discovers any defect or wrong statement in the statement he had forwarded he may correct it.
That judge took the view that the object of the section was to allow a man who made a statement, correct to the best of his knowledge and belief, to correct that statement, if it were subsequently discovered by him to be wrong, without being liable to any penalty. We are satisfied that that is the correct view and that it cannot be disputed.
Mr. Blythe: I do not think so. The matter can easily be tested. If the contention that the Deputy seems to put forward, that this section provides a means of allowing a man who has committed a deliberate fraud to escape responsibility, then we would alter the section to make it clear that the man who deliberately puts in a fraudulent statement will have to bear the consequences of his act.
Mr. MacEntee: I do not like to interrupt the Minister, but, as a general principle, may I put it to him that a person has the right to make restitution before discovery and that that is the governing principle which determines the interpretation of that section.
Mr. Blythe: No. The matter can be tested. Somebody who has done this can try it out and rely on the section if he thinks he has a chance of success. We know that people fight every point of revenue law. We have continual contests in the courts, particularly in regard to income tax law, where direct payment has to be made. The same litigation does not arise in conection with customs and excise, where the taxes are indirect. If anybody who has committed one of these frauds sees he is going to be liable to penalties, he can test the meaning of this section. If he were to succeed on it, we would see by legislation that subsequent people did not succeed. If a person could send in fraudulent statements, knowing that at the worst he was only going to have to pay up, revenue administration would become extremely difficult. Numbers of people would be tempted to try to get away without paying their due share of tax. The cost of administration would be increased; revenue would be lost and honest taxpayers who pay would have additional burdens flung upon them. The question of concealing any rights of the taxpayer does not arise. Nearly  all the people who have made fraudulent returns and are being hauled over the coals about them belong to the class of bigger taxpayers. They have the most expert advice that can be got, and if there was anything in Deputy MacEntee's contention they would deal with it.
Deputy Little delivered himself of a tirade against the Revenue Commissioners and the administration of the Revenue generally. There was no foundation for the complaints that he made. The Revenue Commissioners do not levy penalties in the class of case he was talking about. They say to the person: “You can make a settlement or we will sue for penalties.” When it is a clear case of fraud and the person knows he is caught, he is willing enough to make a settlement. With a view to determining how much of the full penalty will be remitted, the Revenue Commissioners ask for particulars. They ask how much tax that man has fraudulently retained, because it would be wrong to put the same penalty on a man who had only falsified his returns for a couple of years and kept from the revenue a comparatively small sum as on a man who had pursued a course of fraud for a number of years and had retained very big sums. In order that there may be equity in the remitting of the penalties, the only just way is to know how much the man has got.
What generally happens in these cases is: the man pays the tax which he has kept, plus, in most cases, a very small penalty indeed. The penalty is only fractional. If his circumstances are such that he can pay the money without being put out of business, the amount that he will pay will be the arrears of income, plus interest. But in a very large number of cases interest is not taken into account at all, because it would make the sum too big. What happens in that case is: the man pays the back tax. If he thinks it is too great, he has the alternative of standing the racket and allowing the Revenue Commissioners to sue for penalties. That seems to be the correct procedure. To do anything else would be unjust.
Mr. Little: May I remind the Minister that in the discussion on the Finance Bill last year, attention was drawn to the fact, and letters were produced to show that the Revenue Commissioners, in the first instance, asked for from 10 to 15 years of income tax arrears without any reference to penalties whatsoever. The Minister stated then that if that were so the Commissioners could be told to go to pot.
Mr. Blythe: I have just been told that the particular case that Deputy Briscoe was interested in was a case of assessed arrears—arrears assessed and which had not been paid. That was not the type of case we were dealing with at all. I was dealing with the case of unassessed arrears —a case where a discovery of fraud or of a false return had been made and the person who had made it was being dealt with. People talk about the extremely high penalties imposed here. Deputy Little talked a lot of nonsense about the unconstitutional procedure of the Revenue Commissioners. As a matter of fact, taxpayers who act fraudulently here get off much more lightly than they would in Great Britain. In addition to paying the sums levied here, or perhaps larger sums, a great many of the offenders in Great Britain would go to jail. In no case has a taxpayer here been prosecuted and sent to jail.
Anybody who reads the English papers will see frequent cases in which taxpayers have had to pay penalties amounting to £300,000. I saw a case recently where a taxpayer was sentenced to twelve months in jail in addition to a penalty like that. The penalties are no greater here than they are in similar cases in Great Britain. If anything, they are less, and there is no imprisonment added to the penalties. The penalties may be very hard for a  business man to pay. If a man has escaped tax for a long period, then gets caught, and has to pay all the back tax, it may be hard on him, but it is not unjust. It has been stated that men are being put out of business in this way. I do not think that that is so. It is certainly the policy not to put anybody out of business— no matter how much a man owes, not to impose such a penalty as will force him out of business. If a man were found to owe £50,000, and payment of more than £5,000 might put him out of business, no more than that sum would be taken from him. There may have been a case where, through misunderstanding, a man was taxed with such a sum as put him out of business, but I do not know of such a case. I have inquired whether any such case has come to light, and I have not heard of any. The deliberate policy in these cases, no matter how much may be discovered on investigation to have been lost to the revenue, is not to close down a business, and that is a policy which will be definitely adhered to.
Mr. Little: The Minister has mentioned imprisonment. May I remind him of a promise he gave last year to deal with the question of body warrants, and the power which the Revenue Commissioners have to keep people in jail continuously. He stated he was going to reduce that period.
Mr. Blythe: No, I do not think so. I should like to consider that. I will not undertake to accept an amendment. I did promise that nobody would be kept beyond the maximum limit of time that people may be kept in England. In fact, nobody has  been kept for anything like the maximum period, so that this talk about unlimited imprisonment is really nonsense. It is misleading the people and is ridiculous. People have been kept for very short periods.
Deputy O'Connell referred to a circular from a football association. What happened about that matter was that an appeal was made to the Government to exempt the G.A.A. from income tax. It was felt that possibly some specially favourable treatment was due to the G.A.A. I do not myself feel strongly about this matter. I do not see any objection to the other games, but it is perhaps true that the native games, which are not played outside the country, suffer a certain handicap as compared with the games which have the “boost” of international matches and that sort of thing. It was because we felt that the native games do suffer a certain handicap from the point of view of publicity and the means of arousing the interest which is aroused by big international matches that we thought it was reasonable to give this concession to the G.A.A. In a subsequent year, I was approached by Senator Byrne, who was then a member of this House, and others who made a case for the other associations. The matter is of course of absolutely no financial importance. The answer I gave to the deputation was, that if an amendment were put down extending this concession in regard to income tax to the other sports associations and clubs I would not oppose it, but would leave the matter to a free vote of the House. For some reason, the amendment was not put down. I declined to put down an amendment to that effect myself, because I said I felt, on the whole, perhaps the G.A.A. was entitled to a small preference. The matter is a very small one, but, as I said, I invited the deputation to get somebody to put down an amendment.
Deputy Lemass, I think, said that the Revenue Commissioners had closed down industries and that deferred payments should be arranged  to keep industries afloat. In any case where an application is made and where the facts support it, payment by instalment is allowed. Deputy Good later on complained that a collector was not allowed to take instalments. A collector is after all a very subordinate officer, but if application is made to the Commissioners and a case is shown, instalment payments are allowed. The actual collector is not allowed to take the responsibility.
Mr. Good: The collector in this case actually returned the cheque in payment on account. If it is the policy of the Department to refuse payments on account, it is something that we ought to know about.
Mr. Blythe: A collector must refuse payment on account unless the firm has made an arrangement with the Revenue Commissioners to pay by instalments. The collector is not the person who can assume responsibility in the matter. He either collects the amount due or he fails to collect it.
Mr. Blythe: I think the State has gained through that wise policy, and that nobody has been driven out of it. It would be absurd to allow a temporary officer of the status of a collector to decide matters of that sort. It is really a matter that should be decided by a higher officer. If anybody makes a case for instalments, instalments will be allowed. He cannot decide for himself to pay by instalments, and the collector cannot decide the matter, which must be referred to some higher official.
Mr. Blythe: That is simply referring it to a higher authority, because people know very well that the collector is not the type of officer who can decide that. They know that the tax is due, and if they do not want to pay when it is due, but over a longer period, they ought to write to somebody about it. There is nobody who would not know that he ought at least to write to an inspector.
Mr. Good: Whether they have them or not, collectors take on these wonderful powers. In this particular letter that I have before me there is no indication that if the matter were referred to another authority it might be reconsidered. If the Minister likes, I shall read the letter.
Mr. Blythe: I do not think that there is anything more I can say about it. Anybody who has a case to make can make it, but people cannot assume, without making an application, that instalments will be received. The Deputy will see for himself that if people were allowed to pay the collector in instalments without reference to anybody else we would have a great number of people putting off the evil day, to some extent at any rate, by paying by instalments, and that in fact the collection of revenue would be very considerably delayed in the long run. It is because you could not allow the practice to arise of people putting off the collector by giving him a cheque for part of the amount that we have to arrange that the collector has no discretion in the matter and that application must be made to the Commissioners.
Mr. Blythe: Ordinarily speaking, people are supposed to pay the tax on the due date. If they do not want to pay then it is their business to look out for what they will do, not for someone to tell them what to do  and encourage them to delay payment.
I was asked if the Trade Loans Act was going to be renewed. That matter is under consideration, but there is also the fact which the De puty mentioned that no applications have been made under it recently I do not know that any industry which was really a good proposition could not be started here because it failed to get the capital. There is a certain shyness about investment in industry here, but I do not think that that particular shyness is going to be cured by a differentiation in income tax. It has its roots in a disbelief in the prospects of Irish industry, in a belief that money invested in Irish industry is much more liable to be lost than money invested outside. To some extent, that particular fear may be dispelled by things like tariffs in relation to certain industries. It may be dispelled in a variety of ways, but there is no ground, in my opinion, for the belief that a differentiation in income tax on Irish investments would lead to any great increase in industry. Any such differentiation would mean loss of revenue. It would mean that new burdens would be thrown on other taxpayers, and we would have to be satisfied that it would provide a real stimulus before such a course could be adopted. In my opinion, the methods already adopted are more suitable and will give better results than a system of differentiation.
While we may deplore the shyness that exists in relation to investments in Irish industry, I do not think that it is correct to make attacks on those who invest outside. Such attacks are not going to induce any of them to invest in the country. I do not think that there is any hostility in the mind of anybody towards development here. Somebody, I think, suggested that the banks were hostile. I think that there is no foundation for that. The banks are not hostile to the development of industry here. They are dealing with other people's money, and they cannot afford to take risks with that money. They cannot afford to take the risks which the people  who own the money would not take, because if they did they might create unrest and alarm. In my opinion, where any good proposition is put up—and everything that any member of the Government has seen or has had brought to his notice bears this out—the banks will meet that proposition satisfactorily.
I do not know who it was suggested that insurance companies should be obliged to invest something like fifteen million pounds in the Saorstát. I think there is a bigger sum than that really in question, but it would be impossible for them to invest fifteen millions in the Saorstát without doing grave harm to the policy holders.
Undoubtedly the interest could not be earned that is being earned at present, and the bonuses that are being given at present could not be given if insurance companies doing business here were obliged to invest the amount of funds represented by their business in the Saorstát. What any policy of forcing these companies, if it could be done, to invest in the Saorstát would amount to would simply be a tax on the Saorstát policy holders. It would necessarily operate to rob the Saorstát policy holders of advantages which they have at present. I have no reason at all to think, in so far as suitable investments are available here, insurance companies doing business in the Saorstát would not be willing to invest a reasonable proportion of the sums they hold. It would be good business for them to invest here, in so far as they reasonably could, and I am satisfied that they are prepared to recognise that it would be good business. If the insurance business of the Saorstát were done by an Irish company wholly that Irish company would be obliged to invest large sums outside. It might invest substantial amounts here. Perhaps, as time went on, it might be possible for those amounts to be increased, but if by some drastic action it could be arranged that to-morrow the whole of the insurance business of the Saorstát would be done by a Saorstát company,  if the Saorstát company was to give proper service to the policy holders it would be obliged to invest very large sums—I think by far the greater proportion of its capital— outside the country.
It is, I think, pointless to talk about obliging insurance companies doing business here to invest the whole amount that is represented by their Saorstát business here. I do not think that there is any need to try to force anybody to invest here. No good purpose will be served by trying to force people to invest here whether they are outsiders or whether they are our own citizens. So far as our own citizens are concerned—people who are living here at present—I believe if a policy were started of forcing them to invest here, of imposing what looks like penalties on those who do not invest here, that the country as a whole would lose, that people would go out, that the ownership of capital would be taken out of the country and income would be lost to the country. I think in a country like this where we are talking about capital requirements we are to a large extent at the wrong end of the question. I do not believe, in the first instance, that the development of industry is seriously or substantially being held up by want of capital. It is due to other causes. If measures, whether they are in the nature of tariffs or other measures, lead to the growth of industry, then we will have the retention of capital at home to whatever extent it may be necessary. Capital that is invested abroad is not lost to the country. The inflow of investment income is a very important factor in maintaining the economic structure here. If that were invested at home and did not give a result or gave a very much lower yield of interest possibly the country as a whole would be worse off.
Deputy Little talked about the need of having the great majority of the people behind the Fianna Fáil Party in their campaign in regard to the land annuities. I do not know whether Deputy Little is threatening military operations or not.
Mr. Blythe: If he is not threatening military operations then the majority of the people behind him does not matter. It is not a question of force or of counting votes at all. Unless the Deputy is contemplating some threat of force or some great campaign of resistance the majority does not matter at all.
Mr. Little: On a point of personal explanation, it is a most extraordinary distortion of my statement to suggest that I suggest physical force in the matter. The bigger the majority and the bigger the demand the bigger the moral force.
Mr. Blythe: If you could wipe out the debt by shouting it is not due, then, no doubt, we could get enough people to shout it is not due, and wipe it out. If we were the only people who were concerned in the matter, then, of course the shouting would be very important, but when there are two parties to a contract, the shouting of one party is not going to influence it unless, as I have said a few times before, it happens to be the stronger party. If the stronger party in any conflict shouts hard they may succeed in achieving something by their shouting.
Mr. Blythe: When the smaller party tries to achieve anything by shouting, I think its prospects of success are small. I only mention that because Deputy Little seems to think that the matter is going to be settled by some sort of policy of exciting the people here. I think a policy of exciting the people here is not only going to achieve nothing, and is going to mean not merely the defeat of the object which the Fianna Fáil party has in mind, but damage and humiliation to the  country. I do not agree with Deputy O'Connell that there is anything to be discussed about this matter. I am satisfied that there is nothing to be discussed, but if there are people who think there is something to be discussed it would have been a wiser and a more responsible line of policy for them to have avoided making it, as their propaganda has done, a party issue; it would have been wiser for them to make an attempt to do the thing that Deputy O'Connell suggested they ought to do. I think the emphasis that we found laid on the question to-day merely reflects the fact that a by-election is going on. Perhaps we would not have heard it at such great length if that were not the case.
I do put it to Deputies, whether they will take any notice of it or not, that the particular line of policy that they are pursuing is a line of policy which is as irresponsible as, shall we say, their opposition to the Treaty, and similar things, and if they pursue this particular problem hope for it, they are going to bring the whole question on to a physical force, and however little he may hope for it, they are going to bring the whole question on to a physical force plane, they are going to drift into a position where the thing will be settled, not by legal arguments or by appeals to the crowds from the platform, but by methods which will not only——
Mr. Blythe: Assuming for the sake of argument for the moment that it is a matter about which there is doubt, about which there is a question to be resolved, then there is clearly one reasonable line that a responsible party may pursue in regard to it. If Fianna Fáil were serious about this and if they wanted to deal with it in a way that would be best for the country and had regard to the country's interests only, what they would do would be to state their case to the other parties to the matter. They would ask for a conference and they would have  the matter threshed out. But for a Party that sets itself up as a responsible Party to suggest that the way they will open it up is by stopping a payment which has been made continuously since land purchase began, which was made for the first time after the Treaty by a vote of this House, when the money was voted out of the Exchequer and which has been confirmed by an Act of this House, is to put the whole matter immediately on a dangerous plane. Even assuming that there might be something in their argument that the Saorstát is entitled to withhold the annuities, for them suddenly to cease making a payment, which, as I say, has been made continuously since land purchase started, would be an entirely irresponsible act, an act involving danger to the country and absolutely no sense of perspective or of the fitness of things.
Mr. MacEntee: Does the Minister mean that if a person has been making payments for nine or ten years and then has reason to believe that the payment is no longer due, he is doing a dangerous act if he withhold payment or discontinues making it?
Mr. Blythe: If a country—and we had better keep to countries—has been making a payment to another country continuously and if that country has, in the most solemn way that a country could, admitted that it owes payment by a vote of its legislature and by Act of its legislature, and if that country suddenly repudiates the debt and if it puts that party in power which professes hostility to the other country——
Mr. Blythe: The Deputy may not do it, but it is continually done by his Party. If that is done then the country in which that happens is immediately placed in a position of danger, to this extent, that there is every prospect of the struggle being brought into a physical plane.
Mr. Blythe: No such thing. I have put the matter I think very clearly and fairly. This payment has been made from the beginning. It has been acknowledged by this House, whether Deputies say rightly or wrongly, as being due. It was, as is stated by the President, at the basis of the arrangement by which our liability for British national debt was got rid of. Certainly, to stop making the payments, to open that question of withholding payment, would be a definitely aggressive and provocative act. For a party which wants another round provocative acts are things they ought to go in for.
Mr. MacEntee: The Minister has made a remarkable statement, that this payment was the basis of the agreement under which the Boundary Report was shelved and Article 5 was got rid of, but neither the President nor the Minister divulged that to the country at the time when defending the boundary settlement.
Mr. Blythe: The President made a statement and I quoted it in this  House—I do not recollect the exact number of the column—in the debate which took place in connection with the land annuities. I quoted a statement made by the President when the agreement of December 1925 was being discussed here.
Deputy Good asked a question about a firm that had to give particulars of about sixty-seven employees for four years. I admit that looks like a hard case on the face of it, but I would like to know the particulars and if the Deputy would afterwards give me the name of the firm I would undertake to examine the case.
Mr. Blythe: Deputy Coburn suggested that the beer and spirit duty should be reduced. Reduction of the beer and spirit duty would mean a loss of revenue and we cannot afford a loss of revenue in the present year at any rate. I must say the Deputy realises that the very rapid decline which took place in the consumption of beer and spirits four or five years ago is not at present taking place. It is very hard to be sure about the position from the revenue returns of two or three years because fluctuations and withdrawals from bond and stocks held, and other factors, may make the revenue returns misleading, but in so far as we can judge from the returns of revenue obtained from beer and spirits, even making allowance for the fact that in the case of beer additional revenue has been got from the increase in the brewers' stocks, it does seem that in reference to the last two years there has been practically no decline or very little decline in the consumption of beer or spirits. So we are not faced with the problem we seemed to be faced with three or four years ago, when it looked as if the very rapid decline which took place after the setting up of the Saorstát would continue.
Deputy Coburn also asked about long term loans for housing. Of course we are making money available to local authorities out of the Local Loans Fund for housing. That  was not done up to recently, but from this forward local authorities, which until lately have had to borrow for comparatively short terms from the bank, will now be able to get a loan on reasonably long terms for housing. I think that will facilitate operations.
Mr. Coburn: I would like to ask the Minister if he would not make these loans available for public utility societies, as I understand the position at the moment is that these are only available for public bodies. These public utility societies have been the means of erecting a considerable number of houses in the area where they function at present.
Mr. Blythe: I would like to look into that. I do not know that any loans in the past have been made out of the Local Loans Fund to public utility societies, not certainly since the Saorstát has been set up.
Mr. Blythe: That would require to be examined to some extent. There is no difficulty in dealing with the local authorities, because the repayment is absolutely secure. In the case of public utility societies, a further examination will have to be given to the matter. There is not any reason for confining the Local Loans Fund to loans to local authorities. In fact out of the Local Loans Fund advances have been made for the erection of hay barns and of various other agricultural purposes, and in principle there is no reason why advances should not be made to public utility societies, but it is a matter which would require examination in detail before any pronouncement could be made.
Mr. Blythe: I will undertake to look into it. With regard to reciprocal arrangements about unemployment insurance, I do not think there is anything more we can do.  The fact that no arrangement has been made is no fault of the Government of the Free State.
Mr. Little: I would like to ask the Minister whether that remission of duty in respect of cars where the engine is a 1926 one will be added on to the 25 per cent., which is already given in the case of engines used before 1913.
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