In Committee on Finance. - Financial Resolution No. 2—Income Tax

Wednesday, 23 May 1934

Dáil Éireann Debate
Vol. 52 No. 12

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Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  I move that the Dáil agree with the Committee in Financial Resolution No. 2.

Mr. Cosgrave: Information on William T. Cosgrave  Zoom on William T. Cosgrave  Will the Minister say, in connection with this Resolution, if any account is being taken of recent valuations of houses in the City of Dublin and in the City of Cork where rebuilding is taking place and where the valuations far exceed the valuations of other property in the district? Perhaps it is more notable in the case of Cork City than Dublin because Dublin was revalued 16 or 18 years ago. In the case of Cork, a large number of buildings in the centre of the city were demolished about 1920 and these have been rebuilt during the last ten years. The valuation of these new premises far exceeds the valuation of property in the immediate neighbourhood. I should like to know whether, in the calculation of the one-sixth in this case, the Minister has been definitely informed by the Valuation Office that the one-sixth has been allowed off.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  In that connection, I would refer the Deputy to the relevant section of the Valuation (Ireland) Act, 1852, which required that the valuation of houses and buildings shall be made on the estimated net value thereof, that is to say, the rent at which they might reasonably be expected to let from year to year, the probable average cost of repairs, insurance and other expenses being paid by the tenant. The commissioner of valuation, therefore—I have not consulted him upon that specific point —is bound, in striking a valuation, to make an allowance for repairs. I presume that he exercises his functions in accordance with the Act.

Mr. Cosgrave: Information on William T. Cosgrave  Zoom on William T. Cosgrave  That is not what I asked the Minister, I asked him if any advertence had been made to the [1521] difference in the valuation of those premises as compared with other premises in the district, and whether one-sixth was a sufficient allowance in the circumstances. In that district let us assume a valuation of £20,000. There are 100 houses in it. The average valuation is £200. Twenty of those houses are destroyed. On revaluation the value of the 20 houses is taken at £500, as against the old £200. It may seem to be an unusual or an extravagant estimate, but it is the fact. In those cases, even though there has been an allowance of one-sixth, there is not a corresponding annual difference in value between one of those new houses and another house in that district. Let us assume that number 29 was destroyed and rebuilt, and number 30 was not destroyed and consequently was not rebuilt; the valuation of number 30 is £200 and the new valuation of number 29 is £500. Obviously it is an injustice to charge a person who is in occupation of number 29 at £500 in respect of income tax whereas the other is at only £200. The general question is as to whether this one-sixth should come off at all or not; the particular question is in respect of revaluations which have taken place during a certain number of years past, that is to say, in the case of an old city such as Cork or Limerick. My impression is that Waterford was revalued; Dublin certainly was revalued. In those cases there is not the same steep difference in the recent valuations as compared with the old, but, in the case of a certain street such as Patrick Street in Cork, there is an extraordinary anomaly, and one which certainly imposes injustice upon people who have had their premises rebuilt, and in respect of which very big charges now remain for rates, once the remission is removed, as against income tax.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  I do not know exactly the point which the Deputy wishes to make, but it seems to me that what he has said is really directed rather to the point that a revaluation of the country is overdue, because if it were not for the fact [1522] that a big number of valuations are out of date the anomaly to which he refers would not exist—that is, we should not have a house valued at £200 existing side by side with a house valued at £500 assuming—and this is the only thing that would constitute an anomaly—that the structure of the houses was, more or less, the same, and that they were both capable of being let at the same rent. If that condition were fulfilled, then there would be an anomaly if one house were valued at £200 and the other at £500. That has got nothing to do with the point which we are now considering, because whether the house is valued at £200 or £500 the Commissioner of Valuation in striking the valuation for the house has already made allowance for the full amount—not one-sixth or one-eighth of the valuation but for the full amount which, in his opinion, would have to be spent on those premises year by year in order to keep them in repair. It is because we feel it is not right that, over and above the allowance already made by the Commissioner in his valuation, an additional allowance should be granted, that this proposal is now before the Dáil.

Mr. Cosgrave: Information on William T. Cosgrave  Zoom on William T. Cosgrave  The Minister's explanation is a very poor one. First of all, when he says a revaluation is overdue he ought to make enquiries as to what a revaluation is going to entail, and how long it is going to take.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  I have said that the Deputy's argument would go to show that a revaluation is overdue.

Mr. Cosgrave: Information on William T. Cosgrave  Zoom on William T. Cosgrave  That is only one of the points. A revaluation of the whole country would, I suppose, mean 20 years' work, if it would be possible to do it in 20 years, and certainly it would mean increasing the staff very considerably. I should like the Minister to enquire how long it took to revalue the City of Dublin. Whether or not that allowance has been made in certain cases, the fact of the matter is that in the case of a person whose valuation is £500 as against a person [1523] whose valuation is £200, the person whose valuation is £500 is liable for heavier rates at some period or other. Secondly, there is the point as regards the one-sixth allowance. It is simply a problematical matter. The Valuation Office is not more infallible than any other institution when it estimates what is a fair rent. It is within the knowledge of many people who have had to deal with property of one sort or another that if you employ an auctioneer or valuer on behalf of the landlord he will give you, let us say, £150 as a fair rent. If you employ him on behalf of the tenant he will most likely give you £100. It has happened that most reputable firms employed in the case of, perhaps, the largest landlord in the City of Dublin, the Dublin Corporation, will give as a fair value, say, £150. The tenant gets another firm, equally reputable, and they put it at £100. They are not more and they are not less fallible than the Commissioner of Valuation. They simply take the mean, and in the mean it is quite possible that somebody will say, at some time or other, “he has got one-sixth off for repairs; what he loses on one he will gain on the other.”

On the general question, this is an imposition on income-tax payers. It is a thing that has not been borne before. If the Minister read up the history of this country, its over-taxation and all the rest of it, he would find that the major case in connection with over-taxation was in respect of income tax. He very easily forgets that sort of thing when dealing with these cases, but the one-sixth allowance has been the rule, I suppose, practically during the whole of the period of the running of the income tax code here. This is a new imposition; it is an unfair imposition. It is particularly unfair in the case of persons whose property has been revalued, even for the smallest possible extension of the premises. Take a person in the City of Dublin in a single room, and you will find that the valuation has gone up 30 per cent or 40 per cent. While you may seek to justify it on the grounds that it has already [1524] been allowed, it is simply humbugging yourself to say that. Secondly, it has no reference or relation whatever to the unfairness of the incidence of this tax in the case of persons whose premises have been revalued at a later period than the whole of the district in which they live.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  I do not know whether any part of this discussion is relevant to the motion, but let me deal with the points raised by Deputy Cosgrave.

An Ceann Comhairle: Information on Frank Fahy  Zoom on Frank Fahy  The only thing relevant is the question of the allowance.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  We have been told that, first of all, valuations are, after all, matters of opinion; that one person will value property as being worth one figure, and another as being worth a different figure; and, generally, that it is a matter of great doubt as to whether any of those opinions is justified. That seems to me to be an argument against having any valuation at all. It is as strong an argument against the old valuations as against the new valuations. I do not know how Deputy Cosgrave thinks it advances his case in the slightest to make that point.

Then he said, of course, that there are great anomalies being created, I presume the case which he wishes to make is that of two premises, side by side, let at exactly the same rent, and, therefore, indicating that the general public feel that they have the one annual value, but, by reason of the fact that one was valued some years ago and the other one was recently revalued, the valuation of one is fixed at £200 and the valuation of the other at £500. If the argument has any application at all, it is an argument in favour of having a revaluation. I am not saying that a revaluation is necessary; I am not even saying that it is desirable. I am merely pointing out what is the application of the argument which Deputy Cosgrave has used. He said this would create an injustice as between one individual and another. My answer to that is that, so far as repairs are concerned, a full allowance has been made for the [1525] cost of repairs to the owner or occupier, as the case may be, before the valuation has been struck. The only thing is whether, the allowance having once been made, we are justified in making it a second time. I say we are not.

If there were any substance at all in the argument Deputy Cosgrave has used, that because of this anomaly we should allow the person whose premises are valued at £500 to have it on the double, then I say that a much greater injustice exists in regard to local rates, because they are based on the valuation. In some cases they are over 20/- in the £ and the person who has to pay 20/- in the £ on a valuation of £500 as compared with his neighbour next door who pays 20/- in the £ on a valuation of £200, is in a much worse position from the point of view of local rates than he is in regard to income tax. But if the person whose premises are valued at £500 has to pay local rates on that valuation, that valuation is struck after making due allowance for all repairs, insurance and such charges and public charges. So that, so far as he is concerned, as regards income tax, the element of compensation has already entered into his valuation. I say that the anomaly is thereby minimised. The real cure for the condition which Deputy Cosgrave has adverted to in the course of his speech is to allow this Resolution to go through, to withdraw the exemption on the double and, if it is considered desirable from a public point of view, and in order to see that every person is justly dealt with, advocate a revaluation of the whole country.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Surely the Minister will admit that this is not a question of valuation or revaluation or anything else like that; that it is a decision on his part to extract additional taxation from the owners of property. In finding out how he would get additional taxation from the owners of property he hangs on to the only basis upon which he apparently can get it—that is some expression of the valuation. This question of one-sixth or any other figure like that has nothing whatever [1526] to do with the case. The Minister says, “I have to get a certain amount of money from the owners of property and I am going to take it.” As I say, this one-sixth or even the valuation has nothing to do with it, good, bad or indifferent. It is simply that he has no other way of getting additional taxation from the owners of property except by relating it to the valuation and the Minister in doing that becomes discriminatory and he takes the people who own houses as distinct from people who own shops or factories. I should like to hear the Minister get away, as I think he ought to get away, from fractions or anything else like that, and explain why he attacks, by over-taxation, people who own houses, and why property used for commercial, or at any rate, industrial enterprises, does not come under this.

Mr. Cosgrave: Information on William T. Cosgrave  Zoom on William T. Cosgrave  Will the Minister say if one-sixth is an arbitrary figure or if it has been the experience of the Valuation Office that that is the exact figure required for repairs? It certainly has not been my experience that one-sixth would cover the cost of repairs.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  Deputy Cosgrave asked me—I wish to repeat the question—whether one-sixth was an arbitrary figure. One-sixth is an arbitrary figure under the English statute for the purpose of computing the allowance that should be made for repairs in making an income tax assessment where the repairs are assumed to be made by the owner. But in the case of Irish valuations there is no arbitrary figure taken at all. It is the Commissioner of Valuation who determines what allowance should be made in the valuation to cover the cost of the repairs. If the owner of the property should feel aggrieved by that he has the right to appeal.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  The one-sixth is only a smoke-screen?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  It does not enter into it at all, so far as valuations are concerned, for income tax purposes. As I pointed out, if was an allowance on the double. An allowance for repairs has already been made by the [1527] Commissioner of Valuation before he struck his valuation, and owing, I think, more or less to a clerical error under that Act, it was forgotten that the valuations in Ireland made allowance for repairs before they were struck. In England they do not. In England the valuation is the full rack-rental valuation, and the landlord is supposed to bear the cost of repairs. This figure of one-sixth was, therefore, as I said, due to a misapprehension. This allowance of one-sixth was given, and it only applies to certain privileged people among the property owners. Those who enjoy it, enjoy it at the expense not merely of their fellow property owners, but of every one else in the State, and the question is whether an inequitable position like that should be allowed to continue.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  How many of them are there?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  An appreciable number, but certainly a comparatively small proportion of the whole population.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  What proportion?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  I cannot say. Probably about 6,000.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Does that include their families?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  The Deputy can answer that question for himself. He will probably have a typical case in mind. If he likes he can apply the particular to the general and form his own conclusions.

Professor Thrift: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  Are the owner-occupiers the privileged class?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  Yes, but only the owner-occupiers of a certain class of buildings. People who own farms, people who own mills, people who own factories or business are not affected by this.

Professor Thrift: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  It is only the ordinary owner-occupier of a house?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  Yes, who lives in a house for which, in the ordinary way, he would be paying a rent, say, of £150, so that if he were paying rent to a landlord that landlord would be taxed on £150 per year.

[1528]Professor Thrift: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  Where does that limitation come in? Is not every owner-occupier entitled to deduct one-sixth of his valuation for repairs?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  Precisely. I am pointing out that if he were living in that house, not as owner, but as occupier, he would be paying his rent to some person who would be taxed upon the full valuation. In any event, the general position in Ireland is that the valuations are far below the rental value of the houses.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  The Minister mentions a figure of £150 rent. Is it not a fact that persons who have bought their houses from the Dublin Corporation come under increased taxation as a result of this?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  No.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Be sure now.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  Only to this extent— he will, of course, lose one-sixth. But, anyhow, whether he does or does not, the fact is that in striking the valuation he has already received the allowance for repairs.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  How?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  Because the Commissioner of Valuation in making the valuation made him that allowance.

An Ceann Comhairle: Information on Frank Fahy  Zoom on Frank Fahy  I should like to remind the Deputy that the House is not in Committee. There must be some limit. Deputies are only entitled to speak once on each Resolution.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  I submit that it was only by the questions asked here that we were able to find out who are the people who are going to be subject to this particular taxation. The Minister says that persons who bought houses under the Dublin Corporation are not going to be hit by this because they got a certain allowance when the Commissioners were fixing the amount.

Mr. Cosgrave: Information on William T. Cosgrave  Zoom on William T. Cosgrave  We are trying to save the Minister.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  That is a very improper remark.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  I understand that as a result of this, whatever [1529] mystic action the Commissioners took with reference to one-sixth in the past, even though the one-sixth means nothing, they are going to do something with the one-sixth now. I should like to know if the one-sixth is still going to be worked in any way to increase the amount of taxation that will fall upon persons who own their houses as a result of having bought them from the Dublin Corporation.

An Ceann Comhairle: Information on Frank Fahy  Zoom on Frank Fahy  The Chair is not responsible for the limitation of debate and Deputies are aware of the fact that they will have ample opportunity on the Finance Bill for discussing all the information elicited on this stage.

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  This will have gone then.

Professor Thrift: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  I understood the Minister to say that this only referred to a privileged class. So far as I can learn from the information I gained, the privilege is that of paying income tax. If any person belonging to the privileged class paying income tax happens to own the house in which he lives, he comes under the change proposed in this Resolution. I think I am right in saying that that is the only limitation. It is limited to those who pay income tax. I suggest to the Minister that he has not sufficiently considered the reactions of this proposal. It is a definite blow at thrifty people who have tried to buy their own houses, and who have paid a certain price for the house after a careful calculation as to what return they are likely to get on the money, and as to whether it is likely to pay them better to buy their house or not. This change will be a definite loss in capital value to those people. Once this change has been brought in, a certain definite change in the capital value of the house they have bought will take place. In fact, the return on the money invested in the house will be less, because people have considered this point—a point which has been in force for so long that it is almost taken for granted.

A change of this kind will indicate that it is in the power of future Ministers for Finance to make further [1530] changes and to say that the valuation is not sufficient, and that he must get some other way of finding out what rent such and such a person would be paying if he were renting a house. I am only indicating that as a possible line of extension. If the Minister will reflect on it, I think that he will come to the conclusion that the game is not worth the candle, that this blow at capital is not worth the gain to the State which is likely to accrue from this alteration. The stability of an investment of this kind is an important feature for the ordinary citizen who was careful to purchase the house in which he lives. I hope the Minister will take that point seriously into consideration, because I think it is a very vital one in the stability of house investment as a whole.

Mr. Bennett: Information on George Cecil Bennett  Zoom on George Cecil Bennett  What interests me in connection with this Resolution is the extension which the Minister has made of the term “privileged class.” There was, before the present Government took office, never a definition made of “privileged class” in this country. The Minister first referred to certain classes of people with large incomes as a “privileged class.” There were added, at various times, those classes whom some people style “ranchers.” The term “privileged class” is now to be extended to people who buy even Corporation houses. There is to be no limitation apparently on the definition of “privileged class” or on the various people to whom it is to apply. The definition is now to be extended to people of moderate means in order that the Minister may be able to make further extractions from them. People who might have saved enough to purchase their houses, as Deputy Thrift said, are definitely to be included in the privileged classes, and the Minister by this Resolution is out to extract some portion of their savings from them. The Minister might as well call the kettle black and definitely say in simple terms that he requires a certain amount of money as house tax instead of introducing a camouflaged Resolution such as this; in other words, to extract a tax from the people that they do not really understand.

Mr. Belton: Information on Patrick Belton  Zoom on Patrick Belton  It was apparently with [1531] reluctance that the Minister defined the meaning of this Resolution. I would not go so far as to say that he moved a Resolution which he did not understand, but by degrees there has been extracted from him and his advisers the meaning of this Resolution. He opened by saying that in assessing the valuation the Commissioners of Valuation allow for repairs. If that is so, those who have been in the saddle before the Minister's Party took office have grievously offended against this State when they did not discover that the owners of property were getting away with a double allowance for repairs.

The Minister should throw over camouflage. I have not the least doubt that he approached it in this way, that he wanted to wave aloft his reduction of 6d. in the £ on income tax, but he discovered this trick to get it in another way. Taking a house of £30 valuation, at 5/- on £25, it paid £6 5s. income tax last year. Now, we are going to have the valuation of a £30 house at 4/6 amounting to £6 15s. Notwithstanding the fact that the Minister could swell his chest and tell the householder that he was reducing income tax by 6d., in reality the owner of the house will have to pay 10/- more in future. If any clause of an Act has been recognised as a dead letter the Minister cannot come now after 20, 30 or 40 years, and say that it has been worked throughout the intervening years, that in assessing the valuation allowance was made for repairs, and that, roughly speaking, a house valued at £30 should be really valued at £35 or a fraction more. For the purpose of conveying my idea that meets the case. That is really the Minister's argument, that that has been the practice and was in the minds of the Commissioners of Valuation. I accept the Minister's statement that it was in the original Valuation Act, but the clause had become a dead-letter.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  The Deputy is wrong. The clause has been in active application. No one knows that better than the Deputy, seeing that he has houses and land.

Mr. Belton: Information on Patrick Belton  Zoom on Patrick Belton  Then it amounts to this, [1532] that the Minister is making the positive statement that the Commissioners of Valuation worked that clause, allowed one-sixth off what should be the proper valuation, and that the Revenue Commissioners also gave an allowance for the one-sixth.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  The Minister has made no such statement.

Mr. Belton: Information on Patrick Belton  Zoom on Patrick Belton  That is what is proposed. The Minister proposes to bolt out the allowance of one-sixth on the part of the Revenue Commissioners, which was allowed up to this. I think this is a further Economies Bill.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  I did not say that the Commissioners had made an allowance of one-sixth.

Mr. Belton: Information on Patrick Belton  Zoom on Patrick Belton  Does the Minister suggest then that the allowance of one-sixth has not been given up to the present?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  More may have been given by the Commissioner.

Mr. Belton: Information on Patrick Belton  Zoom on Patrick Belton  What Commissioners is the Minister speaking of? Is it the Commissioners of Valuation or of Income Tax?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  The Commissioner who makes the valuation.

Mr. Belton: Information on Patrick Belton  Zoom on Patrick Belton  Is that a kind of left-handed suggestion that the Commissioners of Valuation did not do their job right?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  No. The Deputy is making that suggestion when he says that the law has been a dead-letter. It has not.

Mr. Belton: Information on Patrick Belton  Zoom on Patrick Belton  I think the Minister sees the point very well, and that it is only a question of saying “No” to my “Yes”, or vice versa. We will leave it at that. The privileged class that the Minister speaks of as owning houses, consists of 6,000 persons. It is a pity the Minister was not here yesterday to hear his colleague, the Minister for Local Government and Public Health, boasting that in the last year over 3,000 houses were built in the City of Dublin alone by private enterprise. I guarantee that 99.9 per cent. of these houses are occupied by [1533] the people who own them. The Minister is going to tax them. What kind of people own these houses? In order to help thrifty people who accumulated little savings the Dublin Corporation within the last year and a half advanced £650,000, every penny of which is to-day either used up or applied for. The Corporation have refused further applications, hundreds of which are waiting because there is no money available. The Finance Committee of the Corporation has authorised the spending of another £200,000. Will the Minister think of how the new imposition is going to affect people who have saved from £60, or £70 up to £150 or £200 to buy their houses, and who are to be helped by the Corporation? Will he think of the position these people will find themselves in, when a new tax is going to be put on their bit of property when they get it? Will the Minister consider further the problem that confronts the Dublin Corporation that has advanced £650,000 in a year and a half, and that has decided to advance another £200,000?

The Corporation was told by the Minister for Local Government that advances were not being made fast enough. The credit of the citizens has been pledged to repay that £850,000. When that sum is swallowed up, in a month or two, there will be a clamour for more money. After the credit of the citizens has been put behind that £850,000 for the repayment of instalments, the Minister comes along and the valuation is appreciated by one-sixth. That is really what this proposal amounts to. To put it in another way, the Minister proposes to increase the valuation by one-sixth, and to put an annual charge of 4/6 in the £. on the increase. The Corporation cannot then advance the same percentage. Quite recently the Finance Committee of Dublin Corporation agreed to increase the percentage advanced on houses. It would facilitate thrifty working people and tradesmen to increase the advance by five per cent. to 85 per cent. The Act provides for 90 per cent. The City of Dublin is able to float a loan of £1,000,000 and to get the money. That may be useful knowledge [1534] for the Minister to keep in mind. The city, within the next year, will have to float another £1,000,000 or perhaps more to carry out the present housing programme. Its credit is now going to be curtailed. The Minister made the deliberate statement that only 6,000 persons were affected. Is not every man and woman in the City of Dublin and in the Free State, who owns a house, affected, with a few exceptions including manufacturing establishments? The others are not exempt, so that out of the produce of income tax during the coming year, following the operation of this Resolution, and a similar amount on national income, the return at 4/6 will be far higher than it was last year when the tax was 5/-.

This is the reduction in income tax that we are receiving. I am sure that Deputy Thrift was not making a pun when he said that the thrifty people are going to be taxed under this proposal. The thrifty people in this city who have been proposing to buy houses for themselves will now turn back and clamour at the doors of the City Hall for houses which will be a big loss to the ratepayers. I cannot agree with the Minister that everybody in charge of the public finances during the period when this country was part of the United Kingdom and during the period that it has been on its own made a mistake and did not see what the hawk-eye of the Minister has just seen-that the owner of his house, was getting away twice with the allowance for repairs and that, in fact, it was a swindle on the rates. Will the Minister develop that argument? How could it be a swindle on the rates? Let us say that houses are valued at £20 each. The Minister argues that the valuation should have been £23 6s. 8d. A local authority wants to raise a certain sum. It is immaterial to that authority whether the valuation of the property on which that sum is to be assessed is high or low. If the valuation is high, the rates will be low. If the valuation is low, the rates will be high. The people have to pay the same amount in either case. The only inequality would arise if one house was valued on a lower basis than [1535] another. The Minister's sympathy with the local authority is an empty formula.

The Minister stated that this double allowance is not made in England—that the Commissioners of Valuation there do not allow for repairs. I question that. I doubt if the valuation of houses in a city in Great Britain similar to this city is higher than the valuation here. I have not figures in respect of that. If the Minister says the valuation is higher in Great Britain I cannot contradict him. But if he makes that positive statement, it is up to him to prove it, and it is not for me to prove the opposite.

Mr. Good: Information on John Good  Zoom on John Good  Everybody will agree that this is a most unfortunate proposal, brought forward at a most unfortunate time. Every local authority is building houses at present and is trying to sell those houses. If I know anything of the effects of this proposal, it will have very depressing results so far as the sale of houses is concerned. The Minister may be correct when he says that it will not affect all houses, but it will affect the majority of houses. The allowance of one-sixth for repairs was an inducement to people to become owners of their houses, and it is only the unfortunate people who own their own houses to whom this proposal refers.

The Minister has told us that this allowance is already taken into account in arriving at the valuation. I have been a party to a number of applications for revision of valuation, and I never heard that point raised in a single case. Theoretically, the Minister's assertion may apply, but it does not apply in practice. According to his Budget statement, the Minister will, this year, get the meagre sum of £25,000 from this proposal. I do not know what it would mean in an ordinary year. Perhaps the Minister would be good enough to tell us what the produce of this item would be in an ordinary year. He proposed to get £25,000 from this tax in the current year. I do not think that that amount justifies the injury the Minister is going to do, and I ask him to reconsider his proposal.

[1536]Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  Deputy Belton made a long speech, designed to prove that all the purchasers of houses built by local authorities will be affected by this Resolution. The trouble with the Deputy is that he talks so much of what he knows little about.

Mr. Belton: Information on Patrick Belton  Zoom on Patrick Belton  I said nothing about houses built by local authorities. The Minister should be more careful or more attentive.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  If houses are built by local authorities and are let to tenants, the local authorities have already to pay tax in respect of the income from them. If the houses are sold to tenants, then, in the great majority of cases, those tenants are, by virtue of other allowances, exempt altogether from payment of income tax. The owner-occupiers of Corporation houses do not enter into this matter save in the very exceptional cases where they are persons with substantial incomes. Such a person might have to pay to the extent possibly that his income might be increased for the purpose of the Schedule A assessment which is a comparatively unimportant item. So far as isolated individuals are concerned it might be increased slightly, and that is only in the very exceptional cases. So far as these thousands of people for whom Deputy Belton was concerned or about whom he was speaking, they are not affected at all.

Mr. Belton: Information on Patrick Belton  Zoom on Patrick Belton  There is no exemption in the Resolution and the Minister is aware of that.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  But there are exemptions in the income tax code. The Deputy knows as much about the income tax code as he does about the valuation code in England, about which he has admitted here he knows nothing. But the Deputy wishes Deputies to presume that the Minister is misleading the House when he says that in England, when striking the valuation, no allowance is made for repairs and that it is only equitable, when the income tax assessment comes to be struck, that allowances should be made. But here, when a man has his valuation struck, the Commissioner has made allowance for repairs [1537] but for all other rates and taxes and other charges. That allowance has to be made here. Yet the Deputy gets up here and says that that law is a dead letter and, in fact, he has accused the Commissioner of Valuation in this country of not doing his duty by the State.

Mr. McMenamin: Information on Daniel McMenamin  Zoom on Daniel McMenamin  But has not this part been overlooked, and may not the other part be overlooked too?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  If every owner of property displays the same intelligence as Deputy McMenamin and Deputy Belton have displayed in discussing this matter, it is quite possible that if there was an imcompetent Commissioner of Valuation the Act would be overlooked because then the owner of the property would not be concerned to see that the valuation placed upon the property which would determine the rates to be paid and possibly the income tax to be paid would be the lowest possible to be placed on it.

Mr. McMenamin: Information on Daniel McMenamin  Zoom on Daniel McMenamin  But what about cases where a person had bought a property on which the valuation had been fixed 50 years ago?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  The people who have purchased can always, if they feel that the valuation is unjust to them, employ the service of a learned counsel and go into court and induce the judge to compel the Commissioner of Valuation to reduce an unjust valuation imposed upon them. The fact is that people very seldom go into court, and people unfortunately, where property is concerned, very seldom ask for a revaluation.

Mr. McMenamin: Information on Daniel McMenamin  Zoom on Daniel McMenamin  Because they have not the money to fight it out.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  Is the Deputy soliloquising or interrupting?

Mr. McMenamin: Information on Daniel McMenamin  Zoom on Daniel McMenamin  No. I am quoting a poem by the Minister.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  The point again is that Deputy Belton is, as usual, making wild, ungrounded statements in this House, and he said that this Act has been a dead letter. In fact it has not. On every property upon which a valuation [1538] has been struck in this country there has been a due allowance made to the owner to cover the annual cost of repairs, insurance and other expenses necessary to maintain the property in its actual state.

Mr. Belton: Information on Patrick Belton  Zoom on Patrick Belton  If it has not been a dead letter, what is the need for this Resolution?

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  If God has not given the Deputy intelligence I cannot be expected to be more omnipotent.

Mr. McMenamin: Information on Daniel McMenamin  Zoom on Daniel McMenamin  That is pointless.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  As I have already endeavoured to explain, the point is that the Commissioner of Valuation having made allowance for repairs in the first instance, it is not equitable that the Commissioners of Revenue should make that allowance again in the case of a select number of individuals. When I say select number of individuals, I mean those who enjoy the privilege at present of paying income tax upon less than their income. That is what I meant when I referred to privileged classes. I do not regard income tax payers as being privileged classes any more than other citizens; but any man who has an income and by an anomaly of the law pays less than the appropriate amount of tax upon his income, is a privileged person as compared with the rest of the community and with the class of income tax payers in general. That is the position in which we are placed here. Deputy Thrift said that this was penalising thrift because we were asking people who owned their houses to pay at a proper rate. I do not know which is the more thrifty person, the person who saves £800 and invests it in a house in which to live, or the person who has saved £800 and puts it into the National Loan. Both of them enjoy a real income.

Professor Thrift: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  That is not the case I made.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  Why penalise, or at least why make a person who invests in the National Loan pay income tax upon the full income which he derives from that investment in the National Loan or from any similar investment in [1539] any productive enterprise in the State and not make the owner of a house pay income tax? Supposing a person has £1,000 saved, and instead of investing it in the National Loan he invests it in another house, which he lets. Say that house is one with a valuation of £60 per annum. A house of that sort would probably let for £120—the tenant paying rates and the owner doing the repairs. The rates borne on a house of that sort would probably be, in Dublin, £40 to £45 a year. The annual cost to the occupier of that house, as distinct from the owner, would be about £165 a year. If that house were let by its owner, the landlord would be paying on a net assessment of £60. That is what he gets out of it. But if the tenant were being charged for income tax upon £165 he would pay on whatever might be the appropriate rate after making provision for allowances. The point is that the person who lives in the house as tenant as distinct from the person who lives in the house as owner, will pay full income tax upon that portion of his income which goes to pay for the rent and taxes upon the house, but the person who lives in the house as owner only pays income tax on a £60 valuation, less one-sixth; that is £50. That would be the actual income at which he would be assessed for the house.

Professor Thrift: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  That is not the point I made at all. May I point out to the Minister that the point I was making was where a man 12 months ago or ten years ago paid a certain price for a house. He calculated that price as meaning a certain return on the capital investment. Making an allowance for what he had invested, he was allowing for the fact that he would have to pay income tax upon a smaller sum than he would get by investment, say, in the National Loan. Taking all that into consideration, the house in which he invested was worth a certain capital sum to the man. In future that house will be worth less, and if he sells it, that man will get a much lower price than he paid for it. You have there a definite depreciation of the capital value of the house.

[1540]Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  There is the question of a vested interest in regard to any taxation imposed by the State. The natural consequence to that line of argument would be that no taxation at all should be imposed by the State. We are to have no taxes imposed, because all taxes touch some vested interest. One cannot argue that the creation of a vested interest should mean total exemption from taxation. In any event, the effect of this concession upon the value of property is very much exaggerated. The matter is not a new one. So far as the houses which have been bought within the last ten years are concerned, I think the purchasers ought to have adverted to what took place here in 1924. Deputy Belton has made the point that this thing was overlooked for the last ten years. The fact of the matter is that if Deputy Belton had consulted his Leader he would have found that the Government of which he was President introduced a proposal of this sort, and the proposal was adopted by the Dáil and embodied in a Finance Bill. In 1924, ten years ago, the Government under President Cosgrave submitted the same sort of proposal as this. It was embodied in a Finance Bill, and it went to the Seanad and was rejected by the Seanad.

Mr. Good: Information on John Good  Zoom on John Good  It was defeated here.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  In the circumstances which Deputy Cosgrave himself related here the other day. That was, that he happened to be temporarily in charge of the measure which contained this provision in which he himself did not believe.

Mr. Good: Information on John Good  Zoom on John Good  I may tell you the secret —the Whips were taken off.

Mr. Bennett: Information on George Cecil Bennett  Zoom on George Cecil Bennett  I hope the Minister will do the same to-day.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  There were two Finance Ministers and two Governments convinced that this was an anomaly that ought not to remain.

Professor Thrift: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  And both Oppositions were against it.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  The Opposition then was possibly more powerful than I hope the Opposition will be to-day.

[1541]General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Do not talk about where the Opposition was in 1924.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  Will Deputy Mulcahy tell us where he was in 1924?

General Mulcahy: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Yes, I am perfectly prepared to say where I was in any year.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  The Deputy was not here.

Mr. Donnelly: Information on Eamonn Donnelly  Zoom on Eamonn Donnelly  He got the “works” that time.

Mr. MacEntee: Information on Seán MacEntee  Zoom on Seán MacEntee  This is an anomaly to [1542] which the attention of the Government was drawn very early. They were convinced then that it should be remedied and we are asking the Dáil to remedy it to-day. What has been said with regard to valuations is beside the point. The only force it has is to indicate that there is a necessity for considering the revaluation of the country. That is a suggestion we made when we were in opposition.

Question put: “That the Dáil agree with the Committee in Resolution No. 2.”

Aiken, Frank.
Bartley, Gerald.
Beegan, Patrick.
Boland, Gerald.
Boland, Patrick.
Brady, Seán.
Breen, Daniel.
Briscoe, Robert.
Browne, William Frazer.
Carty, Frank.
Concannon, Helena.
Corkery, Daniel.
Crowley, Timothy.
Daly, Denis.
Davin, William.
Derrig, Thomas.
De Valera, Eamon.
Doherty, Hugh.
Donnelly, Eamon.
Dowdall, Thomas P.
Everett, James.
Flynn, John.
Flynn, Stephen.
Fogarty, Andrew.
Gibbons, Seán.
Goulding, John.
Hogan, Patrick (Clare).
Keely, Séamus P.
Kehoe, Patrick.
Kelly, James Patrick.
Kelly, Thomas.
Kennedy, Michael Joseph.
Keyes, Michael.
Kissane, Eamonn.
Lemass, Seán F.
Little, Patrick John.
Lynch, James B.
McEllistrim, Thomas.
MacEntee, Seán.
Maguire, Ben.
Maguire, Conor Alexander.
Moane, Edward.
Murphy, Patrick Stephen.
Murphy, Timothy Joseph.
Norton, William.
O'Briain, Donnchadh.
O'Grady, Seán.
O Ceallaigh, Seán T.
O'Reilly, Matthew.
Pattison, James P.
Pearse, Margaret Mary.
Rice, Edward.
Ruttledge, Patrick Joseph.
Ryan, Martin.
Sheridan, Michael.
Smith, Patrick.
Traynor, Oscar.
Walsh, Richard.
Ward, Francis C.

Anthony, Richard.
Belton, Patrick.
Bennett, George Cecil.
Broderick, William Joseph.
Cosgrave, William T.
Curran, Richard.
Daly, Patrick.
Davis, Michael.
Doyle, Peadar S.
Fagan, Charles.
Finlay, John.
Fitzgerald, Desmond.
Fitzgerald-Kenney, James.
Good, John.
Keating, John.
MacDermot, Frank.
MacEoin, Seán.
McFadden, Michael Og.
McGovern, Patrick.
McGuire, James Ivan.
McMenamin, Daniel.
Morrisroe, James.
Morrissey, Daniel.
Mulcahy, Richard.
O'Donovan, Timothy Joseph.
O'Leary, Daniel.
O'Sullivan, John Marcus.
Rogers, Patrick James.
Thrift, William Edward.

[1543] Resolution declared carried.


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