Wednesday, 11 June 1947
Dáil Éireann Debate
An Ceann Comhairle: Deputies will please remember that this is the Report Stage and they may speak only once to an amendment. With regard to amendments Nos. 1 to 3 on the Paper it might be argued that the principle in each case was was decided on amendments in Committee. The first two, however, propose to substitute amounts for those contained in the Bill substantially less than proposed by the Deputy in Committee. Amendment No. 3 caused me some doubt, the difference between it and the corresponding Committee amendment being only £100 as compared with £120 but, having accepted the other two, I will admit all three.
The amendments I moved on Committee were related definitely to the value of money to-day as compared with the value of money pre-war. I wanted to put the position in that particular perspective and I feel that the case I made on Committee was practically unanswerable from the financial point of view. The amendments I have tabled here contain suggestions made by an organised body of professional and clerical workers in the city. Their representations were put very clearly and very fully before the Revenue Commissioners in a number of interviews they had with them, and, I am sure, have reached the Minister.
I want to put one simple point. In 1939, an unmarried individual with an income of £150 per year was entirely  free of income-tax. He secured relief of one-fifth in respect of earned income and a personal allowance of £120, so that his total income was free from tax. Under the proposals in the Bill, a person with £175 income will receive relief of £35 in respect of earned income and £140 personal allowance, so that he will be free of income-tax, but if the 1939 man went above £150 and the 1947 man above £175, the 1939 man would be assessed to income-tax on the first £100 at 2/9, and, above £100, at 5/6 and the 1947 man would be assessed on the first £100 at 3/3, and, above £100, at 6/6. An income of £175 per annum to-day represents a standard of living represented by £105 pre-war, so that, in fact, whereas pre-war the man with a standard of living marked by an income of £150 would be entirely free of income-tax, to-day the man with an income of £105 related to 1939 would reach the income-tax level, so that the actual penetration of the burden of income-tax has moved down by one-third to the class represented by those with an income of £150 per year in 1939.
It is that fact which I have been trying to drive home to the Minister and to Deputies in order to emphasise to them that that is the penetration into their lives of a very considerable hardship, and when one considers the enormous amount of income-tax being raised at present and the field there is for raising it, I think it is unjust, and I accordingly propose that the level to which the personal allowance should be raised should be £300 instead of £260, as the Minister proposes. If he does that, he will still leave a position in which the burden of income-tax will fall on people who are below a standard of living represented by an earning of £150 in 1939.
Mr. Aiken: We discussed an amendment very similar to this but slightly different in amount very fully in Committee. I pointed out then the reasons why I could not accept a series of amendments on these lines moved by Deputy Mulcahy. There has been no change in the situation since last week, when we discussed it. One would like to go as far as one could to relieve the burdens of the people who are hard hit,  but, after considering all the circumstances of the country, the bill we have to meet and the position of the people from whom we collect the taxes, I feel that we are doing pretty well for the income-tax payers when we increase the personal allowance by £40 for the married person. We cannot go any further at present.
Mr. Dillon: I understood that the last amendment dealt with the level of income-tax, because the case of married persons is one which would command a wide measure of support. Could we transpose the whole business?
General Mulcahy: Amendment No. 3 will deal with children's allowances. We have had so little response from the Minister that, even if we were on the right foot, I think the arguments might not have made much progress. This amendment relates to single persons and I made my argument in regard to single persons on amendment No. 1. I can argue the case of the married persons on amendment No. 3.
The effect of accepting the amendment would be that, instead of £60 relief being given for each child, there would be a relief of £100. The Minister spoke of the position of a married person with three children when we were discussing  this matter in Committee. In 1939, a person with an income of £500 who had three children would not have to pay income-tax, but if he had an income above that, he would have to pay income-tax. He would receive a relief of £100 for earned income, £220 for being a married person and £180 for three children. In 1947, an income of £500 in a similar case would be completely free of income-tax. An income of £550 in such circumstances would also be completely free of income-tax, because the allowance for earned income would be £110; the personal allowance for a married person under the present Finance Bill is £260; and the person will also receive £180 relief in respect of three children. But the earning value of £550 to-day as against £550 in 1939 would mean a very seriously reduced standard of living.
In fact, the standard of living on £325 in 1939 would compare with the standard of living on £500 to-day. That means that the weight of income-tax has penetrated the standard of living represented by £500 in 1939 to the extent that a person would have 35 per cent. less than in 1939. When we take into consideration the standard of living in 1939 of a person who had to maintain a wife and family and a home on £500, we can realise how his standard of living would be depressed when the money value of his income is reduced to £325. The Minister's proposals at present, therefore, mean that, instead of having an income of £500 free of income-tax, he will really have to pay income-tax from £325 up. That is the effect of what the Minister is proposing in the Finance Bill. I, therefore, press that the addition proposed in this amendment in respect of children should be given and that, instead of a relief of £60, the relief should be £100 in respect of each child.
Mr. Dillon: This is a proposal which I want to support, and I support it as a result of my experience behind my own counter. A person with three children has a very considerable quantity of clothes to buy in the 12 months. Before the war, a person could have bought a pair of boots for  a school-going child for 12/-; the the same pair of boots would cost him to-day from 18/- to £1. He could have bought a ready-made suit of good quality with short pants for 37/6; the same suit would cost £3 3s. 0d. to-day. He could have bought a jersey of durable quality for 3/-; the same jersey would cost from 4/11 to 5/6 to-day. He could have bought a pair of three-quarter length turned-down top hose before the war of durable quality for 1/11, and of good quality for 3/-; the same stockings to-day would cost 2/9 and from 4/- to 4/6, respectively.
Take the little girl. A great deal of the raiment she would ordinarily wear might reasonably be made by her mother in the case of a family with three children whose income was £500 a year. Therefore, if you turn to the price of textiles, you will find that a piece of serge, 54 inches wide, suitable for making a school frock for a child might have been purchased for 5/11 pre-war; the same cloth to-day would cost, I should say, 17/- per yard. A summer frock could be made out of a wide variety of excellent cotton material which could have been purchased for 1/- per yard; the same material to-day would cost from 3/- to 3/6. The comparative costs of hoisery would, in the girl's case, be approximately the same as the boy's. The same may be said of shoes. That item of clothing alone has cast upon parents on the border line of income-tax liability, with three or more children, a very onerous burden. If my recollection serves me aright, the Minister stated, in his concluding observations, when this matter was raised, that the concessions here envisaged would cost £280,000 in revenue.
Mr. Dillon: We will call it £250,000. Considering the acute difficulties under which the parents of families in that  particular stratum of society are labouring, surely we can contemplate whatever economy might be necessary on all the services of the State to permit of this extra concession. I think it is agreed that one of the most hardly pressed sections of the community at present is the salary earner. Observe that I use the word “salary.” The wage earner has had the powerful support of his trade unions and the Labour Court, who have laid down generally that there should be an increase of from 40 per cent. to 60 per cent. on pre-war wages, according to the level of wages obtaining pre-war. We all know that that kind of person, who had from £400 to £600 a year before the war, has not received an increase which would compare with the percentages to which I have referred.
I think most of us are aware, amongst our own personal acquaintances, of numbers of people who are in a state of very acute embarrassment and I think many are going seriously into debt, simply because they are hoping against hope that they shall not be required to call upon their children to accept and display a quite different standard of living from that to which they have been accustomed since their education at school began. What more deserving section of a community can we contemplate than two young persons who, on the threshold of their careers, have given hostages to fortune and married, trusting that providence would smile on their venture and see them through? It is such as they who belong to the category who would benefit by this proposal; it is such as they who, for the time being, must sometimes feel that what was deemed to be praiseworthy optimism when they set forth, has turned out to be somewhat foolhardy in the situation in which they now stand.
We all understand fully that it is impossible for the Minister for Finance, in the early stages of the Finance Bill discussion, to announce material concessions because, if he does so, there will rise around him a cloud of applicants like midges on a summer evening, all with their special axes to grind. No midge can fly after this amendment has  been disposed of. There is no further stage at which a concession can be sought or granted in respect of this financial year. If, as I imagine is the case, all sides of this House would combine in praising that section of our community which has dared to establish their own homes early on, trusting to their own industry and ability to meet the growing charges of a growing family, surely it would be no extravagant gesture, at a cost of less than £250,000, to contribute in some small measure to the readily ascertainable additional cost that falls upon those parents in clothing their children, over and above the other increased costs that the admitted inflation is bringing upon them, especially when we consider that, unlike a member of a trade union, they have not got the advantage of concerted action to adjust their income; unlike a man engaged in business, they have not earned, from an inflated turnover, a larger profit; and they are unlike the man of commanding position, who may challenge his employer to adjust his remuneration to the new circumstances or else lose his services.
Most of these people are at that moment in their careers when, with the responsibility of a family upon them, they must walk warily lest they should find themselves confronted with the unthinkable catastrophe of unemployment. Nothing should more refresh a Legislature omnipotent in its own sphere than to choose the most defenceless section of the community and confer upon it whatever benefits reasonable discretion will permit, leaving it to those who are strong to fend for themselves. Here then is a section of our community who, because they have made this precious and valuable contribution to the State and the community generally in that they are founding families and voluntarily undertaking the obligation to work to the limit of their capacity in order to maintain their households in accordance with the standard that their status in society requires, appear to want some concession to meet the difficulties which have impinged upon them with peculiar severity.
We have the resources to provide for  them. There is no danger, if the Minister will see his way to do it now, of his being bombarded by other requests. It would be from every point of view, as I see it, desirable. I can think of no argument against it. I believe he would be the first Minister for Finance in 25 years who ever made a handsome gesture if he were to say: “Very well, that is a good suggestion and I will adopt it.” It would be a benefit to those people quite disproportionate in its beneficence, for it would relieve them of so heavy a strain. It is the kind of thing I would love to have a chance of doing because it would mean that, being responsible for the public purse, one had not retired into the dustier fastnesses of the Department of Finance, but still kept half a foot in the everyday world. It is too much to hope, I suppose, that the Minister will grasp this unparalleled opportunity. It would be a great happiness to think he might.
Mr. Aiken: They have to pay no income-tax practically speaking. A man who has £600 a year, earned income, and who is married with three children, pays £9 5s. 3d. He gets £6 10s. in children's allowances. He is, therefore, only a few pounds out of pocket. A married man with three children who has an earned income, does not have to pay income-tax unless he earns over £529. I make the Deputy a present of what he would have to pay up to £600 a year. A vital difficulty in Deputy Mulcahy's amendment is that it would not effect the purpose which he advocates. While Deputy Dillon spoke of three or four children, this amendment would only give an increase from £60 to £100 a year in the case of the first two children and the allowance for other children would be left at £43 a year each. He probably  had not that in mind, but that is the effect of this amendment.
Mr. Aiken: Everything is easily corrected, but Deputy Dillon was not here on the last day when we discussed at some length the appropriate level for children's allowances, having regard first of all to the personal allowance granted to a single person and to a married man with no children.
Mr. Aiken: I was speaking of the comparative allowances. A single man has a certain allowance and a married man is granted an allowance on another level. I was saying that on the last day when we were discussing this matter, we considered that as we were confined to giving a personal allowance of £140 a year to a single person, £60 per child was a reasonable amount to grant for children. I think that if the State found itself in circumstances in which it could give further reliefs from income-tax, those reliefs from now on should keep in step as between the single person, the married man with no children and the married man with varying numbers of children. I think the allowance is fair and equitable at the moment.
 When the remuneration or any part of the remuneration of a director of a company has been disallowed as a deduction from the profits of such company for the purposes of corporation profits tax a sum equivalent to the amount of such remuneration so disallowed shall for the purposes of his liability to or assessment for surtax be deducted from the total income of such director.
I spoke on the Committee Stage on the subject matter of amendment No. 4 and that is the reason I did not move it on this stage. I did not give any particular attention at that time to the subject matter of this amendment. The whole point of the suggestion is that there is double taxation involved in the present position as regards the imposition of corporation profits tax. A director whose salary is earned may have to pay the particular tax referred to in this amendment, surtax, and, at the same time, his salary is not allowed as a deduction from the profits earned by the company of which he is managing director in order to arrive at an assessment for corporation profits tax. There is, therefore, an element of double taxation, particularly in the case of the company in which the managing director is proprietor. It is really a one-man company.
Mr. Aiken: ——against this extravagance of Deputy Costello. No wonder he did not move this amendment yesterday in the presence of Deputy McGilligan. On his behalf, I want to protest at this conspiracy of Deputy Costello, behind Deputy McGilligan's back, to give more money to the profiteers—instead of charging them 2/- or thereabouts, to give them 7/6 additional relief. If a surtax payer is one of these directors and if he can get rid of his surtax by paying corporation profits tax alone, he might very well save 7/6 at the cost of paying 2/-. I think the amendment is ridiculous.  I do not think Deputy Costello thought it out at all.
Mr. Costello: With your permission, I would like to say one or two words on a subject matter that I have not mentioned and that perhaps I ought to have mentioned in the course of some of the earlier stages of this Bill. My explanation for not having raised this particular matter is that it was only brought to my attention last night.
The Minister has taken refuge in some sort of suggestion that Deputy McGilligan and I are at cross-purposes, he charging against the profiteers and I vigorously defending them. On this particular proposition that I have to make I am descending to the lower scale, going down to the person who has not had to pay income-tax until quite recently and who has now to pay it by reason of the increase in wages and salaries. It has been brought to my notice that there are certain people who, by reason of increases in wages and perhaps in the lower salaries, have been brought within the ambit of the income-tax code. They now have to pay income-tax where they never had to pay it before. They make no complaint about that beyond the same complaint that anybody makes who has to pay that tax, but it does fall more heavily upon those in a particular trade or business because they have not been in the habit of paying income-tax and the income-tax is not deducted from their wages or salaries. They have not got the custom of saving against the time when the income-tax becomes payable and,  accordingly, they find themselves in the position of having to resort to a plea to the income-tax collector to give them time to pay and to pay by instalments. What I want the Minister to do is, if he can see his way to do it, to make arrangements administratively, or, if necessary, by the appropriate legislation, in respect of that kind of income-tax payers, who find the imposition of the income-tax for the first time bearing heavily upon them, not so much in the matter of the actual weight of the taxation as in its mode of payment, to have a system—I presume it would not be possible to arrange such a system as exists in England of pay as you earn—but a system by which people on making a particular case can make payment of their tax by instalments.
The only trade I was approached about is the bakery trade and, by reason of the increases in wages, by reason particularly of the fact that workers in that trade have to work overtime, income-tax is payable by certain of the tradesmen in that trade. They have endeavoured from time to time, as I am informed, to pay their income-tax in instalments and they have been refused acceptance of the income-tax in instalments or in part. I bring this, perhaps belatedly, to the attention of the Minister in order to see that if at all possible these people may receive some consideration. Of course, in strictness, everybody has to pay income-tax twice a year at a particular period of the year and income-tax collectors normally give a certain amount of rope, so to speak, to the payers until a certain number of months has elapsed. But these people pay their income-tax twice a year. The normal human thing for a person is to spend the money on himself or his family, overlooking the fact that a bill will come in six months' time when a heavy demand will be made on him for income-tax, and unless such persons have had the practice of putting aside from each week's wages a sufficient sum to meet that half-yearly demand when it comes, they will find themselves faced with bills which weigh extremely heavily upon them.
 I would ask the Minister to consider that aspect of these cases. I regret that I had not the opportunity of bringing it to his attention before and perhaps that I have not, even at this late stage, brought it to his attention in such detailed fashion as might enable him to consider the whole circumstances of the case. It was only brought to my attention late last night.
Mr. Dillon: This is one of the last occasions on which we will have an opportunity of referring to the Minister's general finance policy and I want to avail of it to say a word about the implications of the customs revenue that he designs to raise in the current financial year. I watch with growing dismay the robbery and plunder that is being done by a bunch of racketeers in this country under the protection of the Minister's customs revenue' policy. I see tariffs levied on commodities ordinarily usable by the less prosperous elements of our community and I see the domestic price of the commodity in respect of which the tariff is imposed raised by racketeers in this country up to the highest possible penny that that tariff will permit them to collect. I see girls and women trying to buy a hat. I see millinery hats coming in from Great Britain, the wholesale price of which is 7/11, and I see those hats copied, deliberately copied——
An Ceann Comhairle: On the Fifth Stage, Deputies may discuss what is in the Bill. The Deputy is dealing with certain customs duties in the Bill, which he might possibly develop without encroaching too much on the Department of Industry and Commerce.
Mr. Dillon: I am trying to deal with the consequences of levying tariffs of the kind which, collectively, are designed to raise a customs revenue of £19,000,960. I see the 7/11 hat brought into this country and the copy hat being sold at 12/11. Is there rhyme or reason for that? Why in the name of common sense should women of modest  means in this country pay a levy of 5/- on every hat that is worn to a monoplist who exists by virtue of a prohibitive tariff imposed by this House? Reckon up what that means. Is anyone in this House sufficiently interested to count the units of millinery consumed in this country in the year and see what 5/- per unit costs to the community? Did any Deputy ever bother to reckon, taking quality and price into consideration, what those customs duties add to the cost of a pair of children's boots purchasable by the country people? I wish that Deputies had the experience that I have had of standing behind a counter and collecting from the country people the excess price charged on indispensable commodities, to know that you are collecting them from people who are put to the pin of their collar to make ends meet, and to know the individuals into whose pockets those profits were going.
Mr. Dillon: I feel the Minister for Finance has a very grave responsibility which, I regret to say, he and his predecessors in office have felt themselves entitled to shovel off and simply collect as a windfall the revenue deriving from these tariffs, declaring that while he has no responsibility for them they are a matter for another Minister. The net fact is that it is the Minister's Bill that imposes them and levies them and he is the person, the Minister for Finance, who makes the case to this House that the customs duties provided for in his Finance Bill impose a burden which will yield £19,960.
Mr. Dillon: May I make this point clear to the Minister: that it is only a very small part of the burden imposed upon our people and that sooner or later those Deputies in this House who are supposed to represent the ordinary people down in the country will be called upon to give an account of their stewardship when the people come fully to understand what has been done? But there is another aspect of this problem.
We have at the present time accumulated in Great Britain very substantial sterling assets. There is only one means whereby we can bring them home and that is by the purchase of commodities—capital or consumer goods—which our people can advantageously use at the present time. There can be very little doubt that there is proceeding in the world a pretty rapid inflationary spiral. What does that mean? It means that if we have external assets to-day worth £400,000,000 we can either seek to encash them in the form of goods which our people require or we can leave them on deposit where they are. If we leave them on deposit by design and policy let us face this fact that, when we ultimately seek to bring them home, approximately one-third to one-half of  their purchasing value will have disappeared. We could, with great advantage, at the present moment expend a substantial volume of those assets in Great Britain on the purchase of certain commodities which the British would be glad to sell us. I am thinking of agricultural machinery in particular. It might be a matter of negotiation. But what is the position? Far from seeking to get that machinery, to get value for our money, we are forbidden to import and we leave our people deprived of what they urgently need. We are unable to produce it here and we suffer our assets to dwindle in real value instead of using them advantageously at the present moment.
Will Deputies in this House sit back and ask themselves when the new innumerable farmers of this country want equipment and cannot get it—are forbidden to acquire it from Great Britain—who benefits from that prohibition? There are numbers of consumer goods at the present time the cost of which is a heavy burden on that class of income-tax payer in whose behalf the amendments were moved here to-day. Do Deputies know that very recently at the request of the racketeers in this country customs duties that had been taken off in order to facilitate the purchase of these goods were put on again because the domestic rackets were not as profitable as they used to be as the result of competition by the consumer goods coming in from Great Britain? Is it not hard to believe at the present time, in face of all the scarcities, in face of the fierce burden that the cost of clothing a family involves, in face of the fact that certain categories of clothing are available for exchange, that with the sterling assets that we hold in Great Britain, our own Government prevents our people from having access to them because the domestic racketeers complain that if our people were permitted to purchase these things their profits would fall? Is it any wonder that, in those circumstances, an individual can come in here from abroad and lay out approximately £50,000 on the erection and equipment of a factory and secure  a tariff levied by our own Government in order to ensure that he will have free scope to force our people——
Mr. Dillon: These are customs duties. It is a most astonishing situation, and I should like to tell this story. It describes the flotation of this company. He had no assets, in addition to his building and equipment, except the customs duty. He floated the company and he sold his assets to the shareholders of the new company for £180,000 and retained control of the new company.
Mr. Dillon: Very well, I will return to it some other day. I want to go on record as saying that the greatest curse that ever fell upon suffering humanity was the institution of tariffs. At the present moment the racketeers of the world, who are the sponsors and promoters of customs duties of this character, may well in their selfish viciousness be dragging the whole of humanity down to destruction. This country, and the Minister for Finance, might give a lead to save the world if we took the initiative in banishing from our economy the accursed customs tariffs, and proclaimed the free passage of men, money and goods in so far as the territory that we are concerned with had relation with the outside world. Were we to preach that doctrine, and were we to secure the  adherence of the United States of America and the rest of the Commonwealth to it——
Mr. Dillon: On the Finance Bill? Let me say this, that were we to secure the adherence of the United States of America and of the Commonwealth to such a policy laid down by us, we could save the world. That is a strong statement, and perhaps on another occasion I shall get an opportunity of demonstrating its truth. Let me end by saying that I want this House to remember that the greatest curse that ever fell not only on this country but on humanity was the protective customs tariff. God grant that some day we will see it outlawed all the world over.
Mr. Aiken: Deputy Dillon is busy saving the world again to-day. He never gets on his feet in this House that he does not finish up by propounding some scheme to save the world. He reminds me of a coloured gentleman who used to go around to the fairs in the days of my youth and pull out of one of his pockets something that would cure all the ills that human flesh is heir to. We are a bit doubtful about Deputy Dillon's cure-alls for the difficulties that the world is in at the moment. I think that, if his cure-all is to get America to agree to the abolition of tariffs, he has a hard row to hoe.
Mr. Aiken: The only thing is this that the other day the Americans went over to Geneva to negotiate or horse-trade, in tariffs, and what happened? When their representatives were in Geneva, Congress passed a Bill increasing the tariff on wool by, I think, 100 per cent.
Mr. Aiken: Congress did. If Deputy Dillon is depending on getting the rest of the world to abolish all tariffs, I would like him to start on the rest of  the world and we will follow suit, but we would certainly be very foolish to be the only Johnny out of step in a world in which every country is trying to protect its own essential industries by very steep tariff walls. I resent Deputy Dillon calling all the manufacturers of this country racketeers.
Mr. Aiken: ——who are working industry, giving good employment and turning out goods essential for the life-of this country. According to Deputy Dillon's definition, every person who is engaged in industry under the protection of a tariff is a racketeer. They were not found out in the courts in overcharging, like Deputy Dillon.
Mr. Aiken: The Deputy comes into this House and uses the privilege of this House to scandalise the country and condemn every honest manufacturer in it, but before he starts throwing stones he should examine whether he himself lives in a glass-house or not.
Mr. Aiken: The only other point was raised by Deputy Costello, that we should introduce a system of paying by instalments for low income-tax payers. I pointed out the level of income at which income-tax starts to be payable and payment begins very gradually. It is costing us enough to collect the borderline cases where people only pay small sums and instead of having the Revenue Commissioners set up offices where people could pay a few pence a week, a much better idea would be for those income-tax payers themselves to pay a few shillings a week into one of the savings banks and then give it as a lump sum to the Revenue Commissioners when payment becomes due.
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