Friday, 19 July 1963
Seanad Eireann Debate
Mr. Fitzpatrick: The final stage of the Finance Bill was moved in the Dáil on Wednesday evening by the Taoiseach. I understand that is a very unusual procedure. The Bill is usually handled in the Dáil by the Minister for Finance. However, on this occasion the Taoiseach moved the final stage. He explained his action in so doing by saying that this was no ordinary Finance Bill, that it was not the type of Finance Bill which came in each year in a routine sort of way to give effect to ordinary proposals in the Budget. The Taoiseach, in fact, said he was moving the final stage of the Bill because, in effect, it was going to create a revolution in the tax structure of the State. I entirely agree with the Taoiseach that this is a revolutionary measure in that it imposes a tax unheard of in this country before. In those circumstances and having regard to that admission, one would have thought that the people would have got some advance warning about the proposal.
In fact, I think the people would be entitled to expect that a proposal to introduce a turnover tax would have been a plank in the election platform of the Party which proposed to introduce it. But that was not done. In fact, this proposal was never mentioned by the present Government Party in the 1957 election campaign. As a matter of fact, I think the Fianna Fáil Party fought in the 1957 election on an assurance that they would not remove the food subsidies. They gave a solemn assurance several  times and on every platform. We all know that immediately they got into office they did, in fact, remove the food subsidies.
In the 1961 election campaign, they certainly did not state to the people that they proposed to follow the removal of the food subsidies by a direct taxation on food, and that is, in effect, what this turnover tax is. In 1957, having got into office, they removed food subsidies amounting to £9 million and the proposal in this Bill will tax food to the tune of about £7 million in a year. Therefore, the Party who got into power on a solemn assurance in 1957 that they would not increase the price of food by removing the food subsidies have, in fact, added £16 million to the cost of food in this country in a year.
In my opinion, the Government have no mandate good, bad or indifferent, from anybody to impose this tax on the people. I have stated the position in the last two general elections but in fact Providence intervened since the Budget Statement. A by-election was held in the Dublin North-East constituency, which is the largest constituency in this country and which can be taken as representing a fair cross-section of the Irish people. You have better-off people, not so well off people and poorer people in that constituency. It is a constituency in which I think the Fianna Fáil Party would ordinarily welcome a by-election. I think it is one of the boasts of the Fianna Fáil Party that, through the activities of the Minister for Justice and otherwise, this is one of the best organised constituencies from the Fianna Fáil point of view. A by-election was held there and there is no doubt that the main issue was the tax proposals to be implemented in this Finance Bill.
The Government Party in the last general election had a comfortable majority in that five-seat constituency. They had a majority of 5,000 votes; they had three seats out of five; yet they were overwhelmingly defeated in the by-election. The people in this large constituency said they did not want the sales tax and that the Government had no authority to impose it.  They gave a clear indication to the Government to resign, hold a general election and test the feeling of the country in general. I say that the Government have no mandate either from the people or from the Dáil to impose this tax. It might be referred to as a “one vote or photo-finish tax”.
The Commission on Income Taxation had a long discussion on the proposal to introduce some sort of turnover or sales tax. After three economists had advised against it, a vote was taken on the proposal to introduce such a tax, while at the same time giving relief in respect of income tax. This was passed by one solitary, single vote. We know that since this Bill was introduced in the Dáil, it has survived two divisions by one single, solitary vote.
Mr. Fitzpatrick: I think Senator Ó Maoláin had his answer to that from the Leader of our Party yesterday. We always believe in majority rule and we always regard one as a majority but, as you were told yesterday, you did not regard seven as a majority.
Mr. Fitzpatrick: With respect, I think I am entitled to say that this is not the type of Bill which should be steamrolled through the House after a by-election in which the Government got a rebuff. It is not the type of Bill which should be steamrolled through by one vote.
I oppose as strongly as I can the provision in the Bill to introduce the turnover tax. I do so on a number of  grounds. The first is that it seeks to tax everybody indiscriminately. It will undoubtedly increase the cost of living. It makes no difference whether it is a case of a person buying an expensive drawingroom carpet, expensive furniture, golf clubs, a motor car or many of the things wealthy people buy, or that of a man who has to buy food for his family, clothes or boots. It is imposing a tax of £7 million on the necessaries of life. Never again will what are called the social welfare classes get the full benefit of any increase in social welfare payments because what will be given with one hand will be taken away at least partially with the other.
This tax is being introduced at the rate of 2½ per cent. We all know that income tax was introduced many years ago to deal with a specific situation at the rate of a few pence in the £ but it went from a few pence to 10/- in the £. This tax is being introduced at the rate of 2½ per cent but, once it is introduced, it will be increased as required. This is not an alternative tax. The suggestion of the Commission on Income Taxation was that if this tax were introduced, with fuel and food excluded, some relief should be given in income tax.
So far as we can see from this Bill, it is not the intention of the Government to give any relief in income tax. It is not the intention of the Government to discontinue the levying of income tax or to reduce the rate. Indeed, far from that, so far as we can see, the whole trend of the Bill is to collect more income tax, make sure that everyone pays more and that no one escapes. It looks as if it is the intention to retain the income tax code on a long-term basis.
I also oppose this Bill on the grounds that it constitutes shopkeepers and businessmen as tax-gatherers, and it invades the business premises of every person in the country. That is a bad thing. As part of my authority for saying it is bad for the country and bad in general that shopkeepers are being made tax gatherers and that business premises are being invaded, I should like to quote the Taoiseach.  Speaking in the Dáil, as reported in the Official Report of 17th May, 1956, at column 621, Volume 157, the Taoiseach said:
I think it is true to say that most people who have written upon the theory of public finance subscribe to the view that it is desirable that the number of separate taxes should be kept as few as possible, that the State should rely for the bulk of its revenue on a few main taxes and should not try to multiply the number of separate taxes.
There is an obvious reason for that. It is undesirable that the hand of the tax-gatherer should be brought into business. The number of businesses subject to the regulation which is necessarily involved in the collection of taxes should be kept to a minimum. Government intervention for tax-raising purposes in any business always results in waste and is a cause of higher costs as well as of higher prices. Furthermore, it is obvious to expect that the smaller the yield from any tax the higher will be the proportion of that yield absorbed in collection expenses. And, the wider the number of taxes, the greater the prospect of successful evasion by individuals.
At present businessmen have one income tax return to make in the year. Revenue officials will, I think, agree it is sometimes hard enough to get that one return out of them. Instead of getting it early in April, they are lucky if they get it in August. They have to make a provisional assessment and then try to steamroll them into making their returns. Under this Bill, businessmen will still have to make annual income tax returns and they will have to make 12 turnover tax returns in 12 months. It simply will not work. It will not be done. All sorts of powers are being taken by this Bill to compel business people to keep records, to give  power to representatives of the Revenue Commissioners to enter premises, inspect records, take away records, make copies of records. There is a horribly familiar ring about this to anyone who remembers the war years, anyone who remembers the Department of Supplies and the nightmare it created for honest business people, as well as business people who were breaking the law.
Mr. Fitzpatrick: It kept the people fed, but that was in an emergency. This seeks to perpetuate an emergency Department set up to deal with a world war and, as the Senator has rightly said, to ensure that the people did not starve. That situation no longer exists and why this Bill should perpetuate machinery which was devised, introduced, set up, and worked to deal with a crisis is beyond me. If this Bill affects the business people as the Department of Supplies did even in an emergency, there will be a terrible reaction to it. From the point of view of the ordinary man in the street, the ordinary businessman who detests records and bookkeeping, I cannot think of any more objectionable combination than a combination of the Department of Supplies and the Income Tax Branch of the Revenue Commissioners.
I am not casting any reflection on anyone when I say this type of legislation is not suited to the Irish character, the Irish mentality, and the Irish temperament. A measure like this, which insists on people making returns, keeping records, which gives power to Department inspectors to enter premises, inspect records and take copies, will do a great deal to create strife between the ordinary taxpayer, the law-abiding citizen, and a Department of State. Our whole history explains why that is so. Some other form of tax should have been considered, if it were necessary.
The ordinary shopkeeper is being turned into a tax collector. Senator Nash stated that his profession had been collectors of taxes for many years. I do not like the system of proving a thing by giving personal  examples, but with the greatest respect to Senator Nash, I say there is no comparison. It is a solicitor's duty to advise clients on payment of death duties. It is his duty to move for the payment of death duties, and he gets paid for it and it is a significant fact that the higher the estate the higher the death duties, and the higher the estate the higher is the professional fee. Therefore, I do not think the profession to which Senator Nash and myself belong can justly claim to be martyrs because we pay over sums of money to the Revenue Commissioners. That is our business, but it is not the business of the shopkeeper to collect taxes.
Speaking on this measure in the Dáil, the Taoiseach said it would become more apparent in a couple of weeks' time when the second Programme for Economic Expansion is published, why this measure was necessary. It is a pity he put the cart before the horse —that the Government did not come along with this second plan before introducing this Bill. The first plan has not been such a success. If plans and blueprints meant anything, this country would be flowing with milk and honey and we would have the position where at the end of the first five-year plan the adverse trade balance which, I think, is the only real test by which the effectiveness of any such plan can be judged, would not stand at an all-time record of £106 million.
It has been said that the opposition to this tax to date has come from RGDATA who, it is alleged, are a political party for all practical purposes, or have become a political body. I say the opposition has come spontaneously from business people because they see the immediate effect as far as they are concerned. Dublin NorthEast is not a constituency comprised exclusively, or even mainly, of business people: it comprises a fair cross-section of working class areas and they expressed their opposition to it, having had the advice of Government speakers as well as Opposition speakers.
I venture to suggest that though the immediate opposition has come from the business community, before the end  of this year there will be further effective opposition by way of demands for increased wages all over the place when the impact of this tax is felt after the cost of living has increased. You will have demands from every organised section of the wage-earning community in this country, and the White Paper Closing the Gap will have no effect in resisting the claims which will be made for increased wages to provide against the increase in the cost of living, brought about directly by the Bill we are now discussing. This measure will also increase the rates in this country. It will increase the cost of running such institutions as hospitals and the like and, as a result, the rates will go up.
I should like to say a word now on the proposal retrospectively to increase corporation profits tax. Again, I find myself disagreeing with my colleague, Senator Nash, when he seeks to prove there will be no retrospection. I do not propose to prove that in theory by quoting anybody else. I propose to prove it to the House by reading Section 37 (5) of the Bill now before us:
Any additional corporation profits tax payable by virtue of the alterations in the law made by this section in respect of any accounting period ending on or after the 1st day of January, 1962, may be assessed and recovered notwithstanding that corporation profits tax has already been assessed in respect of that period.
If that means anything it is that this Bill can, and is intended to, assess tax on a company in respect of a period for which it had already been assessed. If it does not mean that, there was no necessity to put that subsection in the Bill. There are many limited liability companies in this country which had not to pay corporation profits tax because their profits did not exceed £2,500. They have closed their books, believing that in one year they were exempt from tax. Now, however, when the Bill becomes law, the Minister for Finance will say to them: “I am sorry, I have changed my mind; I have decided you must pay tax.” If that is not retrospection, I do not know what it is.
 Senator Nash spoke unkindly of those companies and seemed to suggest that they enjoyed all sorts of privileges. I want to take him up on that. He says these companies enjoyed the privilege of not paying death duties because a company does not die. If a man owns a business, turns it into a company and retains the shares, he becomes a shareholder. When he dies, death duty is charged on the value of the shares if he has had them in his own name within three years of his death. Therefore, it is incorrect and misleading to say a limited liability company does not pay death duties. The owner of the shares in the company does and it is the same thing.
The effect of this retrospection means that people do not know from one year to another what their liability for tax is. I agree a company do not bring their reserve capital to a strongroom in a bank and keep the money for the income tax collector in a drawer. The company, when they close their books for the year, plan ahead and enter into commitments on the basis of the amount of money available and which is not required for taxation or for one thing or another. We spend a considerable amount of money on attracting foreign capital so as to provide the know-how in manufacturing. We voted the other day a sum of money not exceeding £1½ million to enable the Department of Industry and Commerce to encourage foreign manufacturers to come here. This section in the Bill will offset all the publicity we can give and all the invitations we send out to bring people here. If it gets abroad that this is a country where one does not know where one stands with taxation and where Bills can be introduced taxing people for a year that is gone past, I do not think many people will be keen to come. Therefore, I say that it is fundamentally unsound. It is not because of the amount of money that is involved but because of the principle, which is a very wrong and a very dangerous one.
There is another provision in the Bill  which compels banks to disclose or give a list of their depositors to the Revenue Commissioners. This, again, is a completely new departure, and I doubt very much whether it is a wise one or not. A lot of money in the banks in this country is put there in small or large amounts by the farming community and one of the reasons —and some of us who meet the people and discuss investments with them know—why it is difficult to get a countryman to put money into the post office even, or to buy Government stock, is that he feels it will be known. He does not want anyone to know his affairs and accordingly he deposits the money in the bank even at a low rate of interest. We tell him it is mad to put money into the bank at one per cent when he can get 6 or 7 per cent on Government stock. He does not want people to know his business. I say with sincerity, and I believe it is correct, that once it gets abroad to the farming community that the bank is no longer a confidential institution and that the bank in future will and can communicate with a Department of State, they will fight shy of putting money into the bank. The farmer will take his money and put it in a tin box, even at the risk of the rats eating it.
I am speaking from experience. It may not be as simple a matter as it sounds. I understand that for some years back it has been put up to the banks in this country to underwrite practically every Government loan launched. The banks between them underwrite the loans—so I believe. If substantial amounts of deposits are withdrawn, and I understand they are already on the march, and not alone the big deposits, but the small ones, it will become very difficult for the Government to get money.
I could not help being a little bit amused by some reaction in the House when my colleague, Senator Ross, commenced his speech. He seemed to be giving absolute approval to the contents of the Finance Bill, but before he finished he said he would agree with the turnover tax if food were excluded and if hire purchase were excluded and he violently disagreed with retrospective taxation. I think if you take those  three things which he violently objects to out of the Bill, you might say the Minister is welcome to it.
Professor Quinlan: In examining the Finance Bill the first thing we note is that a change has been made and a new form of taxation has been introduced. We note that the report of the Income Taxation Commission has been used in introducing this. For quite a while I have been worried about the use being made of commissions in this country. We select a commission that is thoroughly representative and then when its report comes in very often major changes are made in the recommendations. I feel worried as to whether it is competence that makes such drastic changes in the report of a commission that has already been regarded as the best possible to investigate such a problem. In the present Income Taxation Commission, we had a vote for the introduction of a turnover tax by a narrow majority of six votes to five, to be offset by some reliefs in income tax. Of course, that is the vote of all commissions that have ever been set up to look into the tax situation. In 1948, there was a similar Commission to get rid of income tax. They suggested three ways by which the same amount could be raised without income tax. That Commission were thanked and now there are the three ways of raising tax, plus income tax, in operation. I do not think we can quarrel too much with the fact that income tax has not been reduced to offset the present sales tax.
I think the Government's departures from the recommendations of the Income Taxation Commission in relation to the sales tax are very dangerous and I believe they are fundamentally wrong, as I hope to show. Nobody I think would quarrel about having to pay for extra services. We did, perhaps, look a little askance on seeing the total go up each year and particularly this year when the jump was rather severe. We may have ideas that sufficient economies are not made in other sectors, especially where government is concerned. Still every section is looking for more and believes it has priorities so we cannot really quarrel  there. I think far too much has been said about the turnover tax and the impact it is likely to have on the country.
It seems remarkable that in a Budget of £65 million a tax should be imposed which will yield in a full year only £11 million, of which £3 million has to be handed back by way of a rebate to some of the lower income groups who should not have had to pay it at all. In other words, it is only a matter of about £8 million. I submit it is fantastic to suggest that that tax has so much bearing on the moneys contributed for the running of Government services. If it contributed about £30 million, perhaps, there might be some foundation for the suggestion that it was really making a big contribution towards providing the increased money necessary for Government expenses. But, in the normal run of expenses here for the past four or five years, an increase of 4 per cent means about £20 million in the national income every year. Our tax structure is so designed as to get back about 23 or 24 per cent of the expenses and that provides about £6 million every year.
When you view it that way, you see the exaggeration of presenting this as the wonderful implement that will change the whole face of the country. I submit it is a gross exaggeration. Likewise, I think it an exaggeration to say that this tax, £8 million of it, will have a very marked impact on the standard of living in this country. A sum of £8 million cannot have such an impact. I do believe that the way in which the tax is levied is calculated to give a wrong kind of impact to the standard of living, because a turnover tax, as has been pointed out by the economists who sat on the Income Taxation Commission, is not something we have to cut. That cannot be denied because the difference between a turnover tax and a general road tax which affects everything you buy, or almost everything, is that this tax has a much greater impact on the cost of living index.
Take the case of a married man who is earning £700 a year in wages or  salary; he is not liable to income tax. His exemptions just about keep him free so an increase in income tax leaves him unaffected. On the other hand, if he has £2,000 a year and with the same exemptions, a wife and one child, his income tax bill would amount to about £350. Consequently, if you increase the standard rate of income tax by 1/- that man would have to pay an additional £50 which would be a 2½ per cent cut in his income, whereas, the average wage earner with his £700 suffers no cut at all.
A trade union cannot make any case for increased wages based on an increase in income tax or on an increase in selective luxury taxes which contribute very little to the general cost-of-living index. As it is, the full effect of the 2½ per cent will be shown on the cost-of-living index. In fact, the man with £2,000 a year is likely to have a far greater proportion of his salary free of turnover tax than the man with £700 a year. For instance, if the man with £2,000 a year decides to take a holiday abroad and so on, as far as I can read in the Bill, that is totally exempt and so the turnover tax, as designed, tends to be of greater benefit to him than to the person in the lower salaried income group. That is why it is a measure which is likely to create great labour unrest at the time when we can ill afford such unrest. I believe that it will probably give impetus to a new round of wage increases which will have a rather disastrous effect on our economy.
Of course, I can see that if a Government could get away with a tax that could be used as a wages cut they would like to have such a weapon available for stabilising the economy. I grant they would do that. If at any time it was found that wage increases were out of step with productivity or otherwise, the Government by the simple device of increasing the general purchase tax could automatically impose a cut on wages. But I submit that no democracy in the present age will submit to such a weapon being in the hands of the Government. Consequently, I think the Government were wrong trying to introduce it here,  especially following a period of labour unrest and when we are likely to have a good deal more.
I submit that such a general weapon in the hands of the Government to vary the standard of living and to impose wage cuts is unfair to the unorganised sections of the community because, while a very strong trade union may be able to fight and get back a certain amount of the cuts, the unorganised sections have no redress. Consequently, there can result a type of inflationary finance which really is I think an evil in the world and hits back at unorganised and other groups. I submit that this is wrong in principle. It is also wrong in so far as we have not fully explored the range of the tax structure here.
The recommendations of the Income Taxation Commission show how the position could be met. I will just take a few items. For instance, we must be rather unique, I think, in the democratic world in that we have not got a tax on luxuries. We all enjoy some luxuries but I do not think anybody really objects to having to pay a little extra for those. I will take a few items to show what can really be done. We have the unenviable record of being the most dance-conscious or dance-crazed country in the world. Personally I have been shocked in the last couple of years to see the amount of capital which has been put into bigger and bigger dance halls.
I travel the Cork-Mallow road quite frequently and recently I saw an imposing structure going up about two miles from Mallow. I said: “This will be a fine new factory.” It looked bigger and better as it went up but, one day, when I was passing I saw the name “Majestic”. It was a dancehall. It cost more than a factory would of its size. It cost between £25,000 and £30,000. Another dancehall has gone up in Crosshaven; and I read that, in impoverished Mayo, there are 200. I submit that the unmarried section, the dance-going section, have far too much money at the moment and they could legitimately be required by the State to contribute more to the State. When  the dance tax was removed, I protested in the debate on Committee Stage on the Finance Bill on 18th July, 1962. In his reply, the Minister said, as reported at column 643 of the Official Report:
So far as I know, the British never had a dancehall tax. They certainly have not got one now. It would be the only entertainment tax levied now, if we took off the cinema tax. It certainly would not pay to keep the organisation run by the Revenue Commissioners for this purpose of entertainment tax to look after dances alone.
In other words, it was not worth collecting last year. The tax varied on the tickets. I think there was a minimum of 3d on a 2/- ticket. We are now proposing that this turnover tax will apply to dancehalls and that there will be ½d tax on a 2/- ticket, 1½d on a 5/- ticket, and 3d on a 10/- ticket. May I ask, in all sincerity, if it was not worth collecting last year, how is it worth collecting this year at only a fraction of last year's rate?
I submit that the system proposed here could equally well have been applied last year when the tax was remitted, and that there was no foundation for the suggestion that it was too costly to collect. Most people going to a dance have to travel quite a distance by car. Figure out the cost of that, plus the additional expenditure which is quite freely undertaken by those people, and you will see that the cost of admission is only a small part of the cost of the night's entertainment. Consequently, if the Minister imposed a tax of 50 per cent, we would all agree with him, now that this tax is being imposed. It is almost law. We certainly cannot stop it.
I hope the Minister will use the power of exemption very freely and, above all, that he will at an early stage bring in variations of the tax. It is ridiculous to levy 2½ per cent on dancehalls. It should be at least 25 per cent or 50 per cent. That is one of the places where there is money for the picking. According to my calculation, there are something like half a million people going to dances in the  country. It should not be an outstanding feat to collect £1 or £2 per head per year from them. There is £1 million to be had there for the asking.
All other entertainments, such as games, are free of the turnover tax. I like to attend the various games and I do not think anyone would object to paying a turnover tax on games. I cannot see any reason for objecting. Even in regard to GAA games, it should be quite feasible. The cost of transport figures very largely in games, too, and a turnover tax on the entrance fee would be a minor item. I do not think anyone could grumble about it. I do not think there is any case for exempting games from the scope of the tax but I think it is ridiculous to charge 2½ per cent on an admission fee of 3/-.
The same applies to dinner dances, to which we all like to go occasionally. I do not see why we should not make a contribution to the Government on our night's outing. Those are all sources of taxation that have not been tapped, and should have been tapped before the Government felt they should throw in the sponge and put a tax on the necessaries of life, as they are doing in this Bill.
As I read the Finance Bill, foreign travel is exempt because transport is exempt. At the moment there is no limit on the amount of money a person may take out of the country. So far as I read the Bill, there is no turnover tax on the £100 or £200 spent on a holiday on the continent, or elsewhere. We are going much too fast in this form of spending. We are subjected to far too much high pressure salesmanship by our airlines, and others, trying to induce us to go for a continental holiday while our own country remains unexplored by many of us. There are many parts of the country that have a great deal to offer.
I think the tax on foreign travel should be five per cent, or ten per cent and, if it cuts down on the volume of money spent on foreign travel, especially for mere amusement, so much the better. It might affect business to a slight extent but, after all, those who travel on business  have their expenditure recouped. In that way, there would be a slight additional taxation on business, but it would be infinitesimal and would be justified in an effort to segregate foreign travel for business and foreign travel for pleasure.
While the younger sections have been bitten by the dance bug, the older sections have been bitten by the reception bug. The amount of money squandered on receptions is out of all proportion to the size of the country and the importance of the projects in relation to which the receptions are held. I was glad to see that our President set a very fine headline with the garden party reception for President Kennedy. That garden party was held on a very modest scale. No alcoholic drinks were supplied and the total cost per person must have been very modest. I am not decrying in any way the use of drink. I like a drink as well as anybody else, but not at the expense of the State and certainly not at receptions I have attended where, when you went up for just a glass, those serving had not time to serve a glass and you had to take away a bottle. And the bottle did not contain anything as crude as Irish whiskey or any other Irish product: it had to be the best champagne at a reception in respect of an industry that only yesterday cost the State £1 million.
I do think pressure should be exerted to try to curb this. I do not know whether the Minister for Finance could devise some means of ensuring that, if private enterprises are to squander a great deal of money on receptions, he could attend those functions himself to get his share out of it, even if it is not in the form of tax money. In this respect I submit that while there is still time for us to impose a differential tax structure, we should tax imported wines and spirits. We may have to remove such a structure in a few years if we get into the Common Market, but at least we should try to use the few years we have got to wean our people away from the imported article and get them  to consume their own product. That could be done by a certain tax on Scotch whisky.
This turnover tax affects all drink and the 2½ per cent rate is infinitesimal in this respect. It means only a halfpenny on the pint, and on the glass of whiskey, it means only a penny. At the present time, when there is a good deal of free money around the country and when people are living on a somewhat more lavish scale than in recent years, I suggest that the Minister at this stage could profit a bit more from an extra bit on wines and spirits and leave the necessaries of life free.
We like to take examples from England in many things. What I am about to say probably affects most members of the House and myself, but I do not think we could cavil at a purchase tax on luxuries such as cars and so on. Again, 2½ per cent on luxuries is very small. I would prefer to see a little more on those in the interest of the necessaries.
In respect of the income tax code, I do not think the rate at the present time is by any means unbearable. I went on record in this debate last year as suggesting to the Minister that his action then in decreasing the rate was really unnecessary and that he could have made good use of the money lost in that way by improving the part of the income tax code that affects the most people—the allowances section. If there is a necessity to do anything about the income tax code it is to bring the allowances into line with modern money values. I do not think it could be objected to if the amount of the tax were raised and, at the same time, the allowances increased so that the ordinary family man who earns up to £1,500 a year would not be affected —in fact he would gain by such a change in the structure.
There are many alternatives to the present new form of taxation available to the Government, but perhaps in advocating such alternatives I am in the position of the Income Taxation Commission who proposed an alternative and got both. Perhaps next year the Minister will be quoting my advocacy of those as reasons for supporting the introduction of further changes.  At any rate, that would be preferable to increasing the 2½ per cent rate and much preferable if it had the effect of removing the turnover tax from the necessaries of life.
Of course, the other objection to the proposal is that it is calculated to bring in only between £4 million to £5 million in the current year and that that was all that was necessary to balance the Budget. However, here we are imposing £7 million of unnecessary taxation and to my mind we are imposing it so that it will be ready for next year. It is claimed that the reliefs given will completely remove the effect of the turnover tax on families and lower income groups. It will do so in the case of certain lower income groups but not the largest lower income community we have, the small farmers, who are made to bear every burden and are being driven out of existence.
I submit that the present tax will hit those very badly. Most of them are struggling along—just a husband and wife trying to keep on the small farm long after their family have gone. There is no relief in this for them; they will pay the 2½ per cent on the loaf of bread. I submit that is the section who will be hardest hit here. The argument has been advanced that this is a cheap tax to collect. Really, I do not see that as a good reason for its imposition. After all, an extra 2/- in the £ on income tax would probably cost nothing at all to collect because the machinery is already there. An increase on any existing tax costs very little to collect so that is not a real argument.
The real objection against the present tax is the manner in which it is to be collected because here we have general uncertainty. It differs from purchase or sales taxes everywhere else. Senator Nash gave us a very excellent summary of sales taxes in other countries but there are many essential differences between this tax and sales taxes elsewhere. The sales taxes operated in American and Continental countries would be quite acceptable here. In America, the necessaries of life are exempt practically entirely and as well as that the whole thing is done on a marked-up basis.  That is the vital difference. Your bill is totted up and at the end there is 2 per cent for the retailer and perhaps 3 per cent for the Government. That ensures there is no overcharging by the shopkeeper. In other words, he is not faced with the dilemma of how to get 2½ per cent on a box of matches. More important still it prevents any unfair competition between shopkeepers because in the past three to four years we have had this inrush by chain stores.
We have seen in Cork city some of our finest and oldest shops taken over and converted into chain stores. We see takeover bids and what not. It is putting a lethal weapon into the hands of those people to levy the tax in the vague way in which it is being done. You can be certain that on the 1st November there will be big newspaper advertisements saying: “We pay your tax; get your bread at the old price and butter at the old price,” and the housewives all over the country will fall for this. They will rush to the chain stores, leaving the neighbouring store which cannot afford to pay a 2½ per cent tax. The neighbouring shopkeeper is already operating on a marginal five or six per cent. He cannot afford to give one-half of that up in taxation.
Of course, the chain stores are not acting in good faith by saying they are not charging the tax. They only want to get the store in the neighbourhood out of business. They know they can do that in six months or a year by this policy and after that they will put up their prices. They may choose one or two chain stores for what is called a “lost leader” in American marketing terms. That is something that draws the people in and once they are in, they are subject to the incentive to buy. They see the articles in the shops and they buy them.
A weapon is being put into the hands of the chain stores that should not be put into their hands and I appeal to the Minister to ensure that that is not done. The only way we can prevent that is by a general Government law. The tax will have to figure just as an addition at the end of the bill and it will have to be  shown clearly and not left to the shopkeeper to devise a scheme for himself as to how it may be put into operation. Otherwise, we are really completing the elimination of our shopkeepers.
In a country such as we have here, which has had to depend so much on the State and on State enterprise, it is vital to keep as many independent elements as we can in our community, the small farmers in general and, above all, the family shopkeeper. He is the basis of the sturdiness and independence that we hope will always mark our nation.
I for one have a feeling of revulsion every time I pass these new distribution stores. I regard them as total waste of capital at a time when we need capital so badly. I cannot see what they are doing. We will have to pay for the capital put into them. Many of the chain stores and much of the huge modernisations carried out are not necessary at present. There are many more pressing needs. I would much prefer to see the money go into factories any day than into the huge distribution stores that are going up everywhere.
I wonder why advertising is exempt from the scope of the present turnover tax. Again, it seems to me that advertising is a pressure in modern life. I think we would be better off with less of it. Certainly anyone looking at the television screens cannot but feel that if we could eliminate or cut it down we would be all the better for it.
There is the question of wholesale and retail. I submit that with so many exemptions—and we hope the Minister and the Government will be persuaded to grant others, particularly in regard to bread, butter and so on— it would have been far better if the tax had been taken at the wholesale level. There would be fewer units to deal with and it would be a simpler process in general to acquire the tax rather than involve the small shopkeepers in the extra book-keeping and, perhaps, extra machinery involved. The case was made by the Minister that it would cost the community more  to do it at the wholesale level; that the wholesaler would add 2½ per cent and then the percentages to the others would be calculated at cost plus 2½ per cent so that the final product would cost about 4 per cent more. I submit there is no basis for that suggestion. If the tax were kept separate and if the article on sale showed its cost, as it is done in America, the tax would be passed on from the wholesaler, without increase. By that means it would sell at 2½ per cent at the consumer end. I believe it would be far better to levy the tax at the wholesaler level.
There is the question of corporation profits tax. The retrospective angle of this is undoubtedly discouraging. I appeal to the Minister to accept the amendment put down to remove this very objectionable feature. I have heard many stories about the misuse of corporations for the purpose of tax evasion. I expect the Minister is also aware of those and perhaps he may in the future try to tighten up the legislation so as to distinguish between genuine corporations and corporations which are there solely for the purpose of tax dodging.
There is the question of the disclosure of bank interest. Again, that seems to hit at a rather fundamental principle—the undermining of the confidence between the client and the bank. Its worst feature, as far as I can understand it, is that it is likely to encourage people to invest abroad. I believe that if people just simply send money across the Border the interest would be sent back free of tax. The tax is not deducted at source, and nobody here would be aware that such investments were made. If that is the case—and I am sure it is—it is a very serious step for us to cause such an overflow which we cannot control.
We may say people who do that are not patriotic, and so on, but still, facing the facts of life, if it is likely to happen on any grand scale, I submit that the little that will be got by disclosure of bank interest will not compensate for the loss. Most people, I am sure, disclose what their bank interest is and pay tax on that. Therefore, you are  really only concerned with getting some tax dodgers. You can be certain that if they are tax dodgers and do not disclose the fact that they have got so much interest from the bank, they are certainly going to take their money elsewhere if they can get a higher rate of interest.
Next year, or the next couple of years, the Minister might undertake a review of the whole basis of land taxation. I do not know whether this can be done in conjunction with the Programme for Economic Development the Government are about to bring in. Properly handled, taxation could be a powerful instrument to encourage good land practices. That would have to be the primary aim. The secondary aim would be that of providing revenue and I hope that that is always regarded as being a very much secondary one. Of course, it could undoubtedly be used as a type of lever by the farming community, those who are farming large acres. We would have no dislike for hitting the farmers, the dog and stick type of farmers who have large acres, fairly heavily by taxation and using the money to help the other sectors of the farming community, the hard-working farmers who are being hit just as much as those who do not work well. I submit that that is a wrong policy in principle and wrong in the national interest. There is no incentive whatsoever in the tax structure to induce good farming practice.
As we are finding it so difficult to get major industries to survive, I submit that we must return to and recognise in the land our main hope of development in the future. An intelligently applied rate of taxation would be the most powerful implement which could be brought to bear in encouraging the intensive use of land and good farming practices.
Finally, I wish to pay tribute to RGDATA. I do it solely from the point of view that I welcome an organised group who are prepared to make their voices heard in the country. The only way a democracy can function is by not having organised groups intimidated by any charges, either political  or otherwise. Let them make their case fairly. I was rather shocked at the charges levelled at them by politicians and others. I was especially conscious of this because I have been actively associated with another vigorous campaign against a former inter-Party Government about tillage. We had exerted the maximum pressure we could through assembling, organising and getting as much newspaper publicity as we could. We were greatly assisted by both the Irish Press and the Sunday Press. That did not mean that we were in any way political and we were not intimidated by the Taoiseach of the day. We were fighting against a Department of Agriculture claim. In the same way, I can see the RGDATA pressure and I hope that in the future it will be realised that we have got to do that and will not be intimidated in any way.
Mr. Healy: The items contained in the Finance Bill have been very fully discussed. I am sure there is nothing I have to add which is sufficiently worthwhile to change the opinion of anybody. However, there are a few observations I should like to make which are of a general nature. Listening to some of the speeches in both Houses, one would be inclined to believe that this is the first time that a Budget proposal was ever strenuously opposed. Of course, the contrary is true because there has never been an occasion on which necessary proposals were accepted by the Opposition without very strenuous opposition. This is, to my mind, no exception whatsoever. The measures used to bring pressure to bear to have the Budget proposals changed are no different from those all down through the years and I presume that will also be the case in future years.
The Minister finds it necessary to raise moneys to meet the various demands of public representatives and various local authorities. When he asks for increased taxation to meet those demands it is then that opposition is found to his suggestions. That, of course, is the main function of an Opposition but it is by way of seeking prestige they oppose the increased  taxation. You find criticism of increased Government expenditure and of the millions attributed to that, but when you break it down you find that it is millions to help agriculture, industry, rural electrification, piped water supplies and increased social services for the very people whom every section of the House are anxious to help. In spite of that the Government are criticised for the increased expenditure.
There are even comparisons made with 1956. Of course, the Budget then was not as good and the amount of money raised was not of the same magnitude. Of course, every person must realise that it was not possible to raise in 1956, when the country was practically bankrupt, that which was raised in 1963. It is when you have increased prosperity in the country that you can increase taxation and give money to the sections of the community which are mostly in need of it.
You hear criticism about the vote of the Independent members and as to their mandate. Surely the Independents who supported the Government have at least the same mandate as the members of the Opposition who opposed the Budget measures. They may not have any greater mandate but at least they have the same right and we trust that nobody doubts that a majority of one is a majority. I am very sorry—I must say this in passing — that the matter of the majority of seven was raised because I am old enough to have a great regard for the men who fought on both sides in the Civil War and I pay a tribute to the sincerity of their convictions. They were prepared to pay for those convictions and I am not at all——
Mr. Healy: I am old enough to know that many sacrifices were made. A majority of seven has nothing to do directly, or indirectly, with a Civil War. Therefore, I cannot see why  it was brought in on a measure such as this.
Mr. Healy: There has been a great deal of talk about the right of the Independents to vote one way or the other. It seems that it is quite legitimate to defeat the Government by the vote of one Independent but, if the Government succeed by the vote of one Independent, that is steamrolling. I do not follow that line of argument, and I am quite sure the people outside do not follow it either.
Mr. Healy: I say that because I have been listening to members of the Opposition expressing fears that the turnover tax will not only be retained at two and a half per cent but that it is the intention in future years to increase it. If they were convinced they could win the next general election and do away with the turnover tax, their fears would be groundless. They would have no need to worry about the turnover tax, but the people know they are playing politics. It is a game of politics, making a fuss about something they have no intention of rectifying if they ever get into power, which is most unlikely.
Mr. Healy: This is the democratic procedure. Opposition speakers have expressed repugnance against some people becoming tax-gatherers. Those who spoke on behalf of the legal profession seem to think they are exempt but, since the introduction of PAYE, anyone who is an employer has become a collector of tax for Revenue.
I do not envy the Minister for Finance who has to bring a Budget before the House annually. He has demands in the 52 weeks of the year, and when he tries to meet the bill and find the money, he is condemned by those who feel they may secure the votes of unthinking people. The Minister, as Minister for Finance, Minister for Social Welfare, or Minister for Health, has always leaned over backwards to help the weaker sections of the community. History will show that he is a very enlightened Minister. He should be congratulated on the measures he is now proposing to raise money which will further improve the position of the country and the buoyancy of the economy.
Mr. Quigley: It is generally agreed  that since the foundation of this State over 40 years ago, there never was such a row as the row that was kicked up about this Finance Bill. It is no wonder that there was such a row, and such a long debate in the Dáil, and that the Bill was so strongly condemned all over the country. The only opportunity the electorate had of showing their opposition to this Bill, and to the turnover tax, was the recent by-election in Dublin North-East when the Government were beaten by a two-to-one majority. Still, a minority Government insist on putting this tax clause into operation which increases the cost of living and which puts every shopkeeper and trader in the position of a tax collector.
The opposition to this Bill and to the Government's policy has shown itself to be no ordinary protest against this new form of taxation. We are told a turnover tax works successfully in well-developed continental countries but the people of this country are not prepared, I am sure, for an increase on the cost of living which will affect the very poor as well as the rich. The small farmer is in a desperate position trying to make a living on 15 or 20 acres of land and, as we can all see, it is impossible for him to save his hay—not to speak about the harvest—because of bad weather conditions. If there is a repetition of last year's weather or a continuation of the present weather we must all agree that an increase in the cost of living would not be very acceptable to him.
The resentment against this turnover tax is very bitter, as I hear it all over the country. The people cannot understand why an Irish Government ever thought of introducing such a tax. RGDATA made representations and made a protest on behalf of their members against this turnover tax, and they were threatened with “bloody noses” and styled a political organisation. The NFA and the trade unions are supposed to be under the thumb of the Fine Gael Party. I think we must all agree that those are absurd statements. The Irish Banking Review had some gloomy things to say about this turnover tax. I quote now from their  quarterly issue of June, 1963:
Obviously this turnover tax will be exceedingly unpopular with traders on whom it is imposed. It will turn them into tax collectors and will involve them in a good deal of book-keeping and filling up of forms. Moreover, they will be faced with the choice of paying the tax out of their profits, the margins of which are already narrow in many cases, or of passing it on to their customers by raising prices. The raising of prices will, however, give rise to many difficult problems.
It will be impossible to add such a small amount of tax to small sales and, therefore, there will be an element of discrimination regarding what prices will be raised. As tax cannot be added to very cheap articles, a higher rate of tax will have to be imposed on more expensive articles. There may be collective action by trade associations regarding how prices should be raised. Different traders may decide to raise the price of different articles and a new type of price competition, damaging to profits, may emerge. There is no guarantee that prices will not be raised by more than the 2½ per cent collected on the retailer's turnover. What will probably happen in many cases will be that the sum in excess of the tax levied on the retailer will be passed on to customers and that the public will pay more taxation than the Government receive in revenue. It is not irrelevant to observe that the tax will be levied on a turnover already swollen by the resulting increases in prices as well as by existing indirect taxes. It is, therefore, to some extent “a tax upon a tax”.
I should like now to refer to some comments made yesterday by members on the other side. They asked us to forget the past and to look to the future. That would suit Fianna Fáil all right, but thank goodness, we on this side of the House can look back on a proud record of achievement, in spite of the bitter opposition of Fianna Fáil. We succeeded in laying the  foundations of this State; we initiated the Shannon Scheme as part of the commencement of Ireland's industrial drive; we built the first beet factory which was then looked upon by Fianna Fáil as a white elephant. Today we can see the benefits of this initiative. Fianna Fáil would like to forget 1933 and 1934 when they put the farmers of this country into a state of bankruptcy, when the slaughter of calves was their only solution.
Mr. Quigley: Fianna Fáil would also like to forget that on several occasions when they enjoyed a larger majority than they now do, when things were in their favour, they sprang general elections on the country. Now we have it from the Taoiseach that the Government will run their full course. I wonder will they. Whenever the election comes the people will not forget the Budget of 1963 which brought into operation a turnover tax, which gave the Government power to inquire into the people's banking accounts which up to now were looked upon as being as secret as the confessional. I feel sure as well that the larger companies and industries will not forget the retrospective corporation profits tax.
Mr. Flanagan: I should like to make a few general remarks on the Bill. In the first place, it has always been my policy to give credit where credit is due. I can certainly give Fine Gael credit for having made the very most of their opportunities in criticising the Bill's proposals. I am also very much aware of the fact that they have not yet finished: I think Senator Dooge is holding his fire over there. During the debate this year, Senator L'Estrange repeated, almost verbatim, his speech of last year. I sympathise with the person who goes to a lot of trouble in delivering himself of an address who might have to listen to a play-back of  a recording of a speech which has changed so very little in substance and, I would say, has not changed at all in motive.
Mr. Flanagan: The motive of his contribution is purely and entirely political. We are supposed to be the Upper House; we are supposed to have possibly, a certain amount of responsibility in dealing with the affairs of government of this country. I have not contributed a lot to debates in this House because I do not like wasting time unless I have something to contribute which I think is worth while. However, on previous occasions, I have asked that in the serious matter of dealing with the affairs of government we might submerge our political bias and face the plain facts. That appeal particularly applies to matters relating to the nation's finance. The finances of the country, the provision of adequate money to meet the requirements of the State, are purely matters for the Government. The Government in power will exercise their authority in these matters and, of necessity, will have to do things that are unpopular.
When a Government take upon themselves the burden of doing things that are unpopular, they are prejudicing their own possible chances of election in the future. The immediate effect is that they prejudice their chances in the near future, but in so far as they act in the interests of all of the people of the country, in the long run, they will be proved to have been right. I do not for a minute say that all the loyalty, all the patriotism, all the public spiritedness, is the monopoly of one side or the other. It is for that reason that I appeal again this time for a reasonable approach to a very important matter of this kind. One would imagine from Senator Fitzpatrick that God Himself provided the opportunity of Dublin North-East for the purpose of testing the feelings of the country on this important question. God rest the soul of the late TD for North Mayo: we are all sorry the occasion arose and we pray that God may rest his soul.
Mr. Flanagan: Did I say North Mayo? Of course we killed people up there before. At any rate, the occasion of the election in Dublin North-East was a time at which the feelings of the people were aroused by forces which were brought to bear— forces fair and unfair, just and unjust, national and highly opposed to the interests of this State—for the purpose of advancing political thought. There was no opportunity, fair or unfair—mostly unfair—which was not availed of on that occasion, and while I do not dispute the right of any Party to take advantage of every situation that crops up for the purpose of advancing themselves, I should like to think that in taking advantage of a situation we might always be guided by the interests of the people of the country as a whole and of the State rather than be always guided by the interests of the Party. I do not object of course, to the right of any organised body making a protest in this country, nor do I object to the RGDATA marching, though I am very conscious of the fact that they did not march during the emergency years when they were dealing so extravagantly in the black market.
Mr. Flanagan: I did not say they were all members of the black market but I attribute one of the difficulties we are facing now to the fact that possibly when the accounts in the banks are investigated under this legislation it will be found these people did not give full credit to the State, that they did not pay their due share of the amount they made on 30/- a lb. for tea, 20/- a lb. for dried fruit or on the other items they charged so highly for at the time. If those things come to light, I will be one of the people delighted that they will at last be brought to pay their due proportion of the country's taxation.
Mr. Flanagan: Since I came into this House two years ago, I have never interrupted any person and I hope I shall never open my mouth to interrupt any person. I feel, when a person gets up to address the House, he should get at least a proper hearing, whether the matter he is discussing just falls into the lap of one person or another.
Mr. Flanagan: Senator Fitzpatrick says it is difficult to get a return of income from the traders. He mentioned during his speech that severe pressure has to be brought to bear on the traders before they make returns. Does he agree that, even without all the control, people should make their returns honestly and if they did the necessity for this turnover tax would never have arisen? I am quite sure that Senator Fitzpatrick and all the members of this House know that if every person made a proper and full return of earnings and of income tax— this was acceptable to my colleague Senator Quinlan—there would be no necessity for any turnover tax whatsoever. Instead of being too critical of the taxes that are imposed, let us try to bring about a reasonable and honest approach by the people in an effort to ensure that they will pay what they are entitled to pay and not inflict on the poorer classes the responsibility of paying what they should not pay. Senator Fitzpatrick says that some other form of tax should be thought out. In other words, his idea is not that we should not have the extra tax but that the extra tax should be thought out in some other form.
In this debate also, very little credit has been given to the fact that we are gradually to reduce tariffs. Reducing tariffs will have two major effects. In the first place, it will reduce the amount of revenue to the State, and, in the second place, it will reduce the cost of living of the people who have to buy. Those two things must be met by the imposition of some form of additional taxation and the imposition of the purchase tax, or turnover tax, is the method adopted by the Government. That is a most important aspect of the matter and it has been entirely ignored in the debate.
A great to-do was made about investigating the accounts in the banks. If people are perfectly honest and fair about the payment of their just taxes, they have nothing whatsoever to fear. If people have been evading their taxes and the amounts in the banks are locked up in tin boxes, as Senator Fitzpatrick mentioned, I think it is only quite reasonable and proper that those amounts should come to be known.
With regard to the protests made, particularly by the traders, I think it is quite wrong to suggest, as has been suggested in this House, that the majority of traders are operating on a five per cent margin of profit. I understand the Seanad sits on Wednesday and Thursday, at least during the next three weeks. I undertake to bring the President, the Secretary, or any member of RGDATA, free in my car to Dublin and leave him back again in Castlebar in the next three weeks. I shall take him around Castlebar and purchase six packaged items which have simply to be paid for and handed over the counter. In Dublin, I can buy any of these six packaged items at 20 or 25 per cent less than in Castlebar. I do not at all agree that the margin of profit is 20 or 25 per cent less than in Castlebar.
Mr. Flanagan: I shall take him to any place into which a person is entitled to go and purchase, and a place where they pay the highest rents paid in Grafton Street. I presume the Labour Party will ensure that those people are paying proper rates of wages to their employees. I do not think there is any necessity at all to raise that matter.
I do not agree with Senator Quinlan that the best method of approaching this very serious deficit which now arises is by the imposition of 2/- in the £ extra on income tax. I cannot see how a professional man, representing the professional and salaried people, can put forward that proposal, unless, of course, everybody was paying his due proportion of income tax and then the impact would not be 2/-on the salaried classes, but rather 2/-less, and 2/- in the £ more for the people who are evading it. There should be no increase whatsoever in income tax unless and until we are satisfied that it will be universally applied and that those people who are obliged to pay will pay.
Senator Quigley said there was never so much opposition to any measure. I do not think there was ever so much organised opposition. I have had close contact with working people in what has been described by somebody as the impoverished county of Mayo for 36 years. I should like to remind Senator L'Estrange, not in any hostile way, that I remember the time when in Mayo the rate of wages for a labourer was 9/- per week. For a man with a horse and cart it was 9/- per week. I remember in 1924 when the rate of wages was 4/2 a day or 25/- a week. That was the rate of wages when the first grant was given from the Road Fund. There was no union; there was never any necessity for a trade union in my county for the reason that the elected representatives of the people were always prepared to pay their employees the best possible rate of wages they could afford. During all the years, and at the present time, the rate of wages in my county—the impoverished county of Mayo—ranks with the highest in the Midland counties. In addition to  that and without any pressure, at the present time our workers are on a five-day week.
They enjoy a 45 hour week as against a 54 hour week when we were paying them 24/- or 25/- a week. The ordinary country person, the ordinary elector of this country, is a fair, reasonable and honest man. When I tell you that the ordinary elector in my county has no organised objection to this tax, it is again because I class him as a reasonable and honest man, prepared to shoulder his obligations. I only wish we could all take a lesson from him.
Mr. McDonald: It is rather difficult to be original on this Bill having regard to all that has been said. The fact still remains that this is a Bill in which there are provisions which are completely new in this country, provisions which will change the pattern of trading as practised throughout the country and provisions that will tax the rich and poor alike on the same basis. This Finance Bill is definitely unique because it is the first time that any Government since the State was founded saw fit to tax the essentials of life. It is the first time that anyone decided to increase the price of foodstuffs by the imposition of a new tax. It is the first time that any Government decided to increase the price of bread, flour, meat, milk, butter by the imposition of a new turnover tax. I believe this will be a definite rebuff to the people who like to say that there is no difference between the policy of the Government and the policy operated by the inter-Party Government some years ago. The inter-Party Government maintained the food subsidies to the tune of £9 million in order to keep the essentials of life within the reach of even the poor sections of our people.
We were told that the purpose of this new sales tax is to provide increases for agriculture and social welfare benefits which will cost the Exchequer over £3 million in the current financial year. I think this new system of tax is designed to bring in between £10 million and £11 million in a year. One of the speakers last night—I think it was Senator Nash—said that those people who opposed the new turnover  tax would be better employed if they had been ironing out the difficulties between the manufacturers, the wholesalers, the retailers and the Department of Finance in an effort to get the new turnover tax working smoothly. When I heard a Minister recommending that the shopkeeper should take a match out of every box of matches and so save the tax in that way I hope he was not advocating that the 10,000 members of RGDATA who marched in Dublin some weeks ago should have resort to that sort of conniving. Unfortunately, there are people who give lightweight measure. The Minister was wrong in advocating that anybody should take a match out of a box of matches just as it is equally wrong to take a pinch from a quarter of a pound of tea or a pinch from a pound of sugar before selling it. It is wrong to advocate such practices.
I was disappointed to see from this Bill that no provisions were made to meet the new challenge to agriculture that is becoming more manifest every day and that is the tendency for many countries to export foodstuffs to underdeveloped lands and the world at large. That is a new movement in which we, as an agricultural exporting country, could participate from the very start as it is most important that no community in the world should be left hungry while food producing countries have surplus produce, practically year after year. At a later stage in the Bill we will have an opportunity of considering the individual taxes the Minister has suggested for the first time and so I shall postpone the remainder of my remarks until the Committee Stage.
Pádraig Ó Siochfhradha: Is dóigh liom go bhfuil ár ndóithin cloiste againn i dtaobh an Bhille seo. Táimíd tuirseach den olagón atá ar siúl le roint seachtain ar fud na tíre. Scéal simplí is ea an rud seo ar fad agus ba cheart é fhágaint mar sin agus gan cruth bréagach a chur air. Tá pictiúr bréagach daite den cháin nua atá beartaithe ag an Rialtas. Is ceist shimplí í fé mar adúras. Tá seirbhísí le soláthar, seirbhísí le túirt don phobal uile, bocht agus saibhir. Cé íocfaidh as  na seirbhísí sin ach an pobal amháin? Ba cheart costas na seirbhísí sin a leathnú ar an bpobal go cothrom agus gan a bheith ag cur chostas na seirbhísí ar fad ar cuid bheag dena daoine agus ligint don chuid eile tairbhe, buadh agus maitheas dóibh féin a bhaint asta.
Is dóigh liom gur cáin chothrom í seo mar tá sí gearrtha ar gach duine. Táthar ag caint mar gheall ar ocras a bheith ar dhaoine. Níl ocras ar éinne in Éirinn agus ní bheidh ocras ar éinne in Éirinn ach an oiread. Níl ansan ach samhlaíocht mar is dóigh liomsa go bhfuil an scéal fónta go leór in Éirinn, chun a dhóithin le n-ithe a sholáthar do gach duine atá ann, rud atáimíd a dhéanamh agus a leanfaimid a dhéanamh. Ní thuigim conas a mholfaimid agus conas a mholann cuid againn na seirbhísí seo atá le soláthar, na seirbhísí nua atá le cur ar fáil, agus ansan fógra do ainm an diail le costas na rudaí sin agus an costas a chur uatha féin.
Ní dóigh liom gur rud macánta é agus ní dóigh liom gur rud cóir a dhéanamh é. Má tá a leithéid le soláthar agus seirbhísí le fáil ag an bpobal caithfidh an pobal díol asta agus sin é an bun atá leis an gcáin seo. Is rófhada atá cuid den phobal ag díol as aon tseirbhís a bhíonn sa tír seo. Sin é mo thuairim agus is dóigh liom gur mithid dúinn eirí as ag olagón seo atá ar siúil.
Professor Dooge: The desire has been expressed that the Second Stage of this Bill should be completed before lunch today. Accordingly, in winding up for this side of the House, I do not intend to go into the subject of the Finance Bill to the extent which, perhaps, I might under other circumstances. However, there are some points which I think must be brought forward at this particular stage of the Bill.
I should like, first, to answer what has been said by Senator Ó Siochfhradha. He said we have nothing here but a simple problem to which the Government have given a simple answer. In stating that problem, I feel he has made it altogether too simple. It is an over-simplification to say there is nothing in dispute here except the question as to where the  services are to be paid for and whether the taxation must be borne by the community at large.
That is not the point at issue. The point at issue is the manner in which the Government seek in this Finance Bill to impose the burden, and the way in which the Government have distributed the burden. The Senator suggests there is a campaign which argues that people will die of malnutrition because of what is being done in putting this taxation into effect. That has never been suggested in the course of the debate in this House or the other House. There is a great difference between an exaggerated statement such as the Senator has put in our mouths — that the people will die of malnutrition—and the statement we make that hardship will result. It is not necessary to bring a person to death's door before hardship is imposed, hardship of which he could be relieved, and which could be borne by some other section of the community.
The Seanad can do little in regard to this Bill. Our position is that we stand in time between the verdict of the Dáil and the verdict of the people on the new proposals. The constitutional powers of the Seanad and the constitution of the Seanad make it impossible for us to take any effective action in regard to the Bill. Nevertheless, it is our privilege and duty to comment on it, and that is what we are doing.
Senator Healy suggested there is nothing exceptional in the resistance to the Finance Bill this year. He suggested we have a sort of annual phenomenon in which there is objection on the part of the Opposition to the taxation proposals of the Government. Let us agree there is always resistance on the part of the Opposition to new taxation proposals on the part of the Government. That, of course, is part of the Opposition's job, but I think Senator Healy is wrong when he says there is no difference in degree between the opposition this year and the opposition there was in 1962 and 1961. There have been other occasions when there was  violent opposition in the Houses of the Oireachtas to taxation proposals. The violence of the opposition is not unique, but neither is it perennial.
There was violent opposition to the Supplementary Budget of 1947 and we are now opposing a Budget which can be classed with that Supplementary Budget. In that Budget, the Opposition said the taxes were of such a nature that they pledged themselves to remove them, and that pledge was redeemed in February, 1948. The position today is very like the position in 1947. There was also very strong opposition to the way in which the Government went about framing the Budget in 1951. We class the 1963 Budget with those two Budgets. When we get the verdict of the people on the 1963 Budget, it will be the same as their verdict in 1947 and again, three years later, on the 1951 Budget.
Throughout the debate, certain assertions have been made by Government speakers. Those assertions have been made with so little support that they are virtually assumptions. They are assumptions which we do not hold and which we rebut. First, there is an assumption that all the money asked for in this Budget is needed, that it must be found somewhere. That is an assumption which the Government are required to prove, but it has not been proved.
Secondly, an assumption has been made throughout the debate in the Dáil and Seanad that no one is entitled to comment on the Government's proposals unless he produces an alternative Budget or an alternative Finance Bill. We reject that assumption. We believe that in discussions on Finance Bills, no matter who was in power, it has never been the practice to offer alternative proposals.
The third assumption made by Government speakers is that the opposition to the turnover tax is almost entirely political in nature. That assumption is similarly wrong. We heard yesterday a good contribution by Senator Nash. He attempted to show that the Government were justified in looking for this money. He attempted to produce a criterion by which we could judge whether or not the Government were  justified in asking for the particular amount rather than a mere blind assertion that the money is required because, if it were not got, progress would not be possible. Senator Nash put forward the criterion that the total ratio of taxation, central and local, to national income has not increased.
Senator Nash produced that argument. I wish to reply to it. The Budget of 1951 was a good Budget by that criterion. The Budget which reduced taxation by removing £9 million from the food subsidies was a good Budget on that criterion. It reduced taxation, but it did not affect the national income directly because all that was involved was a mere transfer. We object to this Budget because we believe there are also criteria in regard to the welfare of certain classes of the community which must be borne in mind.
Apart from that point, what do the figures Senator Nash gave us mean? He told us the ratio of total taxation to national income did not increase and, therefore, everything was all right. But where do his figures end? His figures end in 1962, and our objection to this Finance Bill is not that the ratio of taxation to national income will probably be left at the 1962 level. That was the criterion chosen by Senator Nash, speaking for the Bill. Let us apply that criterion to the years that will matter, because the years that will matter in judging this Budget are part of 1963 and, more particularly, 1964. It is not enough to say the Government have a target of four per cent increase in the national income and that, accordingly, the Government can race away and impose taxation at a rate of four per cent increase per annum.
Let us ask ourselves what is the history of the growth of national income during the past few years. The history is this: the rate of increase in the national income has been declining over the past three years. The latest figure we have is an increase of 2½ per cent. The Government may well say their target for next year is four per cent. They may well have that as an aspiration, but that is very different  from having it as an actual turnout when the statistics for 1963-64 eventually come home to roost. Even applying Senator Nash's criterion to next year, it means that, if we take a four per cent target, there is no indication it can be reached, though every one of us must sincerely hope it will, whether due to internal or external factors.
If we take this 4 per cent, then the Minister, in a central tax Bill of £180 million could, without disturbing Senator Nash's criterion, tax an extra £7 million a year. In regard to local rates, they should not rise by more than 4 per cent per year. If we take a rate of 40s. in the £, it should not rise by more than 1s. 6d. in a single year. But let us take the local taxation first. Does anybody believe that, with the economy running as it is at the moment, and with the added impost on the cost of food and other items which will have to be borne by local authorities, even if the Government are successful in freezing wages, in those circumstances, the increase in local rates could be held to 1s. 6d. in the single year? That is based on the 4 per cent, which is a hope and not an achievement.
If we look at the 2½ per cent, which was last year's achievement, local authority increases would have to be restricted to 1s. in the £ on a 40s. rate, but that again is something that is not certain. On a 2½ per cent basis, the Minister would not be entitled, on Senator Nash's criterion, to raise taxation by more than 4½ per cent in a single year.
The question has been put as to whether all this money is needed. The Party to which I belong have been pilloried as being anti-progressive because they say all the money is not needed. The position is that we do not believe it is all needed, but we cannot judge individual items, we cannot bring forward specific arguments, because the Government constantly refuse to give us the information. Of the various capital projects brought forward by the Government as an excuse for the turnover tax, there is only one which I have been in a position to examine, and only because I  have particular specialist knowledge. I refer to the proposal to erect a nitrogenous fertiliser factory at Arklow.
I spoke in this House for over an hour when that project was before us and earned the reputation of being long-winded. The position is, according to my investigation of that project —and my conclusions have since been commented on favourably by people with a knowledge of economics and industrial chemistry—that by siting that factory where they did, by adopting the process they did, by carrying it out in the way they did compared with an alternative location, the Government involved themselves in £500,000 extra on capital and £250,000 extra on running costs.
In the one case on which I was in a position to get at the facts through technical literature, in which the Government declare they are investing for progress, the basic idea was good but the execution in detail was bad. If this is representative of the remainder of Government investment, if this is the pattern to be followed, then the position is, I fear, that in this turnover tax we are paying for the Government's theory of investment. If the Government are not using correct criteria, if their decisions are not the best possible, if it means similar losses to that £500,000 and £250,000 at Arklow, it looks as if we will have to pay for them. Is it for this that the turnover tax must be applied; is it for this that the people of the country must accept higher meat, milk and bread prices? Is it because the Government believe in investment for investment's sake?
I do not want to take up the time of the House in giving details of our capital investments. The position is, of course, that the onus is not on us to do so. I want to repeat here that only the Minister has the information, only he has the staff to advise him, only he has the power to control expenditure, the power to produce a Budget and a Finance Bill. I do not intend to refer in detail to the turnover tax at this stage: I have put a motion down opposing the Part of the Bill which  proposes to impose it and shall deal fully with it on Committee Stage.
There is one comment, however, I should like to make before concluding. It is something that has passed without comment throughout the debate. In regard to income tax, in Part I of the Bill, the position is one of no change. It has been said there has been a certain feeling of relief at this—that the position of no change is something on which the Minister is to be congratulated. I do not agree. If we go back to the report of the Commission set up to inquire into the income tax code, we find that some of the strongest recommendations of that Commission have been discarded, that the Minister has not done something he might have done. We look at Part I of the Bill in vain for any attempt to deal with the problem of expenses of Schedule E taxpayers; we look in vain for any remission in regard to owner-occupiers under Schedule A. Surely now, when the Minister has transferred income from rents from Schedule A to Schedule D, Schedule A can go, as it has done in England?
There is much more that could be said on this but I do not want in the circumstances of this debate to delay the House. However, I must say that the matter of Schedule A tax on owner-occupiers, and the matter of medical expenses, are items in respect of which the Minister can be charged with sins of omission, matters which should be remedied by him or somebody else before long. It has been said this Bill is an integral part of the Government's policy. I believe the Government attitude to these matters is an integral part of their attitude in general. They seem to take the attitude on this Bill, as indeed they do on the matter of expenditure in general, that they are the Government and that they know best.
Against this paternal attitude of the Government, nothing is permitted to live. It is where the Government can chiefly be faulted. It is the same paternal attitude we had in the Victorian days, at the time when Mr. Barrett of Wimpole Street found his children turning against him and could not understand why they were so ungrateful.  It is as part of this paternal attitude that the Minister and his colleagues tell the people: “Papa knows best what to do”. I think the Minister and his colleagues will be very much surprised when the ungrateful children, the electorate, tell them at the next general election that they do not want any more of this attitude.
Minister for Finance (Dr. Ryan): To commence with, perhaps I should say a few words on the last speech because some general questions arise from it. Senator Ó Siochfhradha had earlier put the proposition as to whether certain services should be paid for or not. Senator Dooge said that it was not so simple. It is the only question really before me because, as I tried to explain to this House and the Dáil, a certain amount of money is required and I have put certain propositions as to how that money is to be got. Therefore, the simple question is whether you will give me the money or not to carry on the existing services. If the Opposition—I am not saying they should—had put down a reasonable recommendation, saying a better way to get this money is so and so, then we could argue on the merits of one taxation against another. As that was not done, we have only to argue the case whether we should continue the services we have or not. If we do continue them, then the money must be got.
Senator Dooge said we had made no case that this amount of money was required. In the Budget I gave what was in the Estimates and decided the amount that was necessary to be expended during the year. Then I gave the revenue that might be expected from the existing taxation and gave then what I expected to get from extra taxation and it balanced out. Nobody in the Dáil or Seanad tried to find fault with any of these figures. Therefore, I must assume that, as far as the Budget was concerned, my balance was acceptable as fair and reasonable and that there was no question that I had exaggerated the figures in any way.
I think I can say to members of the  Seanad that the Minister for Finance is not in a position to exaggerate figures because he is finding it hard to make ends meet. That is the big difficulty as a rule. Perhaps I should not say that what Senator Dooge said is not true. He was correct in what he said about the national income but I think he gave a rather wrong impression. The national income has been very good for the last four or five years— much better than it was for many years before that. It has been very good since the economic programme was brought in five years ago. From my advice, the advice of economists and on any other information we can get, it is expected that the national income will be better in 1963.
In our programme for the next five years we are aiming at a 4 per cent increase so as to fulfil the target of a 50 per cent increase over the ten years. I think it is only reasonable that we should aim on the optimistic line. We were not optimistic enough in our last programme, but we did much better than we anticipated. If we are only going to aim at a little more than the past five years, it is not unreasonable that we should have that aim. In order to achieve that aim, one thing is absolutely necessary—as well, of course, as all the attributes of good organisation, good productivity, and so on—and that is we must continue our expenditure on the incentives to agriculture and industry. Any suggestions made either here or in the other House I think, were rather critical of the amount of money we gave as incentives to industry and agriculture. If we cut them, there is no doubt we will seriously interfere with the aim we have in mind over the next five years.
I should say that the second last point Senator Dooge made is that we may have spent money foolishly. Perhaps we did. I shall say this publicly, as I said to the Industrial Credit Corporation when I met them under the circumstances of the economic programme: “You are not to consider yourselves as an ordinary bank which will insist on good security before you give a loan, because if you do that there is no necessity for you.” I said: “You will have to take a chance. If you come back to me in two years' time and say you lost money there is nothing to be done about it.” How can it be otherwise? After all, if we are trying to encourage industry in this country by giving incentives and giving loans we are sure to make mistakes. Otherwise, we might as well not be there at all because the banks would do the business. If we were absolutely sure the banks could do it, we would not have to step in. I am not going to apologise if the Government have made mistakes in their encouragement of industry. If we made too many mistakes or were absolutely foolish, that has not been proved so far.
Dr. Ryan: I know—even new projects, of course; we have to take a risk on those, too. The last point made by Senator Dooge was that we should have been more generous, as it were, in abolishing Schedule A and in giving more generous allowances to the Schedule E taxpayers. We just could not afford it. If we did that, we would have to make the turnover tax 3 or 3½ per cent. Senator Quinlan was critical of our forgoing very small items of taxation, for instance, in connection with games and things which amount to only a few thousand pounds.
I shall go back to the beginning. This has been, with few exceptions, a particularly amicable debate. I think it was a great pity Senator Hayes should try to instil bitterness by referring to the Civil War. I shall not pursue that. I should be delighted—I can tell you sincerely, very much delighted—to have an invitation to debate the Civil War with Senator Hayes some time.
Senator Fitzpatrick made the point that we did not get the mandate of the people. In fact, he said we had removed subsidies in 1957, although  we had given an undertaking that that would not be done. I have explained already in both Houses that the question was put that we intended to remove these food subsidies. I think the people who said we had no such intention were talking truthfully. We had no intention at that time. We did not realise at all the position this country was in before we came into office. At that time, it was very exceptional to have to meet a net extra taxation to fill a gap of more than a couple of millions a year. On that particular occasion we had to meet a deficit starting off with £16 million and it was difficult to see where that money could be got. Every Senator, I am sure, realises that when you have got what is called conventional ways of raising taxation—you may get a million a year on cigarettes and a million a year on beer—it is very hard to build up beyond three, four or five million pounds. That is why exceptional measures had to be taken at that time. I need hardly say, of course, that if the Coalition Government had come back they would have had to do the same. In fact, the plan was ready when I went to the Department of Finance and I did not ask for it.
Dr. Ryan: Senator O'Brien said the aim was an expansionist Budget, which is quite right. As he pointed out, the aim was to build up the national income by 1970 by at least 50 per cent.  That is quite right, too. He pointed out that that should be done, if possible, without incurring inflation. If inflation were incurred, it would mean a rise in the cost of living. I agree with all that. He went on to say that in my attempts to balance the Budget there were efforts of optimism, by overestimation of £2 million—by taking Exchequer balances at £2 million and by making savings of £1 million, which left £6 million to be covered by revenue. He said that on the whole we had divided that equitably between direct taxation and indirect taxation and that, of course, we ended up with an unpopular Budget. I think it was the first time in the Budget speech I wound up by saying that I did not expect the Budget would be received with enthusiasm by the whole population. One could easily see that it could not be a popular Budget but it was necessary.
Senator O'Brien, after approving of many other items in the Budget, went on to say that he could not agree with the proposal to compel banks to disclose accounts where interest is more than £15. Now, I cannot see why Senator O'Brien should disapprove of that very strongly. After all, there is one sector of the population which is evading taxation which is rightly due and I think it is time we should get them. I might mention that as far as I know we are the only civilised country where that power is not already taken by the Government. There is certainly no justifiable fear that the business of any depositor will be known because the Commissioners have got this information. The Revenue Commissioners work under the greatest secrecy just as the banks do and they are not going to tell that person's business to anybody except to collect taxes due.
Now, it must be remembered that the employed person pays his income tax without question. In fact, he has no way of evading the tax because it is taken from him before he gets his salary or his wages. There is no way out for him and I see no good reason why any other section of the population  should be excused from this obligation. It is argued, of course, that it may interfere with the amount of deposits in the bank. I gave the figure of deposits in the Dáil during this debate and they showed, towards the end of May, long after the Budget was passed, the deposits were substantially higher than they were this time last year. I have never found out exactly what would be the estimate of withdrawal of deposits as a result of that measure. There may have been some. I do not think it was very significant. That is all I can say about it. In any case, I do not see how it is going to benefit any person who takes out his deposit or what is he going to do with his money if he does take it out.
There was one other point which was objected to and which was mentioned by many other speakers and that was the objectionable feature of what they call retrospection in corporation profits tax. Senator Nash dealt very well with that point and I must say I agree with him. I cannot see why this should be called retrospection any more than any other direct tax which is put on. If we had put on, let us say, 6d extra on income tax, it would not have been as much as this, but from that very day the person who is paying under Schedule E would begin to pay the 6d under PAYE or whatever way he is paying it. In the same way, when that tax would be put on the company that 6d would relate to the last accounting year of the company. That is the rule in income taxation. The last accounting year may have ended on the 30th June, 1962, so that he would have been paying, therefore, on a sum calculated on that particular year. There is no reason why we should say it comes out of that year. Obviously, it comes out of the banking account or his income this year but it is related to the profits he made in the last accounting year and, in fact, those who have spoken on the matter in the business community, chambers of commerce and elsewhere have tried to make a distinction between income tax and corporation profits tax as far as this is concerned. I agree with Senator Nash that that is an accountancy fiction.
I do not see that it makes the  slightest difference whether we put a shilling on income tax or a shilling on the corporation profits tax or anything else: he would pay it this year anyway. Whatever fund it comes out of, I cannot see that it makes much difference. You must relate corporation profits tax to something. We could not say we were putting a shilling on the corporation profits tax without saying what it is related to. There must be some basis for calculating it. In order to calculate it, you must take the profits of some particular year. The year 1962-63 was taken because it is usual to take the Corporation profits tax on the calendar year and we wanted this to be equitable so that it would apply to all business people for the same 12 months in all cases. Now it will be calculated on that year and he will pay it out of his account, whether it is a deposit account, bank account or income for this year, or however it is paid it will be paid in the same way as if we had put an increase on the income tax.
Many of the Fine Gael speakers, both here and in the Dáil, talked about the adverse effect this is going to have on business people coming in here to start here—that we could tax them retrospectively. Senator Fitzpatrick, when making his speech, was afraid it might reach the ears of business people coming in and might have an adverse effect. I do not know whether he took pains that the Press would not publish what he said or not because it is in that way, of course, it will reach their ears but I do not think it is going to have an adverse effect.
Senator O'Brien also stated that I said taxation is not a burden on the community in my arguments in the Dáil. I do not think I said it exactly like that but I was answering a Deputy and I said this money was not taken from the taxpayer in that it is money which goes back to the people again. It is a redistribution of money in that way. I do not know whether the Senator will agree with me or not but it is true that the money is not taken and destroyed. It goes back again.
Senator O'Brien also made a point, which will come up on the recommendation,  and I do not intend to deal with it except in a very general way. He suggested that certain items should be excluded from the turnover tax, rather big items. It must be remembered that if you take a big item like food out, then the tax on the remainder must be much higher. If you take clothes out as well, it must be still higher. A purchase tax, I think, is a very inadvisable tax from the point of view of business because the tax would be so heavy on the articles which would come under the tax that these particular industries would probably be put in jeopardy and it might lead to unemployment and so on as it did in 1956. One of the principal causes of the collapse in 1956 was that some of the industries which were heavily taxed at that time lost business. They lost employment and it was one of the facts, as I say, which led to the general disaster at that time.
Senator Cole drew attention to the drafting of the Bill where the Bill says that regulations should be laid on the Table of Dáil Éireann and could be rescinded and so on. I have made a search of the various Finance Bills over the past and I find in most cases —I do not say in all cases—there is no such provision. I must confess I overlooked the point myself when this Bill was first issued but the idea, I presume, is that the Seanad could not annual the regulations, even if they so wished. That is the difference between the two Houses. I have no desire to take from the functions of this House in any way if it had been usual to put in both Dáil and Seanad in Finance Bills, I certainly would have been troubled if it was done on this particular occasion.
Now, going on to taxation, Senator L'Estrange talked about the very big increase in taxation and he quoted the present Taoiseach, when he was a Deputy, stating it was the intention of the Fianna Fáil Government, before they left office at that time, not to increase the rate of taxation—“rate” is the word he used. I gave figures in the previous Budget which showed that if I had left taxation as it was from 1957 to 1962, if I had left the rate of income tax as it was, I would  have had a bigger revenue in 1962 than I had. I presume I would not be able to say the same for this year. Probably the taxation rate is now higher than it was in 1957, but from 1957 to 1962, the philosophy expressed by the Taoiseach was maintained because we did not increase the rate of taxation in the aggregate.
One item I should like Senators to look at, because it may convince them my contention is true, is that although the rate of income tax has been decreased over the past few years by ½d in the £, the yield from income tax is twice as high as it was in 1957. It is the yield that makes the difference as well as the rate.
Senator L'Estrange talked about agricultural rates going up. The last time we gave a big rebate to agricultural rates, I showed the Dáil, and the Seanad, too, I think, that the amount of rates collected from the farmers for 1962 was lower than it was in 1956. It may be higher this year—I do not know for sure—but it was lower in 1962 than it was in 1956. So the point made by Senator L'Estrange about the rates going up on the farmers is rot.
Dr. Ryan: I thought the Senator mentioned the farmers. I am glad the farmers did not suffer an increase in rates generally. Senator L'Estrange talked as usual about Ministers going to dinners. I go to about five or six dinners in a year and, as I told the Senator before, I do not expect to get a better dinner anywhere than I get at home. What is more, I did not see any bottles going around. It is usually sent around by the glass, not the bottle.
Dr. Ryan: What did the Senator do with it? The national income has increased from £456 million to £632 million.  That is an increase of 38.6 per cent. It means that a man who had £1 to spend in 1956 had 28/- to spend last year, on the average.
Dr. Ryan: No; that is the amount he had to spend. The same proportion was taken from him in taxation as was proved here today. The cost of living increased by something like 18 per cent during the same time. Last year, the national income went up by eight per cent. That is a very important figure for any Minister for Finance, because if he is looking for turnover tax, he likes to know what the national income is likely to increase by each year. It is likely to increase by about eight per cent which would be about £1 million a year, and that is a substantial amount. If the people generally are getting eight per cent more this year by way of money income than they were getting last year and if 2½ per cent is taken from them, they have no great complaint. It would be worse if we were taking 2½ per cent from them and their income was going down. Those figures are of great significance.
In regard to the turnover tax, it must be remembered that 1,300,000 people will be compensated for taxation increased by the turnover tax. The number of old age pensioners, widows and orphans, persons drawing sickness allowances, unemployment allowances, unemployment assistance, children's allowances and State pensions, who will be compensated is 1,300,000. That is a very high proportion out of a total population of 2,800,000. It means that only 1,500,000 of the better-off people will be asked to bear this tax out of their own resources. Senator L'Estrange said something about exports going down.
Dr. Ryan: In 1956, exports were £108 million. The figure had been £115 million in 1954 when we left  office, and it was down to £108 million in 1956. It was £174 million last year, that is, a 65 per cent increase. That is an indication of the increase in business in this country because we can presume that home consumption remained the same. In fact, I think the figures would show—if I had them —the home consumption had increased from 1956 to 1962. The fact that exports went up shows that there was a big increase in output and business generally during that time. Towards the end of last year, the increase in exports went down and there was a disimprovement in production. The national income decreased and there was a certain amount of expectation—I will not say jubilation—on the part of Fine Gael that it would keep going down. For the past six months, exports have gone up by £9 million or £10 million. If they continue to go up, we will reach our target for the second Programme for Economic Expansion.
Dr. Ryan: The Statistical Abstract says that in the five years, emigration was 215,000, that for 1956, it was 42,000 and that for the first two months of 1957, before we came back to office, it was 38,000, so that for the period  from 1956 to the early part of 1957, you can add the two figures together.
Dr. Ryan: In 1962, the emigration rate was down to 22,786. These are not firm figures, but they have proved to be fairly reliable when the census people have come to publish figures at the end of five-year or ten-year periods. Anyway, they show a trend, upwards or downwards. On those figures, the population should be going upward in the past 12 months.
Senator Fitzpatrick found fault with us because we are compelling business firms to produce their records for the purpose of income tax. That was one of the recommendations of the Income Taxation Commission which we did adopt as being a good plan. However, to get back to Senator L'Estrange's Fine Gael figures, he said the population had gone down by 61,000 on the farms over the past five or six years. He gave the impression it was all due to Fianna Fáil. Taking the period 1954 to 1957, the drop was 43,000. From 1957 to 1961, it was only 18,000. The Coalition lost 43,000 in three years and we lost less than half, 18,000 in six years.
Dr. Ryan: I see a footnote stating there was a mistake made in the figures over the past five years and now they are to be distributed backwards. If they are, a greater proportion will go  into the Coalition figures and we will have less to bear.
Dr. Ryan: I am not taking my figures from the Fine Gael bulletins. I defy Senator L'Estrange to prove my figures wrong — that the farm engagement in 1957 went down by 43,000. He gave the impression that all this was done by Fianna Fáil.
Senator Crowley said groups of traders are meeting to decide on extra prices. That point was made by other speakers, who said the traders included the chainstore people, the supermarkets, who would not be putting on this tax and who would therefore cut out the smaller people completely. If Senators think those people can afford to sell their goods at prices 2½ per cent below the others, will they tell me why they are not doing it now? If that is so, this 2½ per cent tax should not make any difference.
Senator Crowley also said we should have chosen some form of direct taxation. He suggested putting a tax on beer and spirits, which they opposed on the last occasion we did it. They suggest putting on extra income tax and they opposed that, too, the last time we did it. I do not know what kind of a tax the Labour group would not oppose. If they let me know, I would certainly consider it.
Senator Nash said there might be difficulty because our currency is not on the decimal system. The two countries we have looked at in this respect are the United States and Sweden. The United States has a percentage, and their lowest fraction is a cent, which is equivalent to four-fifths of our penny. In Sweden, the lowest is a hundredth part of the kroner, which equates to our farthing, so we are not so badly off in that respect.
 Senator McGuire spoke about industrialists. Can he suggest any country to which industrialists could transfer from here and in which they would be better treated in the matter of taxation and incentives? He will find our taxation is lower than in any other country and that our incentives are better. What annoys me about all those people is the way they so glibly criticise the Government — no matter what Government are in office. Those people—I am not talking now about Senator McGuire —will criticise any Government; yet they will resent any criticism of them by us. We could have a little reciprocation on these matters.
Dr. Ryan: These industrialists have incentives here for exports which they have not got in any other country. If they are not exporting, if they are competing on the home market, they are very well protected. I do not know what more they want. As far as the small businessmen are concerned, Senator McGuire complained about their having to pay corporation profits tax. If such a person's profit is £2,500 a year, all he pays this year or next year is £62. 10. 0. It is ridiculous therefore to say we are putting these men out of business by asking them to give us £62. 10. 0. out of £2,500. If the profit is less, of course, the amount of the tax is less also.
I must agree with Senator Quinlan that the Government are not obliged to follow all the recommendations of the Commission on Income Taxation. It is quite true. We ask the Commission for a report and recommendations. A Government are bound to consider very carefully any report made by a Commission since the Commission have, as a rule, put a lot of work into the matter. It is wrong to suggest that you are putting in the hands of the Government here a power to increase this turnover tax in the future. That could not be done without the sanction of the Oireachtas.
I explained on the last occasion, when the entertainment tax was taken  off cinemas, that it was not an economic proposition to continue it on the dancehalls because the inspection system was very exacting. We had to verify whether so many people attended. This tax has a much simpler application because it is taken on the turnover and the calculation is a very simple matter. I should say there were a lot of exemptions from the dance tax. First of all, there were exemptions with regard to the density of population. In a town under 2,000 population, or in rural areas there were exemptions. There was also exemption up to a certain level where there was the point that people in rural areas were pleading that it was hard to keep the young people in the country and that we should certainly allow them to amuse themselves without putting a tax on them. Consequently, taxes were taken off these rural halls and dances. Another plea was made that parish halls and parish organisations held small dances for parish purposes, and there was exemption up to 2/6. That made the thing difficult.
Senator Quinlan also asked why would we not tax football, coursing and so on. I saw a paragraph in a paper not long ago. It referred to a final which was being played in my own county. As the match was played in my native parish, I was interested. I knew the difficulties of collecting. Although there was a great attendance at the match, the gate receipts were 6s. 6d.
Dr. Ryan: They would have to pay the same at a coursing match. The fear that Senator Quinlan has that certain of the bigger shops will not pay this tax conflicts somewhat with his contention that it will put up the cost of living.
This is my last point. He said in dealing with inquisitions into bank deposits  by certain people, we were interfering with the most fundamental principle of the confidence between depositors and the banks. I think a much more fundamental principle is the obligation on all people to pay the taxes that are equitably due and there is an obligation on the Government to see that they do.
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