The Press THURSDAY, MARCH 22, 1934. Economic Consequences of Mr de Valera

Press, Volume LXX, Issue 21120, 22 March 1934, Page 8

The Press THURSDAY, MARCH 22, 1934. Economic Consequences of Mr de Valera

The increase of £8.000.000 in the Irish Free State Governments estimates of expenditure, announced in the cable news this morning, will probably cause the Irish people to think more seriously than they have hitherto done about the purely financial aspects of Mr de \ alera s programme tor making the Free State economically self-supporting. In the election of 1931 the Republican party - made the specific promise that the burden of taxation would be light- ■ ened by not less than £2,000.000 a : year, and this " without reducing | " social services, inflicting hardship "on any class of Government scr- " vants, or impairing in the slightest " degree the efficiency of the ad- " ministrative machine." Except lor a reduction in the salaries of Cabinet , Ministers, there was no attempt in Mr de Valera's first budget to carry out these promises. .Moreover, in order to enlist the support of the Labour party in the Dail it had been necessary to provide for an increase of £1.500.000 in expenditure on unemployment. The budget was therefore balanced at the expense of the income tax payers, who const it i ted so small a proportion of the electorate that their votes were of little importance. The standard income tax was raised from 3s (id to ss. . super-tax was levied on ail incomes of more than £ 1500, and the tax on ; the profits of companies not regis- ' tered in the Free State was sub- ' stantially increased. Among the i tenant farmers of the west, who had : never at any time paid income tax and who gave Mr de Valera most of ' his electoral support, these measures I were received with hearty appr d. But the effects on the taxable capacity of the country as a whole were disastrous. Mr Blythe, Minister for Finance in Mr Cosgrave's Government, had deliberately kept income tax below the English level in order to encourage the flow of capital into the Free State and in order to induce wealthy Englishmen to settle on Irish estates. This policy had been remarkably successful: and in . the area round Dublin industrialisation was proceeding rapidly. The immediate effect of the new system of taxation was to deprive the country of some of its wealthiest inhabitants and to compel the transfer of many large factories to England. These developments were rejected in a heavy reduction in the tax revenue for the next budget', but in the meantime additional expenditure had become necessary to subsidise , exports to Great Britain, to provide i relief from rates in the rural area... 1 and to satisfy the insistent demand : of the Labour party for an extension of social services. Expenditure, i which had been £24.000,000 in 1932, ' rose in 1933 to about £30,000,000: ' and this year's increase means that j under Mr de Valera the budget load will be £ 15.000,000 higher than it • was under Mr Cosgrave. Unless it can be checked, this steady growth in government spending must under- . mine Mr de Valera's position. His j scheme to make the Free State an ! economically independent nation of ■ small farmers and small manufae- ■ turers is practicable, provided the I Irish people is prepared to accept, ' for a period of years, a substantially ; lower standard of living. But a lower standard of living postulates : lower taxes and a contraction in | the budget. There are already signs i that the rural areas are becoming ! restive under the burden of taxes j and rates; and, as many govern--1 ments have learned to their c""* the I Irish farmer has no master in the ! art of evading taxes.