THE FIANNA Fáil minister for finance, Sean T O’Kelly, introduced his third budget in 1941, and also his third since the second World War had begun.
It was not an easy budget but it was not as tough as had been feared in advance. Income tax went up from 30 per cent to 37.5 per cent (but not to the feared level of 50 per cent as in the North and Britain); corporation profits tax went up to 10 per cent (from 7.5 per cent) for Irish companies and 12.5 per cent for foreign companies; petrol went up almost 20 per cent, by 5d a gallon to two shillings and seven pence (31d) but the quantity available was reduced and precarious; cigarettes went up by 4d to one shilling and six pennies (18 pennies) on a packet of 20, an increase of about 29 per cent; and a 1 per cent tax was introduced on domestic newspapers. The front page report in today’s newspaper summarised the event thus:
Mr. O’Kelly’s third Budget took eighty-five minutes to deliver. The Dáil was well filled, though not overcrowded. Mr. David Gray, the American Minister [Ambassador], and Mrs. Gray, as well as Mr. C. Benziger, the Swiss Chargé dAffaires, and Mr. E. J. Garland, of the Canadian Office, were among those in the distinguished strangers’ gallery.
The Minister referred to the war situation, and said that, although this country had not been involved, it had not escaped its repercussions. In the circumstances there was no alternative to the imposition of higher taxation.
The greatest loss which they had to face was in respect of the mineral hydrocarbon group of minerals, from which revenue of £1,343,000 was received in last year, and now all that could be expected was £700,000. Tanker tonnage had been depleted owing to war casualties.
Tobacco, which he described as the saviour of the Exchequer, now showed a decline from £6,590,000 last year to £4,785,000 this year, but even at that figure it would produce 57 per cent of the total Customs revenue. The raw material of the industry, which came chiefly from America, was a difficulty which filled him with anxiety.
Referring to the gap between revenue and expenditure, which he estimated at £7,765,000, the Minister said that it was alarming, and that he saw no means of bridging it by normal means. The Budget could not, therefore, be balanced in the strict sense, and, said the Minister, “we must succumb to the general epidemic of budgetary malaise that has been sweeping the world.”
In regard to his increase of the petrol tax, the Minister said that it was based on two assumptions – namely, that substantial imports would take place during the year and that such imports would be consumed.
In order that there should be, as far as possible, an equality of sacrifice all round, he had promulgated two orders of first class importance. These orders placed restrictions on increase of rates of remuneration of practically all classes of workers and employees in the service of public utility and statutory undertakings, in certain essential industries and sheltered and protected industries, and at the same time limited the amount that can be paid by companies either by way of dividend or remuneration of directors.
Referring to this countrys neutrality, Mr. O’Kelly commented: “Neutrality may not be an heroic rôle – especially for Ireland – but, nevertheless, it is an expensive rôle. To secure due respect for our neutrality our defence force had to be increased. This year it costs four times as much as before the war.”
In other ways, too, the cost had been increased. The rise in the cost of living had added to the expenses of government. The Civil Service had to be increased, and social services had been added to the expense of the exchequer.
See www.irishtimes.com/ newspaper/archive/1941/0508