Dáil Éireann debate -
Wednesday, 5 Apr 1978

Vol. 305 No. 1

Rates on Agricultural Land (Relief) Bill, 1978: Second Stage.

Minister for the Environment (Mr. Barrett)

: I move: "That the Bill be now read a Second Time."

The legislation which provided for relief of rates on agricultural land by way of the agricultural grant expired on the 31 December last. The purpose of the present Bill is to continue the application of the agricultural grant with modifications in respect of 1978 and 1979.

The agricultural grant is paid from the Exchequer to local authorities to enable them to give certain abatements of rates to occupiers of agricultural land. In the present financial year the grant will amount to £38.5 million.

The scheme of allowances provided under the Bill includes a primary allowance giving relief of 100 per cent of the general rate in the £ in respect of land holdings the valuation of which does not exceed £20. This means, in effect, the complete derating of these holdings. In the case of holdings between £20 and £33 valuation, the primary allowance relieves 100 per cent of the rates on the first £20 of the land valuation leaving the rated occupier liable for rates on the remainder of the valuation only. The next category of land holdings embraces those with valuations in excess of £33 but less than the income tax threshold for wholetime farmers applicable on 1 January of the relevant local financial year. These holdings will qualify for a primary allowance of 80 per cent in respect of the first £20 of the valuation and a supplementary allowance of 30 per cent on the remainder of the valuation.

The only change from the existing arrangements is that farmers whose land holdings have a valuation which equals or exceeds the income tax threshold for full-time farmers will no longer benefit from the rates reliefs on agricultural land. Since the income tax threshold stood at £75 at the beginning of this year, it will remain at that figure for the reliefs in 1978. The reduction of the threshold for income tax purposes to £60 land valuation was announced in the budget. That reduction will not affect the upper limit of eligibility for Agricultural Grant reliefs until 1979.

Section 1 (2) of the Bill as drafted would, in line with the income tax law, require aggregation of holdings on a national basis for the purposes of applying the income tax threshold to allowances under this Bill. The administrative implications of this form of aggregation are being examined but it appears that there would be considerable practical difficulties in implementing this form of aggregation in relation to 1978. Accordingly I hope to introduce an amendment on Committee Stage to change this to an enabling provision. This will clear the way for having aggregation on a rating area basis rather than on a national basis in 1978.

All farmers will, of course, benefit from the abolition of rates on their domestic dwellings along with all other domestic ratepayers and from the Government's decision to abolish rates on farm outbuildings.

I am pleased to commend this short Bill to the House.

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): This Bill is entitled Rates on Agricultural Land (Relief) Bill, 1978. Section 2 of the Bill says: “This Act may be cited as the Rates on Agricultural Land (Relief) Act, 1978”. Never has a Bill come into this House with a more misleading or dishonest title. From its title one would imagine that the object of the Bill was to grant relief in respect of rates on agricultural land. The direct opposite is the intention of the Bill. As the Minister has stated, over the years substantial grants have been provided for agricultural land in respect of rates. For example, taking this year and assuming a rate of £10.21 in the £, a farmer with a valuation of £75 would, but for this Bill, receive a grant in relief of rates amounting to £331.82; if his valuation were £90 he would receive a grant in relief of rates of £377.77; if his Poor Law Valuation was £100 he would receive a grant of £408.44p. These reliefs and grants are being abolished by this Bill whether or not an agricultural holder is liable to income tax. The pretence behind this Bill is that the farmer may deduct his rates from his income tax, as an instalment of the tax—all very well if he is liable to income tax with a poor law valuation of £75. But supposing he is a married man with substantial family commitments, supposing he employs labour, is paying contractors' fees and bank interest— when all of those are taken into account he is not liable to income tax —his rates will be increased by £331 if his valuation is £75. Then we are told it is a Bill to grant relief from rates on agricultural land. It is stated somewhere that under the income tax code a farmer will be given one date on which to pay income tax and that that date will be the last day of the financial year. But the Minister will make sure that he grabs a slice of that farmer's income tax, if he is liable, well before that date because he will pay the first instalment of rates about the end of June and the second about 1 October, thereby paying his income tax, if he is liable, well in advance, earlier than he ever did before.

Another mean and contemptible aspect of the Bill the Minister did not even think it worth while referring to is that it abolishes the employment grant right across the board irrespective of whether a poor law valuation is £75 or £10 because subsection (1) of section 1 says:

(1) Subject to subsection (2) of this section, the Rates on Agricultural Land (Relief) Act, 1946, shall apply to the local financial years ending on the 31st day of December, 1978, and the 31st day of December, 1979, and shall so apply subject to the modification that no employment allowance shall be made.

This is a Government that came into office with the intention of boosting and giving incentives to employment. I admit—and I make a present of this to the Minister—that the annual allowance of £17 was very small.

Mr. Barrett

It was abolished in 1976.

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): If the Minister was serious about it he should be increasing the allowance and, if it was abolished, should be saying so instead of confirming here that it will not apply. I shall revert to the details of the Bill before I conclude but the Minister is thoroughly ashamed of this Bill and has every right to be so. He comes in here with it after 7 p.m. in the evening when he hopes it will receive no publicity but will be glossed over.

It is acknowledged that the rating system is unjust and has been condemened over the years by people who took an interest in it on the basis that the system of collecting revenue through rates does not have any regard to the income or capacity of the ratepayer to pay. That is the view my party have taken of the system of rates for several years and I hope to show that we have acted accordingly. The Fianna Fáil Party, now in Government, have had different views about rates and rating systems from time to time. As I hope to show from a short history going back to 1972, they appear to find it very difficult to make up their minds in regard to rates. Therefore it is not surprising that they introduce this Bill this evening, the result of which will be to increase the rates—assuming a rate of £10.21p in the £—from £331.82p or 77 per cent on a poor law valuation of £75 to as high as £408.40p, or 66? per cent on a poor law valuation of £100 this year.

As from 1 January next—assuming an increased rate in accordance with the Minister's guidelines and a rate next years of £11.23 in the £—the rates will be increased from £314.44p, or 87 per cent in the case of a farmer with a poor law valuation of £60, to as high as £449.20p, or 66? per cent in the case of a farmer with a poor law valuation of £100. And these increases will take place whether or not the farmer is liable to income tax.

The Minister and his advisers know perfectly well that many farmers with a valuation above the threshold will not be liable to income tax for one reason or another. In the case of farmers who are not making a profit and who produce accounts they will be exempt from tax. Yet they will have to pay this savage increase in rates imposed by this Bill. If they rely on the notional system of paying income tax I want to put on the record that many farmers—because they are married, have a number of qualified children and, in addition, are paying contractors' fees, employing labour, paying bank interest—will not be liable to income tax yet will have their rates substantially increased. That is the position for this year. Next year the position will be even worse because the threshold will be £60, unless the Minister has been told by his colleague, the Minister for Finance, that he proposes to put up the multiplier next year from 90 to well above 100. If the multiplier is left at 90 great numbers of farmers who are married men with the commitments. I have mentioned already will not be liable to income tax on a threshold of £60. Yet the Minister for the Environment will do the dirty work for his colleague, the Minister for Finance, and ensure that this savage increase in rates is extracted from the agricultural community without any regard to the ability of that community to pay or to meet family commitments.

I said I would like to give a brief history of the approach of the Fianna Fáil Party over the past few years to rates. It is right that it should go on the record. In December 1972 the Fianna Fáil Government laid a publication, Local Finance and Taxation, before both Houses and in that publication they committed themselves: without qualification to the rating system as the only system for financing local government. The reference is page 10, chapter 4, paragraph 421. They said that only the local rate satisfies the criteria referred to and the real issue is not the abolition of the rating system but the reform of the system so as to eliminate undoubted defects. They were not talking about rate reliefs. They were talking about closing gaps and doing away with grants so that they would extract the last penny by way of rates. They were committed to continuing the old, unjust system of local taxation without regard to the capacity of the ratepayer to pay and without regard to his income.

That was December 1972. On 3 January 1973 the Taoiseach, without apparently having communicated with his party in advance, called a general election. The National Coalition parties, Fine Gael and Labour, having considered the question of rates and realising the hardship the rating system was imposing on all sections put before the people in that election their policy to remove the health charges and housing subsidies from the rates. They put that clearly before the people as one of their 14 points. They realised the system was unjust and inequitable and, as a step towards abolishing rates altogether, they proposed to remove the health charges and the housing subsidies from the rates. As we know, the National Coalition implemented that promise and during the four-and-a-half difficult years they were in office they kept the rates several pounds lower than they would have been if the health charges and housing subsidies had not been removed from the rates.

What was the reaction of the Fianna Fáil Party in February 1973? They went into the election campaign brandishing this document, Local Finance and Taxation, ridiculing the proposal of the Fine Gael and Labour Parties to reduce the rates as a first step towards abolishing them. They said the proposal was pie in the sky. They said it could not be done. It would bankrupt the country because the money could not be found. It would remove discretion from local authorities and vest it in the Custom House. Towards the end of the campaign they stopped. They thought. They did a right about turn. They ditched Local Finance and Taxation which they had solemnly laid before both Houses two months previously. They threw it into the wastepaper basket. They said they would go one better. They would abolish rates on private houses.

Fianna Fáil made this turn about without telling the present Minister for Justice because, while the present think-tank here in Dublin was churning out a policy to go one better and abolish rates completely on private houses, Deputy Collins was down in West Limerick churning out 1,000,000 circulars ridiculing the proposal of the National Coalition Parties to abolish rates. With a record and a history like that is it any wonder we now have a Bill like this?

We have fortunately further information about the thinking and the promises of the Fianna Fáil Party now in regard to rates on agricultural land. The Taoiseach, speaking in this House as Leader of the Opposition on the Financial Statement on 4 April 1974, was advocating extension of the relief of rates on private houses to agricultural land if income tax for farmers was to continue. He said a good case could be made for derating agricultural land completely. He practically wept for the farmers, At column 1515 of the Official Report of 4 April 1974 he stated:

In making that point,——

that was a point against income tax

——they indicate that rates are already a heavy imposition on many of them, especially the progressive ones. Therefore, there would now be a much stronger case to extend the Fianna Fáil policy of relieving homes, to relieving agricultural land from rates, if the incidence of income tax is going to bear more heavily on farmers as time goes on. It has been pointed out—and I think the point has been well taken—that farmers are the only producers whose means of production would be subject to income taxation. Another point which I think has been well taken is that about 50 per cent of their output, 50 per cent of their product, goes for export, whereas those in industrial production enjoy complete freedom of taxation from profits deriving from those industrial exports. This is a point the Minister will have to take into account—obviously he has not done so at this stage—in order to ensure that fair taxation will be applied across the board.

If that quotation means anything it means that not alone was the Taoiseach advocating the abolition of rates on agricultural land but he was also leading farmers to believe that income tax should not be proceeded with, that they should be tax free because they were engaged in an export business. In the light of that, could anything be more disreputable or dishonest than the Bill before the House?

No doubt the Minister will make the case that the Bill will not involve any additional imposition on farmers. He will tell the House that they can deduct it from their income tax. I would remind the House that there is no such provision in this Bill. The Bill simply states that the agricultural grant will go and that the rates will be increased to the extent I mentioned. I say without fear of contradiction that many of the 22,500 farmers will be brought into the income tax net by this Bill. According to the budget statement of the Minister for Finance the number of farmers with a valuation in excess of £60 is 22,500 approximately. Many of them keep books and are not making a profit that would bring them into the income tax net. If they produce accounts to show they are not liable for tax they will not have to pay income tax but they will be responsible for this huge increase in the rates brought about by this measure. Many of the farmers who work on the notional system of 90 times the PLV of £75 this year—I have a suspicion that system will be more than 90 times next year—will not be liable for income tax because of family circumstances, commitments and liabilities. However, the Minister for the Environment is going to do the dirty work of the Minister for Finance in extracting this large amount of money from the farmers.

I question the bona fides of the Minister for the Environment. I want to put it to the test in this matter. If he tells us it affects only farmers who have income tax to pay in excess of the increase brought about by this Bill, is he prepared to amend the Bill on Committee Stage? Is he prepared to write into it a subsection that will ensure that only farmers who have income tax to pay will suffer this increase in rates? Will he ensure that unless farmers are liable for income tax for an amount exceeding the increase in rates brought about by this Bill he will not extract the increase from them? He need not come to the House and tell us that it is meant only for farmers who are liable for income tax unless he undertakes now to write such a safeguard into the Bill on Committee Stage. I invite him to deal with that point when replying to the debate.

I do not think the enormity of the measures has hit the farming community yet. From speaking to some farmers I know they think it is only the agricultural grant that affects the portion of their PLV in excess of £75 or £60 that will be affected. I want to warn them that once their PLV exceeds £75 this year every penny of grants to which they were previously entitled will go. The primary and supplementary grants will go and they will not get any allowance. They will pay the full rate from the first £ of their valuation to the last £. I do not think that is generally realised by the farming community. I want to put it on the record of this House and I invite the Minister to contradict me if I am wrong. I am satisfied that what I have said is right.

I also believe that this is a move towards abolishing the agricultural grant altogether and towards consolidating rates on farmers notwithstanding the fact that Fianna Fáil canvassed during the general election last year on the basis that all people had to do was to return Fianna Fáil to office to see the end of farmers' taxation. In their very first budget they reduced the threshold from £75 to £60 and they increased the multiplier from £65 to £90, a nice performance from the party who went as the Taoiseach wept on 4 April 1974 about the treatment the National Coalition were meting out to farmers, a nice performance by that Taoiseach having regard to his performance in this House on 4 April 1974.

It will be noted that in this Bill they have taken care of the agricultural grant not only for 1978 but also for 1979. This is the thin end of the wedge, the tip of the iceberg. It will not be long until the agricultural grant is reduced to £50 and to £40, and then it will be gone altogether. Is that the Minister's intention, or can we have an assurance from him, that there will be no further reduction in this grant?

I have given a brief history of the Fianna Fáil Party's record on rates from 1972 to the last election. They issued the now famous manifesto and, in the immortal words of one Fianna Fáil Deputy, it will go down in history. I do not think there is any doubt about that, but how it will go down in history is another question, and what will be written about it is another question, Fair play to it, it dealt with rates and agricultural taxation. The manifesto has a paragraph dealing with rates. Under the heading of local government it dealt with rates at some length but it did not say a word about abolishing the agricultural grant. It dealt with all the nice things they would do for the private householders. It said they would be looked after and that rates would go as from January 1978, and go they did.

One would have thought the Fianna Fáil Party would have given their entire proposals on rates when they thought it fit to put in black and white this substantial paragraph in their manifesto. When I read that it occurred to me that I had better check to see if they had said something about it when they were dealing with farmers' taxation. It would be equally relevant there. I turned to another part of the manifesto and I found a whole page dealing with farmers' taxation. They said what they would do and how much would be saved by this and that proposal by Fianna Fáil on farmers' taxation and income tax. But I did not find one word about their proposal to abolish the agricultural grant and to extract between £300 and £600 from farmers who might not be liable to rates at all.

Then I thought the Fianna Fáil Party might have decided to put only the goodies into the manifesto and leave out the baddies. I wondered did they mislead anybody, and sure enough they did. In the last line of the part of the manifesto dealing with rates they said tax payments will fall due at the end of each financial year. I want to charge the Minister with dishonesty in that regard. That line is sheer dishonesty because not only did it say nothing about his proposals in this Bill to withdraw agricultural relief but it led farmers to believe they could go merrily along until the end of each financial year without being asked for one penny in income tax, and now he trots in here with this Bill increasing rates by abolishing the agricultural grant under the pretence that this is part of their income tax. They will be asked to pay six months, if not more, before the end of the year. Is the Minister not ashamed of that performance in the light of the manifesto?

It is no wonder Fianna Fáil want to hear the end of the manifesto and that they think it is being laboured too much. It is an historic document according to Deputy Leydon and we must have regard to it. So much for that. When the Fianna Fáil Party told town dwellers and owners of private houses they would relieve them of rates they did not tell them at the same time that they would ask the farmers—and I will be relevant shortly—

An Leas-Cheann Comhairle

I am giving the Deputy a tremendous amount of latitude on rates.

Mr. T. J. Fitzpatrick

(Cavan-Monaghan):——to pay their rates for them as they are asking them to do in this Bill. This money which is being extracted from the farmers will go into the Exchequer and presumably it will go towards making up rates on private houses. I am glad rates on private houses have been abolished, but Irish farmers should have been told rates on private houses would be shifted from private householders to farmers with valuation of £60 and so on.

Perhaps this money will be used to make good the £8 million relief on wealth tax. It is more than a coincidence, I suppose, that in this year's budget the Minister for Finance is making a present of about £8 million to very wealthy people by relieving them of wealth tax and asking farmers with moderate means to pay £7 million. One could just balance the other. Perhaps that is what will happen. This is a discreditable performance, a confidence trick. This year's performance will extract £7 million from 15,000 farmers. The Minister should tell the House how much more will be extracted from farmers next year as a result of the introduction of this Bill and assuming an increase of 11 per cent in rates.

I should like to put on record the effect this Bill will have on farmers in an average county. Taking an average rate of £10.21 in the £ if this Bill was not passed a farmer with a PLV of £75 would be paying £433.93 but after the Bill is passed he will be liable for £756.75. On the same rate a farmer with a valuation of £90 would be paying £541.13 if the Bill was not passed but if it is passed he will be paying £918.90. A farmer with a valuation of £100 would be paying £612.60 if the Bill was not passed but if it is passed he will be paying £1,021. That is the position for this year. In County Wexford those figures will be a lot higher because valuations are much greater. Assuming there is a rate of £11.23 next year a farmer with a valuation of £60 would be paying £359.36 if the Bill was not passed but if it is passed he will be paying £673.80. A farmer with a valuation of £75 without this Bill would be paying £477.28 but if it is passed he will be liable for £842.25. A farmer with a valuation of £90 without the Bill would only be liable for £595.19 but if it is passed he will be liable for £1,010.70. A farmer with a valuation of £100 without the Bill would be liable for £637.80 but if it is passed he will be liable for £1,123.

That will be the position whether a farmer is liable for income tax or not because there is nothing in the Bill about income tax. The Bill is an effort to extract money from farmers whether or not they are liable for income tax. If the Minister is serious about this statement to the effect that he will allow rates on agricultural land as an instalment of a farmer's tax bill he should amend the Bill accordingly. If he does not do that he is extracting money from farmers contrary to the promises in the manifesto and all the undertaking given by Fianna Fáil canvassers during the election. If I made a mistake about the miserable £17 employment allowance I make the Minister a present of it. If the Minister wishes to make the point that it was removed in 1976 I wish to point out to him that his party gained power on a promise to create more jobs and encourage farmers to employ additional workers and for that reason he should restore it and increase it substantially. The Minister has at his disposal a lot more money than the previous Government had. The Government have borrowed £821 million and I cannot think of any better way of spending that money than to restore that allowance and increase it substantially. That would be an incentive to farmers to employ more people.

The Taoiseach on 4 April last dealt with the fact that farmers' means of production were being taxed. Exports from agricultural activities produce a great source of income for the country and farmers are doing reasonably well, and not before their time. They are doing better than they were. I come from a farming background and I have experience of living on a farm in bad times. I invite those who are envious of our farmers now not to forget that for many years our farmers were poor people and their wives were slaves. In many cases families living on farms had very little. It is not long ago since farmers' wives were using flour bags to make all sorts of garments for themselves because of their poverty. City dwellers and industrial workers who are envious of farmers because they are able to live reasonably well now for the first time in living memory should not forget that they were slaves long enough. For many years they stood between the rest of the country and economic disaster, when we had nothing to export except agricultral produce. Because we had agricultural produce to export we could buy goods from abroad such as tea, coal, steel and oil. For many years it was the activities, sweat and underpaid labour of the farmers that provided capital to import those goods. As long as I am in public life I shall never stand idly by and listen to people sneering at the farmers as a lot of fat cats who should be skinned at every opportunity. Their contribution to the country should be borne in mind by the Minister for the Environment when he thinks of introducing a Bill like this and by the Cabinet when they decide on farmers' taxation.

I repeat that this is not a Bill to relieve agricultural land from rates; it is not a Bill that will only accept rates from farmers in part payment of income. No, it is a Bill the only object of which is to increase a rate on agricultural land by £331.82 or 77 per cent on poor law valuations of £70 to as high as £408.40 or 66? per cent on a valuation of £100 in 1978 and much more in 1979. There is no use in saying anything else. That is what it does and that is the effect of it.

Mr. Quinn

I should like to be as brief as possible on this rather brief Bill. I am sure the Minister is surprised that it has evoked the response it has evoked. I should like to put on record that I think Deputy Fitzpatrick is perfectly entitled to make the criticism he has made. He made it at length and in a way which leaves the House in no doubt as to the real purpose of this Bill. It is only fair to the Minister for the Environment to say that he is caught between budget strategy on one hand as announced by the Minister for Finance in February and the Finance Act which is forthcoming, on the other, and that it is his sad function to act as tax gatherer on behalf of the Minister for Finance who in the budget dodged the issue of taxing farmers as a response to the promises trotted out in the famous manifesto last June.

I do not want to go over ground already covered but I want to take up Deputy Fitzpatrick's final theme, taxation of farmers. I and members of my party and people who broadly might be considered to represent urban Ireland have, it is said, called for the taxation of farmers. This is not the correct interpretation of what has always been insisted on by Labour Party members which is that farmers who can pay tax should pay tax. Farmers who are now in the position of being able to pay tax should be treated on the same basis as anybody else whose income puts him in the category of being liable to tax. Nobody to my knowledge in the farming community or in farming organisations disagrees with that. Naturally there will be discussion and bargaining about the degree of taxation but that is normal and to be expected. But Fianna Fáil when in Opposition attempted to suggest that if they were returned to power the taxation as proposed by the then Coalition Government would be dramatically reduced and that all that was required was the right decision last June.

We saw the budget that followed in February and the suggestion of comparatively mild proposals on taxation of incomes of farmers in the coming years. With all due respect to the Minister for the Environment he is being made tonight to do the dirty work of the Government in general and in particular of the Minister for Finance who has dodged the issue of taxing farmers as much as his budget strategy would require him to do. I feel a certain sympathy for the Minister for the Environment in this regard but there is an issue above and beyond the Minister's difficulties—he is well able to look after himself—there is the issue of equity. While my party's position has been that there should be an equitable form of income taxation for farmers who have never held nor do we now hold that the rating system is an equitable form of taxation for householders or farmers. The net effect of this Bill is to increase the rateable taxation load on land and small farmers generally. As Deputy Fitzpatrick said, despite any statements that may have been made by the Minister—I was not present for his speech but I read it subsequently—there is no mention of credit against possible income tax bills. Therefore the Bill must be taken on its face value. So, we are left with a Bill which attempts to con from the farming community taxes and revenue which the Minister for Finance had not the courage to levy in his budget this year. Arising from that we have the secondary result of that lack of courage and that is that the form in which this tax will be levied will be far more unjust and inequitable than any increase in income tax which could possibly have been proposed in February last.

I may appear to wander slightly from the Bill but in fairness the Bill must be seen in the context of the budget speech last February and the coming Finance Bill. It is the misfortune of the Minister for the Environment that he is here tonight in the role of tax gatherer for the Department of Finance because that is quite simply why he is presenting this Bill when really it should be presented by the Minister for Finance.

I am more than disappointed that the Minister did not take the opportunity when presenting this measure on behalf of another Minister to refer to the whole mess in which local taxation now is. I would have expected some indication in the Minister's speech that there were thoughts or proposals or—to use some of the "in" phrases of the present day—task forces, working parties or special committees or think-tanks considering the whole matter of local taxation. I do not think any Deputy can now seriously suggest that the relics of the rating system and the form of local taxation on which it is based is in any way acceptable to modern democracy.

The Minister for the Environment, who is now well established in the office which he holds and is surely aware of the issues confronting his large Department, must realise that this is a central issue that must be reformed and not merely tinkered with. Regrettably, the speech introducing the Second Stage of this Bill and the statements so far from the Minister for the Environment give no indication that arising from this Bill there is going to be any change in the way in which rates are to be levied or local taxes are to be collected. This is the second indictment that can be justifiably laid at the door of the Government. As I have said previously, as a party and an administration they have many years of experience in Government, many years of combined wisdom among the members of different Fianna Fáil Government and administrations; yet we see no evidence whatsoever in this Bill or in the speeches from the Minister for the Environment or his Minister of State of a change in the method of levying rates.

I am not going to prolong my comments on this very short Bill. I will take a leaf out of the Minister's book in this regard, but I reiterate what I have said already, that this Bill, regrettably coming from the Minister for the Environment, is no more than a con job on the farming community to extract from them by way of rates money which the Minister for Finance had not the courage to levy on them in his budget of last February. In so doing they are collecting taxes in what is admitted on both sides of the House as the most inequitable form that exists. This is dishonest and it is unjust.

My second major criticism, and I am directing this at the Minister for the Environment, is that I am disappointed, to say the least, that there is absolutely no evidence or suggestion in the Minister's speech presenting this small piece of legislation, that he has any proposals whatsoever for clearing up the mess that now is local taxation. Because of the borrowing of the present Government, because of the strengthening of the £ sterling, because of a certain buoyancy in the world economy in a comparatively comfortable economic stage at the moment, we are in an expansionary stage as regards public expenditure.

I say now to the Minister what I said to him in the debate on the Estimate for the Department of the Environment, that when money begins to get tight in our economy and if restraints begin to come to public expenditure the mess that is local government taxation is going to be a noose around the neck of whoever is the incumbent in the Custom House. Regrettably, there is no evidence to suggest that the Minister for the Environment or the combined wisdom of the Fianna Fáil Party is awake to that difficulty. To conclude on that point, it is a problem that will confront any incumbent in the Custom House for the simple reason that no party or combination of parties in office in central Government will control equally every county council in the country. There are real strains implicit in that situation. The time is running out on the honeymoon that has been enjoyed as a result of the enormous benefit of 84 seats. To quote the closing remarks of a leading article in one of the newspapers, this is more evidence of a dreadful Government in office unfortunately, after a very short time.

Mr. W. O'Brien

Like the previous speakers, I have my views regarding the title of the Bill. It should be titled the Abolition of the Rates Relief (1978) Bill. The Government are reluctant to accept a reference to rates. It is impossible to discuss this Bill without referring to rates.

In October 1977 a circular was sent out from the Department requesting county councils not to prepare their estimates untill they heard from the Department. That was a most unusual procedure. The county councils had no option but to accept that. Some time later we were notified that we could prepare the estimates but we would have to keep the rate to a ceiling of 11 per cent on the 1976 rates. That in itself automatically eroded the powers of the local representative. It must be accepted by us all that the day of the striking of a rate was a sort of day of joy for the public representative. He felt at least that he had some say in the administration of his county and he felt a certain pride in that. Now, as far as the local representative is concerned local power in local government is gone.

Coming to the Rates on Agricultural Land (Relief) Bill, 1978, as it is titled, I remember before the last general election Fianna Fáil canvassers knocking on doors of farmers and telling them "If you have not a change of Government, income tax will go up; if you do not do away with the Government who are wrapped up with socialists, the ceiling for farmers' taxation will be down to £60". While we criticise the people who said that, we must say that they were right because they did bring it down to £60, and it was not a Socialist Government who brought it down.

What happened in my country? Nobody can be accused of being localminded when speaking about rates, and as a member of Limerick County Council I know more about that county than about any other. The abolition of the domestic rate cost the Exchequer £1 million. In other words, the Department will be making a contribution of £1 million to Limerick County Council. Now as a result of the abolition of the agricultural grants on valuations of £75 upwards-and £60 upwards from January 1979—the agricultural community will be making a contribution of £.25 million. Instead of making a contribution of £1 million the Department are now making a contribution of £750,000. In my view this is most unjust because we and the agricultural community are asked to accept that what we pay in rates will be set off against our income tax. This sounds like a double-barrelled affair— if you are missed by the first you are got by the second. In other words, if you are not caught by income tax you are caught by the agricultural tax. This means our farmers will be making a contribution of £7 million.

This is dishonest because at the last general election the people were asked to vote on a certain policy and the Fianna Fáil Party handed out their policy known as the manifesto. When I heard about the abolition of the agricultural grant the first thing I tried to find was mention of it in the manifesto, but I could not find it. For that reason I believe the Government have been most unfair to the farming community. There is no doubt that that community resented the fact that the previous Government introduced income tax for farmers. Their bitterness was aggravated by Fianna Fáil telling them how they were being had and how they were being wronged. They told the people that they had a policy under which they would not have to pay income tax.

I do not blame the present Minister for the Environment because the baby was handed to him. As was mentioned earlier, this is a direct tax and the Minister for Finance or the Minister for Economic Planning and Development should have introduced this Bill. We all agree that rates are a very unfair form of taxation. When the Coalition removed 25 per cent off the rates they did so without any tie. The 25 per cent was met by the Exchequer and there was no reference to anything else.

Another aspect I would like to mention is what my council and most councils had to face, that is, a reduction in our estimates. As a result of the Department's circular my council had to alter our prepared estimate by £130,000. That money would play a major role for additional works in my county. At the moment we have no money to do the many small jobs which come under the administration of the local authority, such as road deterioration as a result of storms——

An Leas-Cheann Comhairle

The Deputy is moving a long way from the Bill.

Mr. W. O'Brien

It is difficult to speak on this Bill without dealing with rates. Not alone have the Government made provision as regards the abolition of rates for 1978 but, most unusually, they have also made provision for 1979. In two years' time agricultural rates will be abolished completely and this is only the thin end of the wedge.

Deputy Fitzpatrick pointed out the reaction the abolition of rates will have in his own county and the same applies to every other county. The Minister was involved in rates at one stage and has a good knowledge of them. Perhaps the abolition of rates would not have the same impact in some counties as in others. If a farmer is not caught in the income tax net he should not be caught in the other net either.

Debate adjourned.

The Dáil adjourned at 8.30 p.m. until 10.30 a.m. on Thursday, 6 April 1978.