Dáil Éireann debate -
Wednesday, 4 Jun 1980

Vol. 321 No. 10

Finance Bill, 1980: Committee Stage (Resumed).

Debate resumed on amendment No. 26:

In page 25, before section 19, but in Chapter II, to insert the following sections:

.—(1) In this section ‘relevant year' means the year 1979-80 or any earlier year of assessment.

(2) Notwithstanding anything contained in the Income Tax Acts, the regulations made thereunder or any assessment made (whether before or after the passing of this Act) in accordance with the said Acts or said regulations, no repayment of tax shall be made nor shall any credit be allowed to any person in respect of any overpayment of tax (whether paid by deduction or otherwise) suffered by him in respect of any relevant year being an overpayment arising by virtue of the aggregation of the income of that person with the income of his spouse, unless, before the commencement of that relevant year, he had instituted legal proceedings to assert the unconstitutionality of the provisions of the Income Tax Acts purporting to authorise such aggregation.

.—(1) In this section—

‘assessment' includes an additional assessment;

‘an assessment to which this section applies' means an assessment to tax made, on or after the passing of this Act, on an individual for a relevant year;

‘relevant year' means the year 1979-80 or any earlier year of assessment;

‘the relevant rate' means, as respects any of the years 1974-75 to 1979-80, the highest of the higher rates which applied for that year of assessment and, as respects any other relevant year, the rate equal to the aggregate of the standard rate of income tax for that year and the highest rate at which sur-tax was chargeable for that year;

‘the relevant tax', in relation to an individual, means the amount of tax for a relevant year which—

(a) would have been payable by the individual for that year, or

(b) in a case where the individual is a wife who was treated as living with her husband for that year, would have been payable for that year by the husband of the individual,

if an assessment in respect of the total income of the individual and of his spouse for that year had been made on the 6th day of October in that year on the individual or on the husband of the individual, as the case may be, being an assessment made on the basis and in accordance with the practice prevailing at that time;

‘tax' means income tax or sur-tax or income tax and sur-tax as the context requires.

(2) Where, for a relevant year, an assessment to which this section applies is to be made on an individual (being a husband whose wife was treated as living with him for the relevant year or being a wife who was treated as living with her husband for that year) and, in consequence thereof, the aggregate of the tax, which would be payable for that relevant year by the individual and the spouse of the individual, is less than the amount of the relevant tax in relation to the individual for that relevant year, the provisions of subsection (3) shall apply in relation to the said assessment.

(3) Where the provisions of this subsection apply in relation to an assessment for a relevant year, then, notwithstanding anything in the Income Tax Acts but subject to the provisions of subsection (4)—

(a) the amount of income on which the individual is to be charged to tax shall be ascertained on the basis that section 138 of the Income Tax Act, 1967, had not been in force and had no effect for that year,

(b) the assessment shall be made on the basis that the individual is to be charged to tax on his taxable income for the year at the relevant rate, and

(c) where the individual on whom the assessment is to be made is a married person, the assessment shall be made on the basis that he is not married and such assessments or adjustments of assessments shall be made as are necessary to secure that the individual and his spouse shall be charged to tax for the relevant year in all respects as if they were not married:

Provided that any income contained in an assessment made on a husband which, before the 12th day of October, 1979, in accordance with the practice prevailing at the time the assessment was made, was deemed to be his income shall not be regarded as income of any other person.

(4) Where the provisions of subsection (3) apply in relation to any assessment on an individual for a relevant year, such relief, if any, from tax shall be given as is necessary to secure that the aggregate amount of tax payable by the individual and his spouse for that year shall not exceed the relevant tax for that year, and, in a case where assessments to which this section applies are made on the husband and on his spouse, the relief to be given under this subsection shall be apportioned between them in such manner as is just and reasonable.".

—(Minister for Finance).

Mr. P. Barry

This amendment relates to the rebate of tax to people who have already paid it or, in some cases, have not paid it prior to the current financial year. I referred three times yesterday to an article in The Irish Times and asked the Minister to comment. It appears that taxpayers in general will not be treated in the same way as the couple who took the court case. This is an involved and very complex technical matter which it is exceedingly difficult for any lay person to understand.

The Minister did not refer to this amendment yesterday when I spoke about this newspaper article but, as a result of a discussion this morning on the Order of Business and references in two newspapers today, the Minister said we would be coming to the matter later on and that we would be unhappy with what we heard. Just before lunch the Minister dealt with the two amendments and offered to brief by way of letter myself and Deputy O'Leary. I am grateful for this but I am sorry to say that it is still unclear to me. The Minister's letter states:

I would like to draw your attention to the attached amendments which I have tabled to the Finance Bill. These arise as a consequence of the Supreme Court judgment on 25 April regarding the operation of the decision on taxation of married couples. The court ruled that sections 192 and 198 of the Income Tax Act, 1967, have been invalid since their enactment in so far as they are unconstitutional but that married couples are not entitled to repayment of tax for previous years unless they had previously initiated these proceedings. The present amendments are designed to give effect to the Supreme Court judgment and to provide for the full payment of taxes by those who have not yet done so. The first amendment provides that no repayment of tax shall be made in response to claims for over-payment as a consequence of aggregation of incomes. The second amendment provides that where assessments are made for 1979-80 or any previous year the amounts of tax payable on foot of these will correspond to the amount that would be payable in the normal course if the old rules were still in application. This will ensure equitable treatment as between those who have already paid their taxes and those who have yet to pay.

I gather that those who have not yet paid will be treated on a par with those affected by the judgment but those who have made normal weekly payments up to 5 April 1980 will not be refunded any money unless they have actually been involved in a court case to obtain a rebate. Even though the Murphy couple took their case on behalf of all married couples the judgment of the court has been determined by the Minister to apply only to that couple and not to every other couple who found themselves in a similar position. He quotes in support of that the judgment of the Supreme Court. The Minister has probably taken advice on this matter and has been told that legally he is not bound to do any more than abide by the narrow interpretation of the judgment. I have no doubt that legally and in the narrow sense that is correct, but surely it goes against the spirit of the action taken by the couple involved. They said they were taking this action not just on their own behalf but on behalf of all couples who found themselves in a similar position. In that regard the Minister is not abiding by the spirit of the action taken.

These amendments may, as the Minister stated in his letter, introduce equity, but most people would consider that the equity which should be introduced should involve couples who found themselves in the same position as the Murphys and who should receive rebates.

Mr. M. O'Leary

There are further questions which arise in considering the implications of these amendments. The Supreme Court decision relates to the Murphy case but nothing prevents the State giving the same dispensation to every other couple as has been given to the Murphys. What happens in the case of a couple other than the Murphys who were involved in discussions with the Revenue authorities and who have disagreements with them on tax paid or yet to be paid? A rather interesting situation would arise if the State sought to gain money by way of back tax from couples other than the Murphys. Might the State be accused of acting unconstitutionally?

Does this amendment mean that couples engaged in discussion about their tax liability will be forced to bring their case before the courts? It seems to me a very confused situation. The Minister must have taken advice on the measure before the House but it seems the State could be constitutionally offside if they are engaged in seeking from couples who are in the same situation as the Murphy couple taxation which the State would claim was payable up to the time of the court decision.

Collection of tax from the self-employed is a year later. Presumably a couple in that category can avail of the decision in the Murphy case and get the full benefit of it. Superficially it would appear to be unfair that a couple whose tax collection is a year later should be able to avail of this where the majority of couples in the PAYE sector are not able to do so. It appears to me there is a sense of haste about this amendment and I am not sure the Minister can be happy in his mind that he has covered all the implications that arise from the decision in the Murphy case.

There is an anomalous situation with regard to a couple who may be engaged in discussions with the Revenue Commissioners, who may be denying their tax liability or who may be claiming back money. From what I can understand of the amendments before us, in that situation the State will pursue what the revenue authorities consider is due. Could a couple in that situation go to court and have the action by the State cited as unconstitutional? The self-employed couple are extremely fortunate in that they can gain the full benefit of the decision in the Murphy case.

Any measures we take here that appear to be partial as between the self-employed and the PAYE sector are not the wisest to take at the present time. The whole tax structure reeks with anomalies. It seems to be unjust in the way the burden falls disproportionately on different sections of the taxpaying population. Abstracting all the individual cases of injustice that can be cited, there appears to be the general case that the people in the PAYE sector are unable to escape the full vigour of the law when it comes to taxation, whereas up to recently the agricultural community could opt for accounts or the notional system and the self-employed could pay a year later. If any measure here increases the sense of privilege of one group and the sense of injustice felt by another group it will be a bad day's work.

The fairest thing to have done in the wake of the Murphy decision was for the State to begin on a completely clean sheet. The implications of that decision should have applied to all married couples. The Murphy couple took an admirable initiative in this matter and the intent of the court decision should have been applied to all couples. The Minister may say that the costs involved should be kept in mind by the Oireachtas. However, if the Oireachtas fail to reform, in time the Supreme Court will take over its functions. It is happening now. We spend our time debating measures; for one reason or another of party strategy we do not make a decision in a particular area and the court make the decision for us. It happened in this case. The headlines set by the Supreme Court should have meant that the Minister would see to it that all couples benefited as a result of that decision.

Mr. O'Keeffe

There are some aspects of this series of amendments that give cause for grave concern. On reading the Minister's letter and the amendments which have just been circulated, it appears to me he is trying to negative the decision of the court. The court held that the manner in which married couples were taxed was unconstitutional. There have been many references to the decision of the Supreme Court on 25 April last but it is proper to point out that this decision followed an appeal by the State against a much earlier decision of the High Court. In fact, initially it was the High Court which found the sections to be unconstitutional. The matter does not just date back to confirmation of the decision of the Supreme Court but goes back much earlier to the decision of the High Court.

The Minister first deals with the question of claims for repayment. Effectively he has shut the door on any such claims because people had not initiated legal proceedings before they made payment. That is a rather strange situation and it gives rise to all kinds of possibilities. The second amendment gives rise to even greater possibilities. It is shutting a door that is now open. For people whose assessment is under discussion or under appeal, the door is wide open but in his amendment the Minister is saying he is going to negative the decision of the High Court and the Supreme Court——

Mr. M. O'Leary

And perhaps act unconstitutionally.

Mr. O'Keeffe

The second amendment provides that where assessments were made for 1978-1979 or any previous year the amount of tax payable will correspond to the amount that would be payable if the old rules were still in application. These documents have been circulated in the past 30 minutes and I have not had an opportunity to go into them in detail but from a cursory reading of the amendment and what the Minister said in his letter what in effect he is trying to do is to reestablish the old rules despite the decision of the High Court as upheld by the Supreme Court, so that somebody who is in the situation that, say, their assessment may be under appeal, will be unable to take advantage of the Murphy decision. Referring to the fact that they had not previously initiated legal proceedings is a very specious response because obviously they would not have initiated proceedings if their assessments were under appeal. That is not the real point. The real point here is that the Minister is trying to obviate the decision of the Supreme Court and restore the situation where a married couple whose assessments are under appeal, from whom ultimately claims for outstanding tax may be made, will be put in the situation where they cannot avail of the Murphy decision.

As a politician and as a lawyer such a course of action would seem to me to be fraught with very grave dangers and I am very concerned that these amendments should be obviously drafted in such a hurry. I do not blame the parliamentary draftsmen because they obviously had to do this at very short notice. But to rush them through here without the full examination of the type of consequences I mention here is a very dangerous practice indeed. Essentially the proper course would be for the Minister to accept that all married couples are entitled to avail of the benefit of the decision of the Supreme Court despite the fact that they were not personally involved.

If one takes any other view surely the suggestion can only be that the Minister is trying to encourage litigation, trying to encourage people to institute legal proceedings at the drop of a hat on every issue that arises in case they will be cut out of the benefit of any such decision. That is not the basis on which law should be administered. If there is a court decision, a decision of the High Court and then a decision of the highest court in this land which finds certain enactments to be unconstitutional, it is altogether improper that the Government should attempt to introduce legislation by way of amendment to the Finance Bill or otherwise to ensure that the people of this State are not able to take advantage of such a decision, and, in effect, to negative the decision of the Supreme Court.

Mr. O'Kennedy

Far from trying to act against and contrary to the spirit of the decision of the Supreme Court I am doing precisely the opposite. I am acting very much in line with that decision and in line with the statements of the various judges, particularly Mr. Justice Henchy, who delivered the majority judgment. I intend to quote extracts which I believe and which I trust Deputies opposite will believe will clearly demonstrate that far from acting contrary either to the decision or the obiter dicta of the Supreme Court, I am acting very much in line both with their decision and their obiter dicta.

Deputy Barry has said that the plaintiffs in question brought this action not just on their own behalf but on behalf of the rest of the community. That may well have been on their minds; it may well have been their intention. But whatever was on their minds or whatever was their intention it is obviously not the guide or criterion by which I must act but rather what the court determines as a consequence of the action that they bring before the court. The court certainly did not hold that in this instance the Murphy couple were acting on behalf of others; they did not hold that what was determined in respect of them should apply to others. They made no such determination. They did rather the opposite and I will come to it in a moment.

Mr. M. O'Leary

The court does not prevent the Minister from doing so.

Mr. O'Kennedy

I will take the points one at a time as they were made.

On that basis what I am doing is acting very strictly in line with what the court did hold on this issue. Let me mention at this point, because the question has been touched upon, that I have taken advice in these areas—obviously any prudent Minister would take advice on any such issue. From the advice available to me in relation to interpretating the Supreme Court decision and as to what my obligations are in this area as Minister for Finance, I am satisfied that I am acting within the Constitution; otherwise I would not be introducing this amendment. I am satisfied also that I am acting within the spirit and letter of what the Supreme Court decided.

It is as well then that perhaps I should mention some basic principles first in relation to the law and then quote from the judgments themselves. The court ruled out other repayments on the grounds, amongst others, that it is not a universal rule that what has been done in pursuance of a law which has been held to have been invalid will necessarily give a good cause of action. They held that very clearly and this is not the first time that such decision has been taken. They also held very clearly and indicated that the State was entitled, in the absence of any claim of unconstitutionality, to act on the assumption that everything was presumed to have been done according to the law. This is not a new principle formulated by this Supreme Court because there is the principle that: Omnia praesumuntur rite et solemniter esse acta. That is a fundamental principle of all constitutional law and the court held here that the State was entitled, in the absence of any claim of unconstitutionality, to act on the assumption that the taxes in question were validly imposed, that they were properly transmissible to the Central Fund and that from there they were liable to be expended, according to the will of Parliament, for the multiplicity of purposes for which drawings are made on the Central Fund of the State. That is very consistent with all statements of principle in this area that have been made by any court reviewing constitutional issues. They also held that in the absence of special circumstances payments of PAYE taxes during the whole of the tax year without instituting proceedings to have the taxes invalidated on the grounds of unconstitutionality should be held to defeat a claim made later to recover the taxes paid during the year. For all of those reasons it is fairly clear that whatever Deputies opposite might want to imply to the court it would be as well to leave it to the court to speak for themselves. I have been as close to the courts as most Members of this House and it is a hazardous operation to start attributing things such as what the court might have intended or perhaps would intend if they were asked to do certain things, instead of relying on what they do say in discharging their functions.

Before I come to the quotations let me refer to what Deputy O'Leary has said. He said that if we do not do our job here the court will do it for us. That of course is not the case. In any event, where the court finds as is the established principle under our Constitution under the separation of powers, that they interpret the constitutionality of laws that are referred to in it and they, in discharge of their function, adjudicate on what is or what is not constitutional, the fact that from time to time they determine that certain actions which were done by the legislature may not have been in accordance with the Constitution is not a condemnation, as has been implied, of the legislature. If that was the case we would have immediate and open confrontation in any state that enshrined that very desirable principle of the separation of powers. There would be a simple way out of that which would operate probably in the dictatorships or authoritarian states. We would have no Supreme Court; it is as simple as that. We would not have this principle that is so important in our legislation and something that all sides of the House would want to cherish and support. But in so doing let us not interpret their decisions as being more than they are, more than they themselves could or would present them as being. Let us not interpret them as saying that they are doing the job which we should be doing. That is not the case. There are people in the media and people generally who do not really understand the principles that apply here. Of course one will find some general comment that might seem to suggest that Parliament did not do its work, that the courts had to do the work of Parliament. That is not the position that applies here. I shall quote here some of the statements made by Mr. Justice Henchy in the Supreme Court. He said:

In every tax year from the enactment of the Income Tax Act, 1967, until the institution of these proceedings in March 1978, the State justifiably altered its position by spending the taxes thus collected and by arranging its fiscal and taxational policies and programmes accordingly.

I might pause here to mention that it is not any accident that, apart from the Taoiseach, the only Minister of Government who happens to be mentioned in the Constitution is the Minister for Finance. This is because he too has a constitutional responsibility both in relation to the collection of revenue and to its disposal. Therefore, whoever holds this office for the time being must also discharge his constitutional responsibility. That is what Mr. Justice Henchy was referring to when he said that the State altered its position by spending the taxes thus collected and by arranging its fiscal and taxation policies and programmes accordingly. The quotation continues:

At the end of each tax year up to and including the tax year 1977-78, those charged by the State with auditing, controlling or planning the finances of the State, were, in the absence of any formulated proceedings or any other sound reason for doubting the validity of the taxes in question, entitled to close their books for that year——

Note the words, "entitled to close their books for that year".

——in the justified assurance that, if any of the taxes that had been collected, allocated, spent or been made the basis of projections for future taxation or fiscal policy, were to become at some future date judicially faulted, and having been unconstitutionally exacted, restitution of those taxes would not be ordered. For a variety of reasons it would be inequitable, if not impracticable, to expect restitution.

I note that Mr. Justice Henchy uses the word "inequitable" whereas Deputies opposite seem to use equity in a rather different sense. I can only say that, in so far as is concerned the principle that equity follows the law, I would prefer to be guided by the legal dictum of what is equitable than by the political interpretations that one would hear in this House. Mr. Justice Henchy continued:

Each tax year involves a different group of taxpayers, if only because of the deaths of some taxpayers and the accession of new persons to the lists of taxpayers. Restitution could be effected only by means of a special statutory provision, which would involve the imposition of fresh taxation to meet what would become an unquantifiable number of claims with the passage of time.

These are not my words, nor are they my interpretation of what might have been the Supreme Court decision. They are the words of Mr. Justice Henchy, whom I consider to be the best authority on which to rely in this case. He went on to say:

For my part, I consider that in the absence of special circumstances (which have not been shown to exist in this case), payment of PAYE taxes during the whole of a tax year, without instituting proceedings to have the taxes invalidated on the ground of unconstitutionality, should be held to defeat a claim made later to recover the taxes paid during that year.

On the assumption that no other taxpayer instituted proceedings, Mr. Justice Henchy went on to say:

No taxpayers other than the plaintiffs would have the standing necessary to maintain a claim that the State should reimburse them for any taxes collected under the condemned sections.

That, again, is straight to the point. Indeed, Mr. Justice Griffin held that the plaintiffs were entitled to recover the excessive amounts of income collected from them by the revenue authorities by reason of the aggregation of their income only in respect of the tax years, 1978-79 and 1979-80. He held also that unless proceedings had been instituted on behalf of any other taxpayers claiming the condemnation of the sections in question or seeking the recovery of any excess taxes collected from them, only the plaintiffs could maintain a claim in pursuit of the decision.

I have quoted enough from the judgments of the Supreme Court to indicate that the law and that equity as interpreted in the law, and which follows the law, has been clearly stated by the best authority in this regard, namely, the judges of the Supreme Court. What I am doing here in discharging my responsibilities as Minister for Finance is giving effect to those judgments. Of course, I have responsibility to the Exchequer as well as to the taxpayers, as I have a responsibility in relation to the disbursement of tax. Taking into account the advice that I have received, I am confident that what I am doing is entirely in accordance with the Constitution and with the law. Deputy O'Leary is right in saying that any Minister for Finance could go further. I do not expect that the Supreme Court would knock something that was done on the basis of extending benefits further. Of course a Minister for Finance could go back further than any issue raised here. He could go back as far as he considered appropriate in relating to applying the principles—to misquote myself but to quote the Opposition—of the Murphy decision. But legally I am not required to do that. In addition, as Deputies opposite know, for me to act in this way would involve major political decisions which would mean major expenditure of public funds, funds which would have to be provided by other taxpayers. We all recognise that the Minister for Finance of the day does not have money stacked away somewhere in little coffers or that all he has to do is to wave some kind of major wand——

Mr. O'Keeffe

He had plenty of money in 1977.

Mr. O'Kennedy

——in order to have plenty of money to spread around. We have all got to the stage of recognising that we ourselves pay for what we provide for ourselves. It is the taxpayers who provide. Now that I can take the political decision, I see no justification politically—the very opposite—in view of what is being done, particularly in implementing income splitting this year, in imposing such a huge extra burden, a burden which is actually unquantifiable. It is always easier from Opposition benches to ask, whether from the county council or the Dáil, for more and more on behalf of more and more. If the Opposition Deputies did a little analysis on it, when they were asked to advise on how the funds were to be collected to meet their requests, they would very soon, and wisely, withdraw their requests.

Mr. M. O'Leary

That is what I wanted to extract from the Minister, that it is his decision that the result of the Supreme Court case will be confined to the couple concerned. I wanted to unwrap the robes of rectitude which the Minister has wound around himself, to find out his position vis-à-vis the Supreme Court decision. There is no legal decision which prevents him from making what would obviously be a difficult decision to make as regards the implications and extent of it. No court decision would prevent him from making a settlement or a decision in that area. He would not be seen in that capacity as acting perhaps in a strictly legal sense. To that extent he need not worry about the strict implications of restitution. He would simply be acting as a Minister for Finance. When I spoke earlier about the role of the courts and the role of Parliament I was not arguing against the idea of separation of powers but simply making the point that in this Supreme Court decision and decisions in other cases which would be irrelevant—for example, on the question on contraception—the courts had to some extent increasingly, because of the failure of this Parliament to grasp what are referred to as nettles, within the separation of powers to make up the leeway of indecision which has been a feature of parliamentary life for a number of years for various reasons —strategic reasons, popularity reasons or otherwise. The majority party in Government in this House have failed to make certain decisions, leaving a greater role, and property, to be discharged by the courts, as happened in this case.

Coming back to the Supreme Court decision, it is another argument on whether the resources at the Minister's disposal would merit a more generous approach to this problem. "What's Another Year", as the pop song goes. What was 1977? The point has been made repeatedly in the life of this Parliament that we have not been so discriminatory or scrupulous in our regard to the use of resources up to now. If they are inheriting, as they are increasingly inheriting, and dealing with a community which is split into millions of sections, with a cash tag in relation to each section's demands, they have only themselves to thank that they are authors of this national psychology which is now the dominant psychology of more on all fronts But that is a separate argument.

The Minister has correctly read out a Supreme Court judgment in relation to one couple. I accept that it gives plenty of protection for abiding closely to the court decision. However, as Minister for Finance elected by popular franchise, nothing in that decision prevents him from broadening and extending the effect of the judgment as related to the Murphy couple, difficult though the decision may be when one comes to the detail of its implications in relating to other couples.

Despite what the Minister has said here, there are still many loose ends. It is still open to other couples, as yet unnamed, to possibly cite cases in relation to claims under appeal. There is the rather anomalous situation that those married couples who belong to the self-employed can quite legitimately claim back moneys under appeal. It seems unfair that the effect of the Murphy decision in their case will not rule anything out for them, whereas it will, or appears to, in relation to couples under PAYE.

Mr. O'Kennedy

I should have dealt with that point.

Mr. M. O'Leary

Could the Minister please deal with that point?

Mr. P. Barry

The Minister has covered a very simple point here with a lot of verbiage which is largely irrelevant.

Mr. O'Kennedy

That is a nice way to refer to the Supreme Court judgment which I quoted precisely.

Mr. P. Barry

The Minister knows precisely what I mean and should not try to palm that one off on me. The proposition has been put forward that it is easy to spend money while one is on this side of the House. I am not going to follow the Minister's example of the last few days in quoting from Dáil debates what various Members of this party and the Labour Party said while in Government. If I did, I would come across a quotation from the present Taoiseach looking for another £100 million to be borrowed and spent, no bother at all—it is easy to say where it should be spent when in Opposition—or the present Tánaiste, four or five years ago, again from this side of the House, saying that indexation should be introduced immediately—no question of where the money was to come from. As he said himself, to give him his due, "It is no concern of mine. That is a matter for the Government. I am saying the principle which should be applied". I remember hearing the present Minister for Finance, when on these benches, making an impassioned plea——

Mr. M. O'Leary

He was not as well-heeled on this side as he is on that side.

An Leas-Cheann Comhairle

The Deputies should debate the amendments before the House.

Mr. P. Barry

He said that no budgetary constraint would stop him from spending 0.35 per cent of GNP on Third World countries.

Mr. O'Kennedy

If the Deputy wants to quote he should quote exactly. I never said that.

Mr. O'Keeffe

The Minister made a lot of commitments.

An Leas-Cheann Comhairle

Deputies, we are not dealing with money for Third World countries or anything else. We are dealing with an amendment on the Finance Bill.

Mr. O'Keeffe

By 1982.

An Leas-Cheann Comhairle

The Deputies must deal with the amendment on the Finance Bill.

Mr. P. Barry

The Minister is being a little bit schoolboyish here over the last few days in going back over Dáil debates. I am not going to follow him down that road.

The point is quite simply that a couple have taken an action the result of which has been that they will be given a rebate of tax—I am not sure of the date and perhaps the Minister will tell me whether it is from March 1978 when they took the action or from the date of the High Court judgment or the Supreme Court judgment. This couple took this action and are going to be given a rebate of tax paid under an Act which was found by the Supreme Court to be unconstitutional. I accept the corrections of the quotation that the Minister has given here today and that his interpretation of it is legally right. I never from the time I stood up an hour ago to speak on this Finance Bill assumed otherwise. However, I differ from the Minister when he says that he would prefer the courts definition of equity to the political definition given in this House. The court is the court and it rules on legal matters. This House is the House of politicians and we decide.

Mr. O'Kennedy

Equity is a legal principle. Equity is a legal maxim.

Mr. P. Barry

I am sure the Minister understands the position, as Deputy O'Keeffe, Deputy Bruton and a few more Deputies who are lawyers do. I am concerned about equity as the ordinary man in the street understands it, that what is sauce for the goose is sauce for the gander. That may be an unfortunate choice of phrase in the circumstances. The position is that a rebate of tax to be given to the Murphys in equity, as understood by the ordinary speakers of the English language, should be given to all couples in a similar position, and that is what I ask the Minister to do. He has repeated and I can see from the letter he has sent me and from his amendment that this is the advice which he has got. He is interpreting the law precisely and correctly, and I accept that point. He is also writing into this Finance Bill the interpretation of the Supreme Court decision in this regard, and I accept that.

What I am saying is that what Mr. and Mrs. Murphy have got as a result of a Supreme Court decision, Mr. and Mrs. O'Keeffe, Mr. and Mrs. Bruton, Mr. and Mrs. Fitzpatrick and Mr. and Mrs. O'Leary should all get as well. That is equity as I understand it. That is what most ordinary people would see as the fair thing to do. Imagine what would have happened if this judgment had been handed down three weeks previously, in the last financial year. Can you imagine the bottleneck in the courts as people lodged their claims for rebate on the tax paid by them in what would then be the current financial year? It is only the fortuitous circumstance of the judgment being handed down during the month of April, after the close of the financial year, that all of these people are not going to be allowed claim through the courts for a rebate of the tax paid in the financial year from 5 April 1979 to 5 April 1980. That is the point. It is purely because that judgment was handed down at that time these people are being deprived; according to the judgment they are not now entitled to claim because they are not claiming within the financial year. I think that is the correct interpretation, but to my mind every one of them is entitled to claim. The Minister says that what is in a person's mind, in the Murphys' minds, whatever was their intention, or may even have been written down, is not a matter for a court judgment. That is correct. But the public at large understood that the Murphys were taking this case on behalf of all married couples who felt that the law that aggregated their incomes for tax purposes was unconstitutional. If that is so—as I believe, and I shall introduce an amendment on Report Stage to say so—then every married couple should be given the same rebate of tax retrospectively to whatever date the Murphys are being given it.

Mr. O'Keeffe

I must suggest very strongly here that there is neither justice nor equality in what the Minister is proposing to do. Basically he is arguing backwards. The Supreme Court said that those who had paid could not recover. The Minister extends this by saying, and by introducing amendments here to provide, that those who have not yet paid will be put in the same situation as those who have already paid. In fact it should be other way round. The Supreme Court has not laid down any decision, specifically or otherwise, as to those who have not yet paid. I believe those people should be entitled to take advantage of the Murphy decision and, despite anything the Minister does here today, may still be entitled constitutionally so to do. As I see it, putting the argument the proper way round, we have now a situation in which there are people who, for one reason or another, because assessments may be under appeal and so on, have not made their payments. The law, as enunciated by the Supreme Court, makes it clear that they do not have to make those payments. That is the picture.

If the Minister is talking about introducing equity into the situation what he should be doing here is to provide for the repayment to those people who are in a different situation because they have previously made payments. That is the way the argument should be presented here. With respect to the Minister, he evaded the point entirely in the long excerpts he quoted from the decision of the Supreme Court. Nobody has argued here on what the Supreme Court judges have said about the entitlement to repayments in law if an Act is held to be unconstitutional. It is accepted that what has happened previously is not to be undone. If, say, a Criminal Justice Act is held to be unconstitutional, somebody who has served a jail sentence is not entitled to claim for unlawful imprisonment against the State; similarly in civil matters. That is quite clear, but that has nothing to do with the fundamental issue here. As I see it the issue is that the Supreme Court has held that these provisions were unconstitutional. The Minister is trying to extend the words of Mr. Justice Henchy and others to protect the Government from the repayments they should be making. He is doing this on the spurious grounds of providing equitable treatment. He is taking the words of the Supreme Court in regard to claims for repayment and extending them to those who have not yet paid. In effect that is what the second amendment the Minister is introducing here provides.

I would say to the Minister, in regard to his first amendment, why is it necessary at all except as a spurious basis for the second one? The first amendment provides that no repayment of tax shall be made in response to a claim for overpayment as a consequence of aggregation of incomes. Is it not already—as read out by the Minister—the decision of the Supreme Court that that is the case? Why then is it necessary to produce an amendment to that effect? I suggest the only reason this amendment was produced was to permit of the second which, in effect, is saying that the old rules will apply in regard to those who have not yet made payments for those income tax years. Therefore I suggest the first amendment is entirely unnecessary and the second is probably unconstitutional.

I must suggest strongly that the Minister's approach to this whole problem is entirely wrong and unjust, that he is attempting to extract from people—those people in the category whose payments for those years have not yet been made—money which the Supreme Court has held they should not pay, and he is doing this under the guise of equity.

Mr. O'Kennedy

Is the Deputy saying that the Supreme Court held they should not pay?

Mr. O'Keeffe

The Supreme Court held that sections 192 to 198 of the Income Tax Act of 1967 were unconstitutional.

Mr. O'Kennedy

That is not what the Deputy said. I should have expected the Deputy to have some experience of legal precision. As far as I know the Deputy said the Supreme Court held they should not pay. The Supreme Court held no such thing. If the Deputy wants to advance an argument he should do so on the basis of facts and on the basis of what was dealt with.

Mr. O'Keeffe

If the Minister wishes the case to be argued in terms of legally precise wording I can do that and take a long time in so doing but there are other people here who wish to speak.

Mr. O'Kennedy

It is often a help.

Mr. O'Keeffe

But, very simply, the Supreme Court judgment was that sections 192 to 198 of the Income Tax Act, 1967, were invalid, were unconstitutional.

What the Minister is now proposing to do, in regard to his second amendment, is to provide that the amount of tax payable for the year 1979-80 and previous years—where that amount has not already been paid—is to be paid on the basis of the old rules, the old rules which were declared to be unconstitutional by the Supreme Court, and he is attempting to do this under the guise of equity. Does the Minister appreciate the consequence of what he is proposing to do? Unless I am misreading his amendment entirely, in effect what he is saying is that those people whose assessments are under appeal, whose payments have not yet been made, must pay as if the Supreme Court never decided on this matter. The Minister is asking us to approve an amendment to that effect, to ignore the decision of the of the Supreme Court. That to me—and I think I am correct in what I am saying—is an outrageous proposition.

Mr. O'Kennedy

If it were as the Deputy has been misrepresenting it, it would be outrageous.

Mr. O'Keeffe

With respect to the Minister, I raised this very point when I spoke first on this amendment. The Minister quoted parts of the Supreme Court judgment in regard to the non-entitlement to recoupment of tax and did not deal with the second amendment at all, which is the basic point here. If the amendment as I read it is passed it will be a total travesty of justice.

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): The Supreme Court held that sections 192 to 198 of the 1967 Income Tax Act are unconstitutional, and the effect of that decision was to exempt Mr. and Mrs. Murphy, the plaintiffs in the case, from income tax as assessed on them in respect of the financial year 1979-80, but the court went on to hold that that decision applied only to Mr. and Mrs. Murphy and not to all other married couples who found themselves in exactly the same circumstance. The court also held that the decision was not retrospective to the date on which the 1967 Act became law.

That is my understanding of the Supreme Court decision. I can understand the court holding that the decision could not be retrospective to 1967 because that would have all sorts of complications, but the decision is absolutely clear, that as far as Mr. and Mrs. Murphy are concerned they are to be exempt from the income tax assessed on them for 1979-80. I say that irrespective of what the Minister argues; the law is that if one couple are exempt from income tax under certain rules in respect of a given year, then every couple in the country in the same circumstances should be exempt in respect of the same year under the same rules, and it is unjust and unfair for this House to attempt to pass legislation that would decree otherwise.

The Minister spoke about equity following the law and the law following equity. We here want to talk in plain language, plain common sense. We have control of the situation here. The Supreme Court spelled out the law as they saw it and they said that only the couple who had brought the case were entitled to a refund if they had paid, or to an exemption if they had not. I presume the Murphys had in respect of 1979-80. Once one couple in the State are treated in that way the entire population should be treated in the same way if they bring themselves under the decision of Murphy v. Ireland. To try to do anything else is unfair and unjust. The Murphys brought the case and that is the only respect in which they are different from all the other Mr. and Mrs. Murphys in the country.

All the other couples in the same circumstances are having their joint earned income aggregated and they are being taxed on it. That is what the Supreme Court held to be wrong and that is what the law is for Mr. and Mrs. Murphy in respect of 1979-80, and as far as this House is concerned that should be the law in respect of every other similar couple for that year.

The Minister may try to argue that that would be impossible because the consequences would be catastrophic for the other taxpayers, that it would upset the finances of the State to such an extent that it would create chaos. That is not the case. I do not know how much money is involved but it would be small——

Mr. O'Kennedy

About £100 million.

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): It is still comparatively small when we are talking about an Exchequer budget of £2,000 million. We will be enacting an injustice here if we do what the Minister proposes. I am speaking on behalf of all the people who can bring themselves within the judgment and who can claim exemption on rebate.

Mr. Crinion

I should like to know how many couples are likely to be affected by this.

Mr. O'Kennedy

There are 300,000 married couples and 120,000 of those have two earned incomes. These figures will give some measure of the amount involved. Deputy Fitzpatrick said that the amount involved would be relatively——

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): I referred to the overall Exchequer. At least I did not use the word used here in the past—“nugatory”.

Mr. O'Kennedy

The record will show the phrase used by the Deputy. I put the figure at £100 million which obviously is considerable, no matter what the size of the budget. We have gone over the ground already. Deputy Fitzpatrick said that because the Murphys come under this decision it is only fair that couples in the same circumstances would benefit. That is not in accordance with law or reality and I must deal with it on these precise grounds. We have been told that this must be dealt with here in plain political language. It is a great shelter to use vague and broad generalisations—if the Murphys got it everybody else should get it. That is plain but it is not the reality as applied by the law and we here are discharging a legal as well as a political function. We have here the most useful guide and the most persuasive authority——

Mr. O'Keeffe

The Minister is holding it like a shield in front of him.

Mr. O'Kennedy

I heard representations from the other side, in "plain man's language", about what the Supreme Court held. Obviously they do not like to hear what the Supreme Court actually said——

Mr. O'Keeffe

It is irrelevant to the points we are making.

Mr. O'Kennedy

Of course it is irrelevant, but what the Supreme Court said.

Mr. P. Barry

That is childish.

Mr. O'Kennedy

If what the Supreme Court said is irrelevant, this debate should not happen. Mr. Justice Henchy said:

For a variety of reasons, the law recognises that in certain circumstances, no matter how unfounded in law certain conduct may have been, no matter how unwarranted its operation in a particular case, what has happened has happened, and cannot or should not be undone. The irreversible progressions and bye-products of time, the compulsion of public order and of the common good,——

This £100 million is an element in the public order and the common good——

the aversion of the law from giving a hearing to those who have slept on their rights, the quality of legality—even irreversibility——

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): That is the Gaming Act.

Mr. O'Kennedy

——that tends to attach to what has become inveterate or has been widely accepted or acted upon, the recognition that even in the short term the accomplished fact may sometimes acquire an inviolable sacredness, these and other factors may convert what has been done under an unconstitutional, or otherwise void, law into an acceptable part of the corpus juris.

That is going about as far as I would want to go if I were arguing from these benches.

This trend represents an inexorable process that is not peculiar to the law, for in a wide variety of other contexts it is either foolish or impossible to attempt to turn back the hands of the clock. As an eminent historian vividly put it, speaking of the pointlessness of seeking to undo or reshape the facts of history: "the statue has taken its shape and can never go back to the quarry".

They are the words of Mr. Justice Henchy.

Mr. Bruton

The Minister would do well to read those words in other contexts.

Mr. O'Kennedy

I have been asked to ignore all these principles of law. Although Mr. Justice Henchy would not say he was an authority, he said the principle was not just of the law but of fact and reality. Because one case was determined by the court and the court held that parts of an Act were unconstitutional and that the plaintiffs were entitled to redress, we are being asked to accept here what has never been accepted in law and that means "in plain man's language" everyone is entitled to it at a modest cost of £100 million.

That seems a little unreasonable and unfair. There is no principle which suggests this should be done. How would we raise this very considerable sum? In a year when provisions, far beyond what the Supreme Court required, are made in the Finance Bill for married couples, and when some people suggest—I am not going to say with justification—that single people are not getting benefits of the same amount, Deputies are saying that we should ignore all this. Who is to pay? If it is to be the married people, this means they will be given money with one hand and paying it back with the other. If they are not asked to pay, who is left? We would have to ask the single people to pay this extra £100 million. We could tell them that we have done well by married people but we would need this extra money to meet the wishes of Opposition Deputies, even though the law does not require it nor does the Constitution suggest it and there is no known principle that requires it.

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): How much income tax was assessed for 1979-80?

Mr. O'Kennedy

About £730 million. The Deputy will appreciate that £100 million is not an insignificant fraction of that sum.

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): I would like to see that teased out and justified because I do not believe it is anything like that figure. If there were a number of questions put down about the amounts paid by single and married people and the amount involved here is only the excess paid——

An Leas-Cheann Comhairle

The Minister is in possession.

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): The figure of £100 million is absurd and I am not a mathematician.

Mr. O'Kennedy

We are talking in terms of 1978-79 and 1979-80. The amendment says people are entitled to go back over a number of years to get assessments——

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): I am talking about 1979-80.

Mr. O'Kennedy

That is not the issue covered in these amendments.

Mr. P. Barry

It is the issue we are covering here.

(Interruptions.)

An Leas-Cheann Comhairle

The Minister should be allowed to conclude.

Mr. O'Kennedy

Deputy O'Leary said it would be inequitable if PAYE taxpayers were debarred from repayments while those who did not pay their taxes in time were to get the benefit of the court's rulings for the back years. Of course it would be inequitable if we were to discriminate in favour of those who had not paid as against PAYE taxpayers. For that reason section 20 is being introduced.

Mr. O'Keeffe

The Minister galloped through a very basic point in five seconds. In the light of the Supreme Court decision how can he justify "applying the old rules" to those who have not yet paid?

Mr. O'Kennedy

We are not applying the old rules. We are applying a basis of assessment which is reducible to the amount of tax which would have been paid under the old rules. That ensures that the principle of equity, treating all taxpayers equally, is being applied here.

Mr. P. Barry

We have spent two hours on this amendment. The Minister does not seem to be taking the point we are making which is that all married couples should be treated for the tax year 1979-80 as are the people in the court case. I intend to introduce an amendment on Report Stage to ensure that the rebate allowed to the Murphy couple will be allowed to all married couples in the same position.

Amendment put and declared carried.

SECTION 19.

Question proposed: "That section 19 stand part of the Bill."

Mr. Bruton

This section is concerned with the extension of income tax liability to farmers having valuations between £40 and £50. On average these are farmers who have between 40 and 50 acres and who would be earning between £4,000 and £5,000 per year. On the basis of demographic data about the number of children per family and the average income for particular types of farming it can be clearly seen from a quick calculation that most of these people would not be earning a taxable income. The net result of this section is that all these people, who in many if not all cases could be seen not to be earning a taxable income, will have to go to the considerable bother of preparing accounts which will be examined and stamped by accountants for presentation to the Revenue Commissioners. The whole operation will be completely abortive as far as collecting revenue for the State is concerned. A substantial number of farmers who have not a taxable income will have to pay accountants to prove this fact, and this is not a desirable development. There are many very talented accountants and their valuable time will be wasted in going over the books of people who are obviously not taxable. I assert that there are a substantial number of people with valuations between £40 and £60 who will not be liable to tax because of the size of their family.

My second argument is applicable to this particular year, though it may not be applicable in every year. It is common cause among all sections of the community and among reputable economists within and without agriculture that in many cases farmers have not made money but have suffered substantial losses. They are now to be brought into the tax net. Of course, the Minister will say that if they have suffered losses they will certainly not have to pay income tax. That point is conceded, although they will be paying substantially increased rates. That is another argument on which we have yet to spend some time in this House. Many farmers who have suffered losses will have to go to the expense of producing accounts to prove they are not taxable, which fact could be easily predicted on the basis of available information about the number of children they have to support and the prevailing agricultural conditions. This will be an expensive waste of time which will not yield much revenue to the State and it is a matter of some concern to the entire farming community.

The Minister will say he has made the concession, as yet not clearly explained, that in the case of farmers being brought into the tax net for the first time they will be allowed for the first year to present what are disingenuously described as "simple" accounts.

Mr. O'Kennedy

I did not say "simple". I said a "simplified form of accounts". The term did not start from me.

Mr. Bruton

I accept the Minister's description and I am not attempting to quote him verbatim. I should like to know a little more about these simplified accounts. If they can give the information needed in respect of this category of farmers, would not simplified accounts suffice in the case of other categories of farmers? The Minister might address himself to that question in his contribution. The accounts required at present are quite complicated. The significant point about this so-called concession is that it will apply only for one year. It is like the sugar coating on the medicine for the first application, but in subsequent applications there will be pure unadulterated castor oil without any sugar coating or orange flavour. Like the resource tax, which is supposed to last only for a year, it is a means of trying to keep everyone at bay for at least 12 months and then do the worst. It is an easy payment plan under which one will finally have to pay more.

Lest the Minister should say that I am making a song and dance about people having to prepare accounts when he is providing this simplified method, I would point out that it is only to last for a very brief period. We do not know how simplified they will be. I should like to know from the Minister if it will still be necessary to get accountants to vouch for the simplified accounts as it has been necessary to get accountants to vouch for what one might describe as the complicated accounts? If accountants will have to vouch for them there is not much advantage in having the accounts simplified. We should get specific details about what is meant by simplified accounts.

What I am concerned about is the cost incurred by farmers in hiring accountants to prove they do not have an income. I accept that farmers should pay tax if they have an income, but I object to putting them to the bureaucratic cost of proving they do not have an income when that is obvious from simple observation. I should like to point out to the Minister that in Northern Ireland farmers pay income tax. There is a large number of small farmers there also and it has not been necessary for accountants to vouch for every set of accounts submitted by them. In fact, a simple return of income is accepted from the bulk of farmers in Northern Ireland and there has been no suggestion that they have been getting away with murder so far as tax is concerned. They may get away with it for one year, but if their returns are clearly out of line with the situation obtaining in other sections of the community events catch up with them and they have to pay their tax. If it is possible to work that system in Northern Ireland without requiring accountants to be involved in every case, I do not know why it is not possible to operate it here. I should like the Minister to say if he has investigated the situation and if he will give us the results of the investigation.

Mr. Crinion

I was glad the Deputy referred to the fact that there is a simplified system for people whose valuations are between £40 and £50 but I do not like the case being made that such people have to engage the services of an accountant. In his budget statement and subsequently the Minister stated that these people may submit simplified accounts. When the National Coalition Government introduced the tax originally there was a simplified form of accounts in operation and the Revenue Commissioners accepted them. Quite a number of farmers submitted their accounts themselves in 1974-75 and they did not have any great problem. I have told many farmers to avail of the simplified form of accounts. It will not involve them in much work. Nowadays they sell at the mart, in the factories, creameries and to the Dublin dairies and it is easy for them to indicate lodgments and payments on their bank statement. The form in operation when the National Coalition Government were in office was not difficult to complete and did not present any difficulty for farmers. We should not scare farmers who have a valuation of £40 or £50 into hiring the services of accountants. They are able to produce their accounts themselves and there are many people to advise them. I am sure the agricultural instructors will advise them with regard to valuations and this is where the major problem arises. I would advise all farmers with valuations of £40 to £50 to use the simplified accounts. Speakers here are doing a disservice to such farmers when they tell them to engage accountants to do the work.

Mr. D'Arcy

We heard much talk this morning about equity, about who should or should not be entitled to a rebate of tax. This section reduces the threshold and can be seen as a further attack by Fianna Fáil on the poorer section. In the main this represents farmers with holdings of 35 acres to 60 acres. I think Deputy Bruton put their incomes far too high; their incomes range from £2,000 to £5,000. Since 1977 there has been a consistent attack by the Government on this group and the valuation threshold has been reduced from £75 to £40.

This morning the Minister imposed a further injustice when he increased the interest rates on death duties from 10 per cent to 15 per cent. The Minister has practical knowledge of rural Ireland. In the past few years we have had Ministers of Finance who were based in the urban areas but people expected that a man from a rural area such as Tipperary would have some practical knowledge of the difficulties faced by farmers. The Minister has not taken any measures to protect the people working the land. I am prepared to accept that the measures before the House are the collective responsibility of the Government, but one expected more from a Minister who comes from a rural constituency. Fianna Fáil completely misled the people with their manifesto of 1977 and they have consistently attacked the agricultural community since then. Now they are attacking people with incomes as low as £2,000 to £5,000.

This measure may not cost a lot in actual tax but we know that people with a valuation of £40 are liable for full rates. The Minister spoke about simplified accounts for one year, but that will not suffice. In most cases it will cost £250 to engage an accountant and this amount, in addition to rates of £500 to £600, will mean a cost of from £15 to £20 per week for people with the lowest incomes in the country. Even if they do not pay tax, after 1980 they will have to employ an accountant. The ordinary PAYE taxpayer merely fills up a form based on figures from his work place. A farmer with a valuation of £40 to £50 has a simple income, one that is based on the sale of milk to a creamery and which can be quite easily assessed. On the basis of cattle or pigs or poultry to a factory, surely at this stage it should not be necessary for these people to keep accounts. You said "simplified accounts". The Minister has never told us exactly what simplified accounts mean but we are now handing over to the Revenue Commissioners people with the lowest possible income and at the same time we are asking these people to pay between £15 and £20 on actual income of £2,000 to £3,000 in some cases even if they have a low valuation. I point out to the Minister that in County Wexford, as in every other county in Ireland, we have a great variation in the valuation system. We have from as high as 125p poundage per acre in valuation. These people would have a valuation of only £40 but they would have only 30 acres of land while in other places in Wexford they would have 100 acres of land and £40-£45 valuation.

In view of these massive fluctuations some attempt should be made to have adjusted acreage put into operation. This has been talked about down the years and sooner or later somebody will have to stand up in this House and state that when you are trying to extract money from people it must be done with some equity. There is no equity in the valuation system. The same must apply in your own county as it must apply also in every county in Ireland. Further, you have given an undertaking that valuation will remain for three years at £40. Any undertaking given by Fianna Fáil since they regained office in 1977 as far as the farmers are concerned is a sick joke. The previous Minister gave an absolute undertaking that anybody who opted for the notional system under the 1978 budget would have to stay on that system for three years. You are giving the same undertaking in your budget. You can take it, Minister, that nobody will take it seriously.

Mr. O'Kennedy

Will the Deputy not?

Mr. D'Arcy

No, certainly not, and neither will the farmers. The Minister is fooling the farmers.

Mr. Deasy

They took them for a ride in 1977.

An Leas-Cheann Comhairle

Deputy D'Arcy will address the Minister through the Chair in the third person. I do not accept responsibility for any of these things. It will appear in the record that the Chair has done all these things that the Deputy is talking about.

Mr. D'Arcy

Sorry, a Leas-Cheann Comhairle, I will address the Minister through the Chair. Now, Minister you are a new man, you are a rural Deputy.

Mr. Bruton

The Minister is a new man.

Mr. D'Arcy

He is a new Minister for Finance. He is a rural Deputy and he has some knowledge of the difficulties attached to agriculture. No doubt you have seen for the past year the amount of problems attached to agriculture. You have seen for 1979 the reduction in the real income as far as agriculture is concerned of about 12 per cent. In 1980 it is reasonable to assume that the reduction of the actural income of those engaged in agriculture will range between 12 per cent and 25 per cent depending on the type——

An Leas-Cheann Comhairle

Deputy D'Arcy is getting away from section 19.

Mr. D'Arcy

I am making the point to the Minister about incomes.

An Leas-Cheann Comhairle

The Deputy cannot get away from section 19.

Mr. D'Arcy

I am dealing with the incomes of people with £40 valuation. I want to point out to the Minister that the only section of the community in this country who are on a falling income at the moment are people engaged in agriculture and he is bringing in legislation here to tax these people. Surely that is relevant to the discussion.

An Leas-Cheann Comhairle

We cannot have a debate on agriculture on this section.

Mr. D'Arcy

As far as agricultural incomes are concerned he can take it that in the year 1980, depending upon the increase in prices and on the type of farming you are in and how developed that system is, your income can fall from 12 per cent to 25 per cent. Where is the justification in asking people with smallest incomes in this land to pay, first of all rates—and for people with £40 valuation the rates will be about £450 up to £650—to pay an accountant £250 more and the Minister is asking them to pay tax? There is no justification whatsoever.

Mr. Keegan

We are not asking them to pay an accountant.

Mr. D'Arcy

We have an undertaking from the Minister that for the first year he will accept simplified accounts. He has not told us what these simplified accounts are. After that year he is asking them to pay an accountant.

Mr. Bruton

If the Minister intended it to be only temporary, he would have said so.

Mr. O'Kennedy

In the meantime I have to listen even though I may not agree totally with what was said or represented on my behalf.

An Leas-Cheann Comhairle

Deputy D'Arcy on section 19, and for the record, Deputy, refer to the Minister as the Minister.

Mr. D'Arcy

I want to ask the Minister a simple question. What is the meaning of simplified accounts? For how long will they apply? That is what the farmers are asking. How does he justify asking people with an income as low as £2,000 to pay, first of all, up to £500 rates, £250 for an accountant, and on top of that to pay tax if they have a taxable income?

Mr. Keegan

I hope to be able to set Deputy D'Arcy's mind at ease by telling him that the simplified taxation forms which small farmers are obliged to return are already issued and they are simple. You do not need to be an accountant or even to go beyond national school standard in your efforts to fill in the queries asked in the query form. If Deputy D'Arcy consults any of his constituents who have already received them he will have no doubt in his mind that this is an acceptable, simplified system.

Mr. Deasy

There are no small farmers in my constituency.

Mr. O'Kennedy

What Deputy Deasy said should be put on the record for the benefit of Deputy D'Arcy.

Mr. D'Arcy

I did not say that.

An Leas-Cheann Comhairle

The Chair would believe that there are a few, but no matter.

Mr. Keegan

Whenever new measures are introduced, it is natural that people will resent those measures especially at a time when agriculture has passed through a difficult period. They had marketing problems during 1979 and those problems are not with us in 1980. The farm incomes are guaranteed through recent agreements in Brussels. Therefore, it is reasonable to expect that the farming community will have a better chance of a reasonable income during 1980 than they had in 1979. That is completely in contrast with the situation in 1974——

An Leas-Cheann Comhairle

Deputy Keegan will have to stay with section 19.

Mr. Bruton

It is getting contentious.

Mr. Keegan

Unfortunately, everybody who has spoken so far has drifted completely away from the subject matter.

An Leas-Cheann Comhairle

The Chair is doing its best to try to control the drift with the farming community present but that is no reason why Deputy Keegan should drift.

Mr. Keegan

With regard to section 19 of the Finance Bill which makes provision for the inclusion of farmers in the £40-£50 land valuation bracket for the first time, a measure such as this is bound to be resented by sections of the community especially when political parties set out to capitalise on the issue, try to make life intolerable for the farming community and try to inject fear, suspense and mistrust in the farming community.

(Interruptions.)

Mr. Keegan

The farmers who are already in the tax net are quite happy with the allowances they are getting. They are not saying a word about it and I have them in my organisation the same as everybody else.

An Leas-Cheann Comhairle

Stay on section 19.

Mr. Keegan

I am happy with the provisions that have been made already in previous Finance Bills.

Mr. Bruton

My visits to Westmeath do not provide me with the same information.

Mr. Keegan

Deputy D'Arcy asked why is it necessary to ask farmers to make returns. Why is it necessary to ask small shopkeepers and thousands of workers to make returns, even though they may not be obliged to pay one penny in tax? I see nothing wrong in asking farmers to make returns in the same way. We hear a great deal of talk about the introduction of equity into the tax system. This is an effort to achieve equity. If there were a change of Government after the next general election, I wonder would we see the complete abolition of farmer taxation? Would their Labour colleagues agree with them?

An Leas-Cheann Comhairle

It does not arise.

Mr. Keegan

These are questions which must be asked because they have not been touched on.

An Leas-Cheann Comhairle

The Deputy should ask them on another occasion. They do not arise on the section.

Mr. Keegan

Deputy D'Arcy talked about the inequities of the land valuation system. Every constituency is affected by the land valuation system. In County Westmeath we have land valued at £150 per statute acre—among the highest in the country—and I am surprised nobody from the Opposition benches has talked about the revaluation of all the land of Ireland. I do not know how anybody would set about that task.

An Leas-Cheann Comhairle

It does not arise.

Mr. Keegan

We are working the system as we have it. These measures are being introduced. The vast majority of the farming community are coming around to the idea that they should make tax returns in the same way as every other section of the community. Most of them have been keeping farm accounts under the EEC scheme where they qualify for a grant of £60 each year. They have become accustomed to that. They are paid for doing a specific job. The Opposition are labouring farming accounts in a big way.

Recently in answer to a Dáil question the Minister stated that the farming community were not obliged to submit farm accounts to an auditor. If they are capable of doing them themselves in conjunction with their agricultural adviser, those accounts will be accepted by the Revenue Commissioners. I was more than pleased when the Minister made that statement. He took the pressure off many farmers who had misgivings because of the fact that they were coming into the tax net for the first time. There has been a great deal of scare-mongering. It will not be as difficult as people imagine. If no profit is made no tax is paid. I agree with the principle of introducing equity into the taxation system in general.

Mr. Bruton

I subscribe to the principle that, where there is taxable income, income tax should be paid. My concern was about the substantial payments which might have to be made to an accountant to prove that people did not have a taxable income. Deputies speaking from the Minister's side of the House pointed out—as I acknowledged in my original contribution—that this simplified accounts system would operate for farmers between £40 and £50 valuation coming into the tax net for the first time.

It bears repetition that the Minister has said only that this is a temporary measure, perhaps for the first year. No assurance has been given that this simplified accounts system will continue for any length of time. Once these people are in the tax net, presumably they will stay in it. Deputy Keegan's reference to farmers being able to present their own accounts, assuming they are on the more complicated basis of accounts because they are over £50 valuation, may be fine on paper, but in practice farmers cannot do that. I am sure Deputy Keegan would be hard put to find people in his constituency who have been able to present their own accounts.

Mr. Keegan

I could name them.

Mr. Bruton

I have not met any of them.

Mr. Keegan

The Deputy should be a member of a committee of agriculture.

Mr. O'Kennedy

He is moving in the wrong circles.

Mr. Bruton

I understand Revenue are more severe in the type of accounts they require. Previously normal profit and loss accounts were accepted, but they are now looking for balance sheets, which are a much more complicated refinement of the type of accounts presented. They are of such complexity that the only people capable of preparing them would be practising accountants. We would like to hear the Minister on how exactly the simplified accounts system will work and how long it will remain in operation.

Mr. O'Kennedy

I am somewhat reassured to know that some Deputies—Deputy Keegan and Deputy Crinion—took note of what I said in reply to a Dáil question. I said specifically that it would not be necessary for farmers in this category to employ an accountant and that this would not be essential to their case. That being so, the argument made initially by Deputy Bruton—he has gone back on it a little now—and by Deputy D'Arcy that we would force small farmers to engage accountants at extra cost to prove that they had no tax liability is gone.

Mr. Bruton

No. The simplified accounts system is temporary.

Mr. O'Kennedy

That is the first bit of good news in respect of the small farmers and bad news for the Opposition.

Mr. Bruton

There is no shortage of that.

An Leas-Cheann Comhairle

May I ask for silence in the Gallery? When they are elected to the House in years to come they can shout as much as they like, but not in the Gallery.

Mr. O'Kennedy

They probably feel they should emulate their elders. It is very important that I should make it quite clear once again that there is no question of forcing small farmers who come into the tax net for the first time to engage accountants. If that were so, obviously much of the case made by the Opposition would be well made. I have been charged, among other things, with ignoring the background from which I came. Most of my farmer relations are in this category. I may be a bit closer to this category than some of those who speak on their behalf from the other side of the House——

Mr. W. O'Brien

They will not claim the Minister now.

Mr. O'Kennedy

I know them. I was reared with them and lived with them. If I were imposing the cost on them of going to an accountant, it would be an undue burden and would be unwarranted. I am not doing that. From the earliest stages of our consultations with the farm organisations they have been very fruitful in a wide variety of areas and in this area specifically. We agreed to introduce a simple farm accounts form for small enterprise farmers. The form has been under discussion and has been agreed subject to reference to the organisations involved.

It will be a simple farm accounts form for small enterprise farmers. I cannot give further details until we get confirmation that it has been accepted as agreed by the organisations at large. The forms we are talking about are simple and simplified and meet the criteria about which Deputy Crinion and Deputy Keegan spoke. Deputy D'Arcy referred to them also. They are simply statements of receipts and expenses in the simplest form and they derive from the experience of the Revenue Commissioners and the farmers with whom they have been in consultation. They are intended to be of assistance to farmers in presenting their accounts.

It is fair to say that this is what the farm organisations themselves want. We have often heard leaders of the farm organisations say that they would like to see a situation where everyone would be subject to accounts so that they would not have to continue to listen to claims that farmers are getting special treatment and that accounts would tell the full story. Now that we are doing that it is a little bit unreasonable of the other side to imply that we are imposing burdens when we are not, to imply something which the representatives of the farm organisations have not implied. Of course, one can represent here for one's own purpose something that the leaders of the farm organisations themselves would not represent. We have engaged in very useful consultation with them and they have found these consultations, as we have found them, to be very satisfactory.

In addition, let me say that, while it applies to those who come in for the first time this year, it is not confined to them, because we are talking about small enterprise farmers, and where appropriate it can also be used by farmers who have valuations over £50. That is not to say that it will be found to be appropriate in every case, but where there are small enterprise units—and this is one of the things that I would hope would be seen as a measure of my response in contact with my officials because of my experience in this area with small farmers—this form of accounts will be available not just to those with valuations between £40 and £50 but to the small enterprise farmers above £50 in appropriate cases. That would obviously be for decision in particular cases. I want to make it clear that I am ready and anxious to see this being applied as widely as possible in appropriate cases.

The third point that has been raised here is the question of duration. Let Deputies not represent to me or to my Department on my behalf a view of something I have not said. I have said that this will be reduced for those coming into the tax net this year, namely, those with valuations between £40 and £50. I have already said—and Deputy D'Arcy says no one will believe me and I know he does not want to and that he does not want the farmers to believe me either——

(Interruptions.)

Mr. O'Kennedy

I remained silent while the Deputies were speaking and I heard them represent views to me and views of farmers about me and I am at least entitled to represent the reality. This threshold will remain for three years. I have never said that the simplified accounts system will only be for the first year in respect of those who are now coming into the tax net. I have never said that and I do not know why anyone should represent it as being my opinion or my statement or my position. If it helps to dissipate any doubt I am now saying that it is not confined to this year because the situation in respect of this category will exist next year as it will this year. I would hope that as a consequence of it the presentation of accounts for this group of farmers will be both reasonable and appropriate.

Having said all of that, I want to make it clear that we are not asking farmers to waste their money on accountants and even if they decided to do so the money they spend in that context would be deductible from their profits for tax purposes.

Mr. Bruton

That would be no use if they do not have a profit.

Mr. O'Kennedy

If they were paying tax it would be deductible. I do not want to see them wasting their money because farming is vitally important to our economy. I do not want to see farmers in this category in particular wasting their money in engaging accountants and certainly, as Deputy Bruton has said—and I made a statement on this topic recently although I did not get much publicity—I do not want to see accountants wasting their talents in an area that is not appropriate. I would prefer to see them advising people much more effectively on maintaining their accounts to keep the running of their business on a proper basis so that they would know exactly where they stand from year to year rather than advising people on how they can reduce their tax liability. I would like to see accountants working so that farmers would have the benefit of their advice for that purpose and not just for the purpose of submitting accounts which will reduce the liability for tax to the lowest possible figure.

In a relatively brief reply I should now have covered all of the points that have been made. There was some suggestion that if farmers do not have a taxable income the fact of their being liable to tax does not mean they pay tax. If they do not have a taxable income they do not pay tax but, having announced all of these concessions or recognitions of reality, let me say that one is not expecting to get any major revenue from that sector this year. But there is no principle that suggests that, while one is not expecting to get that, one should not make them accountable, in fairness to them and other sectors of the community. That is what I understand the farmers want and what other sectors of the community want. They want not only that things would be done fairly but that they be seen to be done fairly. Some may say that reducing the threshold to £40 is evidence that I have turned my back on my own background as a first rural Minister for Finance and that this establishes beyond doubt that I do not care. If people want to say that they can, but it is not the truth.

Mr. Bruton

The rates are the big problem for these people.

Mr. O'Kennedy

That is not what we are talking about here.

Mr. Bruton

The Minister is fighting on ground favourable to himself.

An Leas-Cheann Comhairle

We cannot talk about the rates on this Bill.

Mr. O'Kennedy

So far as this Bill is concerned they will get full credit for rates for income tax purposes.

Mr. P. Barry

If they do not pay tax that is no good.

Mr. Bruton

If one has a nil income that is no use.

An Leas-Cheann Comhairle

We are not dealing with rates. That is another day's work.

Mr. O'Kennedy

If they are not going to pay tax I do not know what all the bleating is about. We are not talking about rates on this Bill. Some other time some other Minister will deal with that one. I am talking about this Bill and the issues raised with me now. I can refer to the rates in so far as they are appropriate to this Bill and say that they are allowable against tax. That is the only relevance that they have here. I am asked how they are going to get any relief if they are not paying tax. If they are not paying tax then they have nothing to complain about in respect of what is being done here. In respect of those with valuations between £40 and £50, they will have marginal relief, which has always been applied in respect of those who come into the tax category for the first time whether at £50, £60 or £70. In other words, a person coming in at £40 would pay one-tenth only of such tax as he would be liable to pay; at £41 he would pay two-tenths and at £43 he would pay three-tenths and so on. That certainly would be a substantial easement in respect of such of this group as would be liable to pay tax finally.

For all of those reasons I would hope that this discussion has clarified some doubts that seemed to exist before I started. I would also use this occasion to reassure the farmers in question and the organisations who are aware of this of the attitude that the Government are taking in respect of this issue and the question of accounts involved in it.

Mr. Bruton

I have a few questions to put to the Minister.

An Leas-Cheann Comhairle

Deputies must realise that there are another 70 or 80 sections of this Bill to be dealt with.

Mr. Bruton

Can the Minister say definitely that the system of simplified accounts will continue indefinitely, that there is no intention of a cut-off point? Secondly, what sort of criteria would be used in deciding on cases of more than £50, and furthermore, can the Minister indicate what is the difference in the type of information that will be required of farmers who are not on a simplified accounts basis vis-à-vis farmers who are operating on that basis? What additional information will be required?

Mr. O'Kennedy

Regarding the last question, perhaps it would be best for me to answer by indicating roughly what will be involved. I can only indicate roughly at this stage what will be the position because although I have a copy of the form before me I do not wish to publish it prematurely since it has not been formulated and confirmed. Accounts of the kind I am talking about will involve receipts such as those in respect of the sales of livestock, of crops, of milk or of other farm products. This information will be set out simply in one column while expenses will be set out simply in another column. We set out in some detail, though not in any complex form, the range of expenses that farmers will be entitled to include. There is space for total expenses and for total receipts and when the amount of the total expenses is deducted there will remain the profit or loss situation, subject to adjustment for stock and personal expenditure. What is involved is a simple form of accounting.

The Deputy can judge from this information how the new system will differ from the existing one but I cannot go beyond what I have said already at this point.

Regarding the second query, I am conscious of the question of meeting a case consistently. Before this discussion started, Deputies opposite were under the impression that the provision would apply only to farmers in the £40 to £50 valuation bracket. That would be nice and tidy but as I have said, the provision is not limited to that category. It will be applied also where appropriate to small enterprise farmers. That invites the question from Deputy Bruton as to the kind of people who will be involved but I cannot answer that question other than to say that the provision will not be applied to people engaged in intensive activity of one form or another. The criteria will be as simple as possible. I have instructed the Revenue Commissioners to advise the inspectors of taxes in the appropriate areas to use their discretion in this area, with a view to having these simple form accounts adopted, even in respect of vluations of more than £50.

Each case will have to be judged on its merits. There is no guide that I can give at this stage when we are moving into this kind of territory. It would be easier for me if I had a guide and to say that the level will be £50 but I do not propose in ease of my own situation to do that. Therefore, I trust that the Deputy will understand the reason for my not being able to answer the question. However, in view of the discussions we have had and of the understanding that has been conveyed on my behalf to the farming organisations, I want to see the provision used in appropriate cases, in cases where it was indicated from the discussions that it would be applied.

I recognise that there are some anomalies in the valuation system though I would not go along with the idea that a revision of that system would be in ease of the farmers, which is what Deputies opposite seem to suggest. Such a revision would act in the opposite direction by and large but Deputy Bruton would not seem to hold that view.

Mr. Bruton

It would depend on the tax rate.

Mr. O'Kennedy

Fine Gael have their own position on this but I do not think that many farmers would agree with them.

The Deputy's other question concerned the length of time that this provision will last. As I have indicated already we have given a commitment not to lower the threshold for three years and, consequently, there is no reason for the provision in question not lasting also for at least three years. Let us recognise honestly that the purpose of all of this is not to provide avenues of escape for people who should pay tax not to pay tax. It is not meant to be a way out of paying tax. If it were, I would be failing in my duty to taxpayers generally. In the course of the next three years we shall have an opportunity of judging the system in operation but it is my intention to launch it on a fair and equitable basis and what I have just indicated should be a move in that direction.

Mr. Callanan

Regarding the application of this option in certain circumstances to farmers with valuations of more than £50, the people who will use this option will be those who will know that they will not be in the tax bracket. As the Minister has said, valuations are sometimes unfair. Nine times out of ten it pays anyone in the tax bracket to hire an accountant. The people that we are interested in are people with valuations over £40, and even over £50, who will not be in the tax bracket. There should be a simple form of accounts. Each case will have to be judged on its merits. People with farms with valuations over £50 and with very large families, who are poor, should not have to pay any tax. This will be an effective system and I am delighted that we are not going to be tied down to £50 valuation.

Question put and agreed to.

SECTION 20.

An Leas-Cheann Comhairle

Amendment No. 27 is in the name of Deputy P. Barry and amendment No. 28 is consequential. These amendments may be discussed together.

Mr. P. Barry

I move amendment No. 27:

In page 26, between lines 36 and 37 to insert the following:

"Provided that where an individual is to be charged to tax for a year of assessment in respect of profits or gains from farming and duly elects to be charged to tax in accordance with paragraph (b) of the said section 20 A, section 21 of this Act shall not apply for the year 1980-81.”.

Section 21 does away with the notional system of taxation for farmers from the year 1980-81. I presume that at the moment the notional system is gone and that farmers this year who are liable to tax will pay on an accounts basis.

The problem which I am trying here to correct is that many of those farmers who are now liable to pay tax in the year 1980-81 will be paying tax on the preceding account year and they may not have kept accounts. My amendment tries to rectify that position and to ensure that those who are going off the notional system will be given due notice of having to keep accounts. Otherwise things will be made extremely difficult for the Minister, the Revenue Commissioners and, indeed, the farmers.

Mr. D'Arcy

I support the motion put forward by Deputy P. Barry. There is no doubt about it that the Finance Act of 1978 misled people when it stated quite clearly that they would have to give a guarantee that they would stay on the notional system for a minimum of three years. The present Minister did not give that guarantee, it was his predecessor who did, but the present Minister has corrective responsibility. I have no doubt that a huge number of farmers believed that the notional system would be retained until the end of 1980. They should be given due notice of at least a year, which would suffice. The Minister is asking people to drop the notional system and start accounts for 1980-81. I appeal to the Minister to allow these people the minimum notice of one year. Otherwise, he will be creating great problems from his Department in compiling these accounts which are just not available for the year 1979.

Mr. Bruton

It is worth noting that Fianna Fáil gave a guarantee in their 1977 election Manifesto that the notional taxation system would be retained. That swayed a lot of farmers in their favour. Now, in this Bill, this system is being abolished, within three years of that very solemn and specific promise being given in the manifesto.

Mr. P. Barry

That is no problem to them.

Mr. O'Kennedy

Last year my predecessor indicated in his budget statement that the notional system would cease to operate from this year. What is being done here now is to give effect to that statement. I should mention here that it is recognised now that the notional system is notional and what we are talking about is real liability, as distinct from notional liability to tax. The notional system which operated on a system of a multiplier of £40 and then £50 and subsequently on last year's increased figure was notional in the real sense of the word. However, we are not talking about notional liability, we are talking about real liability or real freedom from liability as the case may be, as between the farmers themselves and subsequently as between the farmers and other sectors of the community.

When the whole question of farmers' taxation was introduced for the very first time some years back, not very long ago, as a means of introducing farmers to this whole area of taxation and to take account of the special situation that they had not been accustomed to keeping accounts and matters of that sort, the notional system was introduced. That is no longer the case. The notional system has been operating for some time but farmers have become accustomed to the effect of this system. Those who are liable to tax have become accustomed to keeping accounts, which is as it should be, not only in their own interest but in the interest of equity between them and other sectors of the community.

One could not accept this amendment. I am very reluctant to give examples of the manner in which the notional system has operated—or, rather, one might say has not operated. I was horrified, and I use the word "horrified" deliberately, to find that in many cases farmers with valuations up to £500 paid no tax. I have samples before me of 50 cases from all the provinces of farmers with valuations up to £200, £300, £400, £500 who under the notional system paid no tax. There was a certain amount of bruhaha in respect of a certain television programme a while back which I did not see. I have seen the facts in respect of other areas where the notional system has operated, and frankly——

Mr. Bruton

Were these cases subsequent to 1977 or prior?

Mr. O'Kennedy

I am speaking about the last number of years, 1974-75, 1975-76, 1976-77, 1977-78, 1978-79, 1979-80. There is one case where a farmer with over £600 valuation paid no tax over any of those years, another with over £575 valuation who paid at most £500 in 1975, otherwise nothing.

Mr. Bruton

Smart man.

Mr. O'Kennedy

One farmer with £540 valuation paid nothing almost every year, another with a valuation of £480 paid nothing every year and so on. Those who would bleed for the termination of the notional system should share a little drop of blood for others who have been paying tax, including clerk typists, at a level away above anything involved here. Let us not weep for the passage of something which was not appropriate. It was just an appropriate means of introducing people to the system of taxation. No-one else is weeping for it now. It was, apparently, understandably used to effect by those who opted for it. It is fair to say that most of those in the lower bracket of the tax net have ceased to operate the notional system, in any event. Most have opted out of it.

Mr. M. O'Leary

Could the Minister say whether any of those examples he has given were hypothetical or not?

Mr. O'Kennedy

They are not hypothetical.

Mr. M. O'Leary

Were any of them paying wealth tax?

Mr. O'Kennedy

Not that I am aware of.

Mr. P. Barry

That hurt.

Mr. O'Kennedy

It did not hurt me. But, having said that—we are moving away from that period now and I think everyone would agree that it is appropriate that we should—I find it difficult to accept that people who were on the notional system would not have kept accounts. I say this for a variety of reasons. There would have been charges they could claim against their liabilities. They would have kept records for their own good purposes, quite understandably, to reduce their tax liability. For instance, they would have kept accounts in respect of wages, what they may have paid to contractors, records in respect of a whole range of things. They would have done this, as indeed is evidenced in this case. They would have kept records of such overhead expenses as would have been deductible for tax. Such records would help them. If they maintain they have not kept accounts, then that is not quite consistent with the fact that they could make claims against their liability under the notional system, claims which could be lodged only if they had evidence to prove the wages they had been paying, what they had been paying contractors and so on. Therefore, that should be a help.

I believe that the vast majority of such farmers would be able to produce accounts for last year. After all, farmers this time last year were on notice that the notional system was being abolished—it was said very clearly—and I am simply implementing what was said then. Therefore one might at least expect that they should have kept accounts on that basis. But, assuming that they did not, it should be possible to get some guide. Again, I would suggest that in respect of the current year's accounts, the accounts for last year be used as a guide by the inspector of taxes—no more than that. Ideally the accounts should be there. Despite the fact that notice was given last year, if they are not there then obviously we would have to use this as a guide in determining the assessments for this year. It will not be a strict rule, but certainly it will be a guide to the inspector of taxes who, having regard to that guide, will be in a position to determine the appropriate assessment. For the reasons I have mentioned I cannot agree to Deputy Barry's amendment.

Mr. P. Barry

The Minister says farmers were put on notice from last year that the notional system would be abolished this year. That may be so. I do not remember the Minister's predecessor saying so but I am sure he did if the Minister says so.

Mr. O'Kennedy

There was a formal announcement.

Mr. P. Barry

It was not made in the House here. Anyway it does not matter. I accept that it was if the Minister says so.

The Minister has quoted examples here of people with valuations of £400, £500 and £600. I am not talking about that category of farmer at all. Probably they would employ teams of accountants. They are probably some of the wealthiest people in the country, and in this respect, Deputy O'Leary's point was very pertinent: were they payers of wealth tax, which was abolished also, so that perhaps they have been contributing nothing to the coffers in the last few years? The people about whom I am talking are those who come into the tax net today, the person with a valuation of £40 or £50, the people who had no notion this time last year that they would be caught in the tax net this year. Such people will have no accounts. They were not paying a notional tax last year. How can they be properly assessed? How can they possibly produce anything that would be satisfactory to the inspector of taxes?

Mr. O'Kennedy

My original understanding of the Deputy's amendment was that it related to those people but then I thought, as he introduced it here, it had a broader basis.

Mr. P. Barry

They are included as well.

Mr. O'Kennedy

That is why I dealt with it on the broader basis. I did understand it originally in the sense in which the Deputy has now referred to it. I can assure the Deputy that the farmers he is talking about will have, in addition to what I have already said in this respect, the option of presenting either this year's accounts or last year's. That option is open to them. That is the appropriate way in which to deal with them. In regard to those farmers who come into the tax net for the first time—and incidentally notice was given last year about that also—if they decided in anticipation of that fact that they were going to keep accounts, fair enough. But, if they did not, they have the option this year of presenting either this year's accounts or last year's accounts in respect of their liability. I do not think I could go further than that. That was my original understanding of Deputy Barry's proposal, but when he introduced it he seemed to extend it to the whole notional question anyway.

Mr. P. Barry

I did, yes, to both categories.

Mr. O'Kennedy

In view of the arguments he has presented about the notional system generally, in view also of what I am arranging to provide for those coming in for the first time—this option of presenting either this year's or last year's accounts—it can be seen that it would be entirely inappropriate to introduce what Deputy Barry suggests now: a notional system from which we are moving away for the good reasons I have mentioned.

Mr. D'Arcy

In the event of people with a valuation of over £50 on the notional system in 1979 not having kept accounts, can I take it that the tax inspector will be prepared to accept an assessment for 1980 and perhaps wait a while for the tax?

Mr. O'Kennedy

No, the assessment will be made. Then it will be up to the farmer himself to indicate what he feels is his liability to tax and to ensure that he can produce accounts to justify that. If it turns out that he is within a certain range of what transpires to be his tax liability—I think it is 80 per cent—then he pays no interest. If he is not, he pays interest on the amount over and above the figure he has submitted. But, of course he himself has the obligation to submit the proper accounts on which his tax liability will be determined. If it happens at the end of the year that he is within 80 per cent of the actual final liability, then he pays no interest, which is one of the reasons this was introduced: to encourage farmers to state their position and to present their accounts as accurately as they can.

Mr. L'Estrange

The Minister stated a few moments ago that it was made clear last year that the notional system of taxation would be abolished. I do not know where that was made clear. Has the Minister got it in print? I remember prior to the last general election a Fianna Fáil Deputy making promises in my county about what would happen if the Fianna Fáil Party were returned. They were pro-farmer and the National Coalition were anti-farmer. We were crushing them with taxation. Indeed, even the Taoiseach at that time referred to the fact that we were taxing 9,000 farmers, that we were trying to get our toe in the door, and that the taxation of those people would continue. I heard the Minister a few moments ago talking about the large farmers being on a particular side of the House——

Mr. O'Kennedy

I did not say that.

Mr. L'Estrange

He did indeed. I heard him say so. I was listening on the intercom. He maintained that we had more in common. The majority of ranchers in this country at present support the Minister and his party. At least they did in the last general election because of the promises made at that time.

Mr. O'Kennedy

I may have said that I was at least in as close contact with the small farmers about whom we were talking as are Deputies opposite. But I did not say anything about having more in common with small or big farmers.

Mr. L'Estrange

They have fooled many of them since. I can refer back to the manifesto of the Fianna Fáil Party which shows——

An Ceann Comhairle

We are dealing now with amendment No. 27.

Mr. L'Estrange

I am talking about amendment No. 27 and the fact that the Minister said it was made clear last year that the notional system would be abolished this year. How in the name of God could the Minister expect farmers to believe anything said by this Government? It is down in black and white in their manifesto and I can quote the relevant part as follows:

Farmers can opt for assessment by submitted accounts with the option of averaging his profits over a three year period, due to the cyclical nature of farming or by the Notional System.

That three-year period has not yet expired. The Minister's party have fooled the farmers often enough in the past. What answer have they now to the fact that in their manifesto, on which they were returned to power, this is down in black and white and that the three years have not yet expired? This is another major promise made by Fianna Fáil to the farmers which they have broken.

Mr. O'Kennedy

I should like to thank Deputy L'Estrange for livening up the proceedings. He always does so when we have laboured long through important details of a Bill. He always introduces the old platform stuff when he emerges for a few moments. It is refreshing, but there will be another platform occasion——

(Interruptions.)

Mr. O'Kennedy

When Deputy L'Estrange finds that there are a lot of important details being dealt with in a dry way he says he will go in and whip it up. He has succeeded today because he has good experience of it.

Mr. D'Arcy

When was the undertaking given that the notional system would be abolished? What statement was made in the 1979 Budget about the notional system? Could we have that reference and also the reference to the statement made on it in the 1978 Budget by Deputy Colley? He said that anybody who opted for the notional system must stay on it for a minimum of three years. That is what is important to farmers.

Mr. O'Kennedy

I did not come in armed with these references but I will get them because Deputies opposite apparently do not accept that these things were said. The farming organisations obviously read these statements because they are aware of them. Deputy L'Estrange apparently goes to bed with a copy of the Fianna Fáil manifesto. He takes it with him wherever he goes.

Mr. L'Estrange

Fianna Fáil have kicked it out the window.

Mr. O'Kennedy

I assure Deputy D'Arcy that I will make copies of these statements available to him.

Mr. D'Arcy

After the 1978 Budget the Finance Bill contained a provision that people who opted for the notional system would be obliged to stay under that system for three years. Farmers are being misled.

Amendment, by leave, withdrawn.

Question proposed: "That section 20 stand part of the Bill."

Mr. Bruton

We have discussed this up and down. I accept there are cases where people by availing of this system have succeeded in not paying tax which clearly they should have paid. However, in case people might think that the notional system is a diabolical way through which people can avoid paying tax, it was originally recommended in 1960 by the Commission on Income Taxation as part of any system of farmer taxation. The notional option still applies to farmers in France. They continue to retain it though we are abolishing it.

Mr. O'Kennedy

Section 20 deals with the applications of the optional basis of assessment in respect of those coming in for the first time.

An Ceann Comhairle

Amendment No. 27 on this section and amendment No. 28 section 21 are consequential. The two were discussed together.

Question put and agreed to.

SECTION 21.

Mr. P. Barry

I move amendment No. 28:

In page 26, line 39, after "1980-81" to insert "(except in accordance with tehe proviso to section 20)".

An Ceann Comhairle

This amendment was discussed with amendment No. 27.

Amendment, by leave, withdrawn.

Section 21 agreed to.

SECTION 22.

Question proposed: "That section 22 stand part of the Bill."

Mr. Bruton

Would the Minister please tell us something about this section?

Mr. O'Kennedy

Section 28 of the 1974 Finance Act was designed to meet the situation of a farmer whose profits were exempt from tax because his valuation was below the threshold but who had other income. It was regarded then as inequitable to other taxpayers if in such a case the full personal allowances could be set against non-farming income, whether that income was his or that of his wife. That section provided broadly that only half of his personal allowance could be set against his non-farming income. In that way the tax appropriate to the non-farming income would be collected.

Now section 28 has to be amended to apply to cases where the other income is that of wives, in view of the Supreme Court decision prohibiting aggregation of husband and wife incomes. Accordingly, it is now being provided that where the other income is that of the wife she will be assessed on that income as a single person. This is a consequence of the Supreme Court decision. She will now receive a single person's allowance. This is the appropriate way, as we see it at this time, to deal with the application of section 28 of the 1974 Act.

As I have already indicated, where there are children the wife will be able to claim the allowances in respect of them if not claimed by a husband who is exempt on his farming profits. Deputies will be aware that the position hitherto is that the restriction operated would also apply to children's allowances. We are now treating the wife as a single person and at the same time providing for her the appropriate allowances, such as children's allowances, which would be applicable for tax liability.

Mr. Bruton

Will the dependent relative's allowance be cut in half? There can be only one dependent relative's allowance, no matter who claims it—it is the same for husband and wife.

Mr. O'Kennedy

She will get the dependent relative's allowance if the husband is not using it.

Mr. Bruton

I made the point because I think that allowance is grossly insufficient.

Question put and agreed to.

NEW SECTION.

Mr. O'Kennedy

I move amendment No. 28a:

In page 27, before section 23, to insert the following section:—

23.—(1) In this section—

‘farming' has the same meaning as in Chapter II of Part I of the Finance Act, 1974;

‘specified machinery or plant' means machinery or plant in use or intended for use for the purposes of a trade of farming but not including fixed machinery and fixed plant designed to be used exclusively in a farm building and which is in use or is intended to be used in such a building;

‘specified provisions' means section 251 of the Income Tax Act, 1967, section 11 of the Finance Act, 1967 and section 26 of the Finance Act, 1971.

(2) In determining what capital allowances fall to be made to a person for any chargeable period commencing on or after the 6th day of April, 1980, in taxing a trade of farming—

(a) in a case where the aggregate of the capital allowances which would fall to be so made to the person for the chargeable period if the specified provisions did not apply or have effect for that chargeable period in relation to specified machinery or plant, or the expenditure on the provision thereof, amounts to or exceeds 30 per cent of the amount of the profits or gains from farming on which the person is chargeable to tax for that chargeable period, the said specified provisions shall not apply or have effect in the case of that person for that chargeable period in relation to specified machinery or plant, and

(b) in any other case the amount or the aggregate amount of—

(i) any capital allowance or allowances given under any of the specified provisions, and

(ii) any amount or amounts by which any capital allowance or allowances may be increased under any of the specified provisions, shall be limited to the maximum amount which will secure that the aggregate of the capital allowances falling to be made to the person for the chargeable period in taxing the trade of farming shall not exceed 30 per cent of the profits or gains from farming on which the person is chargeable to tax for the chargeable period.".

An Ceann Comhairle

Acceptance of this amendment involves deletion of section 23.

Mr. O'Kennedy

This amendment provides for the re-writing of section 23 so as to give effect to the decision to exclude from the restriction on capital allowance any fixed plant or machinery used in a farm building. This is a consequence of discussions which I and my officials had with farmer representatives since my budget statement. This is to exclude from the restriction on capital allowances any fixed plant and machinery which is used in a farm building.

There was a drafting flaw in the original section which was brought to our attention by the draftsman. That is being corrected by bringing in a reference here to section 251 of the 1967 Act which provides for an initial allowance of 100 per cent on machinery and plant. A reference to this provision is required in addition to the provisions relating to depreciation.

As a result of this rewritten section capital expenditure by a farmer on fixed plant and machinery which is installed for use in a farm building will be removed from the scope of the proposed restriction on free depreciation. This means that the restriction on the accelerated allowance relating to expenditure incurred by a farmer will be confined to expenditure on machinery and plant other than plant and machinery installed for use in the farm building.

It is important to remember that any restriction of accelerated allowances in respect of plant and machinery will apply after the full allowances have been given in respect of, for instance, the ordinary wear and tear allowance on all plant and machinery. The restriction does not begin to apply until the full allowances have been given—increased allowances in respect of farm buildings, free depreciation on expenditure on land reclamation, drains, fences, holding yards and roadways—and if accelerated allowances are claimed in respect of ordinary plant and machinery, the amount of such extra allowance will be restricted to such an amount as will not bring the total capital allowance to more than 30 per cent of the chargeable profits. This means any such restriction applies only to the extra allowances claimed on that plant and machinery. In relation to all other allowances there will be no restriction even where they exceed 30 per cent. This amendment, which provides for the rewriting of section 23, is a consequence of discussions we had with the farm organisations with a view to limiting restrictions of the allowances already announced.

Mr. P. Barry

The Minister appears to be suggesting that the farm organisations have agreed to this amendment. I am sure that is not correct.

Mr. O'Kennedy

I never suggested they agreed to amendments. I said I am giving effect to an understanding reached with them.

Mr. P. Barry

I cannot understand how any responsible farm organisation could accept this because the thrust of Government policy for the past ten years, and the farming organisations as well, has been to treat farming as a business. Why it should be treated separately in this instance I cannot understand. For that reason I intend to oppose the section.

The Minister made a refinement on this section, outside the drafting amendment. He allowed a full depreciation on machinery installed in a farm building. I presume that means a tractor will attract depreciation at 30 per cent while a milking machine will attract depreciation at 100 per cent. Is that correct?

Mr. O'Kennedy

Yes.

Mr. P. Barry

I cannot understand how the Minister differentiates. The usefulness of this section, and similar sections in other legislation, is that it encourages investment and productivity. We are told that one of the sins of agriculture is a low level of productivity. We need to encourage higher productivity in farming yet the Minister says machinery installed inside a building is more of an aid to productivity than machinery used outside. Evidently if it moves it must be taxed. If it is installed and stationary it is put on the same level as industry.

The consequences of this for an individual farmer may not be very great but it will have some effect. The roll-on consequences to manufacturers and sellers of farm machinery will be considerable. I am not particularly close to the farming industry but everybody interested in agriculture knows there is a firm in Dublin which is on the point of going into receivership. They have £4 million worth of farm machinery in their yards which they are unable to sell. When this section is passed their prospects of selling that equipment and saving jobs will be negligible.

My main objection to this section is that it makes it harder to achieve what we have been trying to do for the past ten years, that is, to have farming treated as a business. Even though this amendment improves the position, the Minister does not go far enough. If we are serious about farming, it must be treated as a business. It must be assessed as a business and be given and the same grants and inducements to productivity and investment that are given to ordinary businesses.

It will be very difficult to get full value for the country as a whole, through taxation, productivity, exports or employment, while the farming sector feel they are being treated separately and are not getting all the advantages other businesses get. They are being continually lectured by the Minister for Finance for not contributing their fair share. They are willing to do that. The more farmers who use the accounts system the better.

This section puts farmers in a different position to ordinary businesses. The Minister's amendment makes it appear that he assesses differently the contribution made to productivity and farming by fixed machinery and movable machinery. I am not very familiar with the various types of machinery bought by farmers to improve productivity or to assist them in running their farms. Except by tossing a coin, I cannot decide which is more beneficial to a farmer, a milking machine or a tractor.

Mr. Bruton

It is a pity this amendment issued so late. I understand it is based on discussions the Minister had with farming organisations. If it is based on agreement, it would have been more appropriate if the people involved had had a chance to see the amendment in black and white before the debate took place. This would have happened if the amendments had been circulated last week. By circulating them today, nobody had an opportunity to see them, except Deputies who did not have very much chance of studying them.

I endorse what Deputy Barry said. Farming should be treated like any other business. Investment in farm machinery is as desirable as machinery for any other enterprise. It does not seem appropriate that we should have a system where allowances for machinery are restricted in the case of farmers but not in respect of other business people. The Minister has a very heavy duty to discharge to prove that it is just to impose restrictions of this nature in the case of farmers but not equally just to impose them in respect of other businessmen.

He may claim there is evidence farmers bought more machinery than previously, but that will not stand up. Britain introduced income tax for farmers some time after the war. Their experience was that in the initial period there was an amount of mechanisation. Farmers availed of the allowances and invested in machinery but very quickly they reached saturation point. From then on, it became a normal business situation. They did not invest any more in machinery than other business would have done. Since our farmers came into the tax net there was an initial surge of purchasing machinery, to which the Minister is now responding by restricting these allowances, but that would not have continued. By bringing in this restriction, which applies solely to farmers, the Minister will distort and damage the situation. If he had left things as they were the initial over-mechanisation would have worked itself out very quickly. Farmers should be treated the same as other businesses. They should not have their allowances restricted while other people are getting allowances.

I want the Minister to explain the distinction between fixed machinery and free moving machinery. Why should one have access to free depreciation and the other should not? This distinction requires explanation, as does the distinction which this section enshrines, namely restricting allowances for farm machinery and not in respect of other business machinery. The burden is on the Minister's shoulders to prove that these two distinctions are justifiable.

Mr. Crinion

I agree that farming should be treated as a business. Farmers were buying machinery as a tax avoidance measure. Free depreciation of machinery was introduced to encourage industry. The installation of new machinery in an industry would provide extra jobs——

Mr. Bruton

Some of these machines did people out of jobs.

Mr. Crinion

This was intended to encourage expansion in industry and create extra jobs. When farming was considered a business, farmers were given these concessions. In industry it is expected that a machine will last ten or 15 years but farm machinery has a very short life expectancy. I am sure Deputies know of people who bought machines they did not need. I know of two cases. One person bought a £20,000 combine——

Mr. Bruton

A person could do that once but he could not keep on doing it.

Mr. Crinion

——so that he would not have to pay tax. Another man bought a tractor two years ago and it has not had a second service.

Mr. Bruton

He was a lunatic.

Mr. Crinion

It is just lying there——

Mr. Bruton

Tell me where it is.

Mr. Crinion

I am sure the Deputy knows that just as well as I do.

The point the Minister made about the 30 per cent has not been sufficiently emphasised. A farmer may write down his machinery on the normal rate of 25 per cent for a tractor and so on and it can amount to 50 per cent or even 100 per cent of his income, but it applies only when a person wants to write down something in depreciation over the normal limit granted by the inspector of taxes. Too many farmers think that depreciation on all machinery is based on 30 per cent of their income and this should be categorically denied. It applies only on free depreciation of mobile machinery and the extra provisions made by the Minister are welcome. We are getting back to the original provisions for industry regarding fixed machines. All fixed machines will now be included, such as milking machines and corn rollers which will last a long time. It will encourage people to be more efficient in their use of this machinery.

Articles which depreciate quickly are affected by this section and these are the items which have been used for tax avoidance. One of the farming magazines published an article during the past few weeks about farm machinery. In 1978 people were looking for a particular type of cab but this year any type of cab with a roll bar is sufficient and people are not looking for the most expensive kind. At one time farmers were buying a very expensive foreign tractor of 90 horse power when they could buy a cheaper one with the same horse power which was practically as good. They could buy two of the cheaper tractors and have £1,000 in their pockets for the price of one of the dearer tractors.

There are many such tractors in the country. Most of them were imported. Our balance of payments position is bad enough without farmers buying such expensive machinery. The Minister was justified in imposing this rate of 30 per cent. He had many discussions with farming organisations and he was prepared to accept logical arguments with regard to milking machines, coolers and so on. The Dublin District Milk Board now want fixed coolers, and these cost a considerable amount of money. This amendment will be of considerable help, and I welcome it.

Mr. D'Arcy

One of the major defects of the present administration is the fact that we must have special conditions for agriculture. I do not know why we cannot treat it like any other business. There are special conditions for machinery and stock quite different from those applying to other businesses, and this is creating uncertainty and a lack of confidence in the agricultural industry. Deputy Crinion and the Government seem to be setting themselves up as the judge of who should buy machinery. The farmer is the best person to make this decision because he knows the state of his finances. Making a case that he will avoid tax by buying extra machinery is codology. I should imagine that 98 per cent of the farmers have not reached that stage of development yet. I am prepared to accept that a wealthy farmer may buy a tractor to offset against a tax bill of £4,000 or £5,000 but this is an isolated case.

The fact that the Government are imposing measures special to agriculture is creating uncertainty in the industry. No other section has to accept such conditions. The saving obtained will be small. The Minister has done enormous damage to the distributing trade so far as agricultural machinery is concerned. Many old firms have gone into bankruptcy. All the distributors in Dublin have let go half of their employees. I accept that the economic conditions obtaining have contributed to some extent, but the Government have been largely responsible. Farmers are the best judges about buying machinery. If the Government set themselves up as the judge on all these issues people will not be encouraged to show initiative, and this will damage the industry.

The same situation applies with regard to the stock allowance. Special conditions are imposed for agriculture. What Deputy Crinion said would apply to only 1 per cent of farmers. Talking about a farmer buying a tractor and not giving it a second servicing does not make sense. Certainly we have not reached that stage in Wexford. A combine harvester will cost about £20,000 and if this kind of money is around the Minister should get out his bag and start collecting. I think this kind of money exists only in Meath, certainly not in Wexford.

Mr. Keegan

This debate seems to centre around farm machinery sales and purchases. Deputy Barry said that dealers of farm machinery had equipment worth millions of pounds unsold on their premises because of the depressed state of the market. That is something we should welcome, because during the years our adverse balance of payments situation was created entirely by purchases of farm machinery, although I accept that other factors may have been involved also.

I am not surprised that machinery dealers have a lot of machinery on their hands because of the depressed state of the market. However, we must bear in mind that there was over-mechanisation in the past few years. Farmers spent much more than they should on machinery. Many farmers purchased a second tractor but they did not do any costings or calculate the number of hours it would be used during the year. It was important to put some brake on purchases of farm machinery in order to assist our balance of payments problem and the provisions in this Bill will go some of the way towards correcting that imbalance.

Deputy Crinion was right when he pointed out that many farmers purchase expensive combine harvesters that are used for one month out of 12 and which lie idle for the remainder of the year. The depreciation costs in such a case are very high, and this should be remembered also. The farming community would be well advised to do their sums in future before they invest in farm machinery.

A farmer will not invest in non-mobile equipment unless he really needs it. Milking machines, coolers and such items of equipment are in use throughout the year. Mobile farm equipment has a short life, and farmers tend to allow it to depreciate at a fast rate. That is something that must be considered. Many farmers—but not all—have availed of grants for the purchase of tractors under the farm modernisation scheme. To an extent it encouraged farmers to over-mechanise, and that should be discouraged. What the Minister is proposing now will tend to correct the situation. An industrialist will buy a machine only if he is going to use it for 50 weeks out of the year. He buys a machine to make use of it, but unfortunately the same cannot be said with regard to many items of agricultural equipment. A mower can be used for two out of 52 weeks and it lies idle most of the time. Any effort that can be made to induce farmers to employ a pool of farm machinery should be encouraged. This provision in the Bill might encourage that type of approach.

Mr. O'Kennedy

What we are talking about here is that any restriction of accelerated allowances in respect of plant and machinery will only apply after the full allowances have been given. Deputy Crinion was right to point out that the ordinary wear and tear allowance in respect of plant and machinery, free depreciation on fixed plant and machinery, increased allowances in respect of expenditure on farm buildings and also the free depreciation in respect of expenditure on land all apply, and that what we are talking about is restrictions, after these have been used, in respect of farm plant and machinery.

We have had a reasonable and objective approach generally to this discussion except by Deputy D'Arcy who every time he gets up seeks to convey the notion that we are deliberately strangling agriculture. Deputy D'Arcy has misrepresented the reality. The statement that we referred to earlier is the statement of 24 April 1979 which is a Government statement in relation to the notional abolition and the reduction to £40 valuation. Included there was the restriction on capital allowances. In reply to the implication that I as Minister for Finance am strangling agriculture, what was proposed over a year ago was a 30 per cent restriction in respect of all capital allowances, farm buildings, farm development and farm plant and machinery. In my budget statement I indicated that I was not proceeding with the 30 per cent restriction in respect of farm buildings and farm development generally. That was not evidence of a determination to strangle agriculture. The 30 per cent has remained in respect of farm plant and machinery, and this is only in addition to ordinary allowances. Deputy Barry asked why there is a distinction between farm plant installed in a house and farm plant outside the house. That distinction was made in response to a request from the farm organisations, who are well qualified to make their case. They made the distinction about farm machinery in a house and farm machinery outside. I was prepared to move away from the limitation in all the other areas, farm buildings, farm development and every other area with the exception of this. In the farming interests I felt I should hold to this, and they made the case for the fixed plant.

Deputy D'Arcy would succeed in getting a better response to his case if he took a more objective approach to reality rather than implying that all right is on one side and all wrong on the other. About 80 per cent of agricultural machinery is imported. This was causing problems in relation to the balance of payments. Also the purchase of agricultural machinery was being widely used to reduce the incidence of tax liability.

Mr. Bruton

What type of machinery mostly?

Mr. O'Kennedy

Mostly tractors and all matters of that sort.

Mr. Bruton

No silage-making equipment?

An Leas-Cheann Comhairle

The Minister without interruption.

Mr. O'Kennedy

This also had another effect in that it was eating into the limited amount of credit available for agricultural development at a time when the ACC and everyone else had a limited pool of money. It was contrary to the agriculture interests and certainly contrary to the national interests that so much of that limited pool was being swallowed up in the purchase of plant and machinery. Farmers who followed that course would have been better advised to pay their tax rather than use the purchase of what would be under utilised plant and machinery just to avoid tax. It was suggested that we are treating agriculture differently. It is easy to make a general statement not backed up by facts.

Mr. Bruton

It is the truth.

Mr. O'Kennedy

It is not. In this area we are doing exactly the same as we do in relation to rolling equipment for industry. There is no free depreciation on motor vehicles for industry. This shows that we are not treating agriculture in a different way.

Mr. Enright

One cannot compare a motor car with a tractor.

Mr. O'Kennedy

The Deputy's neighbour introduced the comparison. We allow special recognition to agriculture. We have a special credit for rates against income tax which is allowed to farmers and not to industry. The allowance for farm buildings does not apply to commercial buildings other than to industrial buildings. Is that treating agriculture unfairly by comparison to industry? If it is it is going the other way to what has been implied. The new easements for stock relief covered in amendments that I will introduce will not apply to any other business. That is certainly treating agriculture differently, but not in the sense that Deputy D'Arcy has implied. If we are to continue these discussions let us not have any more of the general stuff that would be more appropriate to a platform audience during an election campaign. Let us use this time for a really detailed discussion.

Progress reported: Committee to sit again.