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Dáil Éireann debate -
Wednesday, 11 Jun 1980

Vol. 322 No. 2

Finance Bill, 1980: Report Stage (Resumed).

I move amendment No. 13:

In page 17, line 16 to delete "paragraph (a)" and substitute "paragraphs (a) and (b)".

Up to this Finance Bill people who earned £70 interest on deposits in a number of institutions could claim tax relief on that figure. There was considerable pressure on the Minister and his predecessor to acknowledge that the figure of £70 was inadequate and was not an encouragement to people to save. Recognising that pressure and the legitimacy of the arguments the Minister increased the sum to £150, but he limited the institutions in which deposites could be placed to trustee saving banks and some other institutions and excluded the commercial banks which had previously been included. We raised this matter on Committee Stage of the Bill and the Minister's defence was that if he included these banks there would be legitimate representations from other banks. He would then be under some pressure to include these other financial institutions. In turn, this could have a damaging effect on Post Office savings and on building societies. I can see the problem but I cannot understand why the Minister has introduced this differential. If the Minister had amended the figure of £70 to £150 in respect of all institutions there would have been no problem.

As a general rule the financial institutions or the trustee savings banks do not have offices outside Dublin, Cork, Waterford, Limerick and Galway. That means that in areas outside these centres a small depositor has the use of only the Post Office and I am sure I do not have to elaborate on that. Anybody who lives in rural Ireland will understand the reluctance of ordinary people to deposit their savings with the Post Office. If the choice were available to them, normally they would choose the commercial banks but because of the limitation proposed by the Minister they will not be able to benefit to the same extent as depositors with trustee savings banks and other financial institutions. The Minister has burdended himself with unnecessary problems. Many people in rural areas do not yet realise what is being proposed by the Minister but when they discover what is happening he will be under pressure from these ordinary individuals. They will try to ensure that the same allowance of £150 will be allowed across the board, as was the case with regard to the £70 allowance which applied previouly.

We dealt with this matter in detail on Committee Stage and I do not have very much to add to what I said then. The position of the Post Office Savings Bank and the trustee savings banks is well known but perhaps I should repeat some of the points made before. The two institutions were set up to cater for the small saver and they are in a particularly difficult situation. An important point and one that the Deputy did not refer to is that their rates of interest are directly controlled by the Government which is not the case with regard to the associated banks and others. In addition, the bulk of their funds are lodged with the Exchequer and this is not the case with regard to the others. Because of the fact that they have a lower rate of interest which is directly controlled by the Government, it is reasonable to suggest that we should offer an incentive by way of tax relief which is what we are proposing to do in respect of the Post Office and the trustee savings banks.

Since this was introduced it has become clear that there are some anomalies even in applying this to banks at all because there are a number of other banks that were not nominated for this interest exemption. They could claim quite reasonably that because they were nominated in the past they should not be excluded now and that any benefit being applied should be extended to them. Anybody who looks at this objectively will come to the same conclusion. I should like to correct slightly what I said on Committee Stage when I said that the former Minister for Finance, Deputy Ryan, referred to this matter in 1975 or 1976. In fact, he mentioned it in his budget statement of 1973. I think I could enlighten the House a little if I quote precisely what he said then, which is at odds with what Deputy Barry is suggesting now. The then Minister for Finance said:

At present interest up to £70 on deposits made by an individual with the Post Office Savings Bank, the trustee savings banks and certain commercial banks is exempt from income tax. Banking institutions set up since the relief was introduced have sought to be included in the concession. This however would be a costly move for the Exchequer. On the other hand, the present position is clearly anomalous. Since the relief was introduced as a measure to promote thrift, I have decided that the best course would be to confine it to deposits with the Post Office Savings Bank and the trustee savings banks which are the main thrift institutions of the State. The change will come into force with effect from 6 April 1974.

The previous Minister for Finance was proposing the abolition of the concession for all the banks and he gave notice that it would take effect from April 1974. In the event, because of some significant political changes, that did not happen, but the then Minister clearly gave notice of his intention to change the procedure. He mentioned the cost to the Exchequer even of extending the concession to other institutions which is not just what Deputy Barry is proposing here. What the Deputy is proposing would be even more expensive.

Let me give an indication of the rates of interest and the differentials between the associated banks and the nominated banks. In respect of the two main associated banks, the Allied Irish Bank and the Bank of Ireland, the rate on withdrawal-on-demand deposits is 11.5 per cent. The rate in Guinness and Mahon is 16.5 per cent, in the Commercial Bank it is 12.5 per cent, and in the City Bank is 17.5 per cent. The rate in the Post Office and the Trustee Savings Banks is 9.5 per cent. The rate on deposits in the Post Office or the Trustee Savings Banks is significantly lower than the rates which apply to the other banks nominated for this relief. In some cases there is a difference of 8 per cent. For all these reasons it is reasonable to acknowledge the special position of the Post Office and the Trustee Savings Banks by granting the extra exemption to them so as to in some way compensate for the control over interest rates which has meant that their level of interest is lower than that applying to the other banks.

There is no real substance in the case Deputy Barry is trying to promote that banks are more readily available than the other institutions. There is a post office in every village but there is not a bank in every village. To suggest that people living in remote places will start to do what they have not started to do is wrong because contrary to what the Deputy suggests I have not received any representations from people living in remote places.

They do not realise it yet.

People are not that slow and there has been quite a lot of publicity about this. I announced this on 5 May 1980 in a statement from the GIS and it was given a certain amount of publicity. People are not that removed from what is being publicly announced so as not to be aware of it. If people had any objections I am sure I would be aware of them by now.

I am very disappointed with the Minister's attitude to this. The Minister has representations perhaps from the banks.

The Deputy suggested that I had received representations from the public and that is rather different.

I am saying that the Minister got representations from the banks.

Yes, but not from other sources.

I got copies of the representations made by the banks, as the Minister probably knows. I am very disappointed with the Minister's attitude. I can see no point in differentiating between one set of depositors and another.

Amendment, by leave, withdrawn.
Amendment No. 14 not moved.

I move amendment No. 15:

In page 17, to delete lines 30 to 55 and in page 18, to delete lines 1 to 10.

The purpose of this amendment is to avoid the position whereby people who are self-employed will have to pay what amounts to three lots of tax in the one financial year. This is particularly unjust at the present time when so many small shopkeepers because of inflation are finding it very difficult to keep the cash flow position correct and are not allowed to borrow increased funds to finance that cash flow because of the credit restrictions. On top of that the Minister is proposing to take 50 per cent more tax than in the one year. This will put some small businesses under pretty severe strain at the end of this year. There is no good time to make adjustments in the tax system whereby the Minister for Finance gets more for the Exchequer in any one year but to do it at a time of high inflation, high bank charges and restricted credit is an indication of the insensitivity of the Minister for Finance to the difficulties being faced by small businessmen.

I support Deputy Barry's amendment. This provision will hit small businessmen on whom to a large extent the future of our economy depends, when they are already facing great difficulties in having sufficient cash flow. They require but are unable to borrow substantial amounts of money in order to keep their stock levels up. On the other hand big shopkeepers who are in direct competition with the small shopkeepers, because of their market power, are able to ensure that they get credit to stock their shops. The result is that they are able, because of their market power, to charge an artificially lower price and do down the small shopkeeper thus adding to the problems of the small shopkeeper. This liability to increased taxation in this year when consumer demand is not as good as it would otherwise be, could lead to the closure of many small shops or could make their business much more difficult to maintain. I urge the Minister to carefully consider the small business people who will be badly affected by the section as it now stands.

I dealt with this matter exhaustively on Committee Stage but obviously the Deputies want to raise this matter again. Deputy Bruton has overstated the case and has given the impression that the consequences will be disastrous. Deputy Barry has suggested that the high inflation and so on will give rise to crushing problems. I would remind both Deputies that this is not the first time this issue came up. It would have been interesting to see Deputy Richie Ryan who was Minister for Finance in the Coalition period, in the House at any stage during this debate. Deputy Ryan would find that almost all of the things that he stated as high principles are now being rejected by the current spokesman for Finance and by Deputy Bruton. There are at least four or five occasions on which Deputy Richie Ryan spoke in relation to these areas. It is important to recognise that a certain level of consistency from the party opposite would be a help in this area.

The new day means that most of these taxpayers will pay tax in one instalment but not until six months of the year has already passed as distinct from the PAYE taxpayer whose tax is deducted at source. If we are trying to move towards equality in the tax system and towards justice that can be seen to be done, surely it is reasonable to align the date of payment as much as possible. I have not brought it right up to date. It will be payable in one instalment after the first half of the year has passed. As Deputies know—we had this yesterday in regard to another aspect of taxation—you will always have two months' grace after that before interest becomes payable.

In making this proposal are the Opposition really suggesting that somebody else should pay this tax? If I were to act on what Deputies opposite are proposing there would be a significant loss to the Exchequer which means a loss to the taxpayer because there is no magic purse as I have said many times. If the kind of money involved here and necessary to give effect to their proposal—a figure of about £24 million in 1980—were to be cast aside, I take it that the Opposition recognise this would have to be paid by somebody else. I want Deputies opposite—for once Deputy Barry will have an opportunity of replying because he is moving the amendment—to say if they suggest that perhaps PAYE taxpayers should pay it, paying as they already do in advance or simultaneously? Do they suggest—there are very simple choices—that extra indirect taxation be introduced? Or that nobody should pay it, that I should go ahead and borrow the money for it?

The Minister is doing that already.

No, I am talking about——

One could make this argument against any tax.

Where did the Minister get the money for the rates?

I have endeavoured to explain consistently and clearly my budget strategy, how it is being implemented in this Finance Bill, the concessions that are being introduced in addition to those announced in the budget and in respect of this issue, I am asking what I submit is a very reasonable question. The whole basis of this is a basis of equity. It is a basis that has been recognised and stated by Ministers from time to time. Anybody who has sat in this seat in recent times has said it. Deputy Richie Ryan particularly stressed it. Now, as we move towards it, Opposition Deputies say: "Any other year but this year". One can say that any time. They tell me it is not reasonable to bring it forward as I am doing, even though these taxpayers will still not be paying tax simultaneously as the PAYE sector do. I have mentioned the figure involved and I think it is fair to do so even though Deputy Barry may say that I did not ask that question about anything else. I have to respond as Minister for Finance. Whatever about Deputy Bruton who has a different role, Deputy Barry is spokesman on finance for the Opposition and in that capacity he would have the responsibility, if his aims were realised, of managing the public finances. I think I am entitled to ask him where he would propose to levy the £24 million to meet this amendment the effect of which would be to move away from rather than towards equity.

Nobody rushes to pay tax but we all have an obligation to pay our share and do so reasonably simultaneously. I know Deputy Barry will say he is disappointed at my reaction. I think I have given him both reason and fact as to why this amendment should not be accepted. I shall now yield to the Deputy and perhaps he will tell me where he will get the £24 million and who will pay for his suggestion if adopted.

The Minister did not tell me where they were getting the money for the five extra Parliamentary Secretaries appointed since the change in the administration. There were certainly no demands by anybody in the country that those extra posts——

We are talking here about real money.

The Deputy should keep to the amendment.

The Minister asked me where I would get the money for the amendment I have put down. I think the Minister should be truthful. That is a nonsense of an argument. No Minister for Finance says precisely where he will get the money for every innovation of the Government. This Minister was appointed last December. He is there now for six months. Within a month of being elected he puts on the backs of the unfortunate taxpayers more taxation than any one of his predecessors ever did. He comes in here justifying all this, including increasing by 50 per cent the amount the self-employed have to pay in any one year. Within a fortnight of a new Taoiseach coming into the Cabinet there was an increase of five, 100 per cent more junior Ministers in this Government than in any former administration. They did not say: "We will put up the price of the pint to pay for Deputy Killilea—there is a great bargain we got. We will put up the price of petrol to pay for Deputy Allen—there is another bargain."

The Deputy should stay with the amendment.

I think this is quite relevant.

This invites reply.

The administration changed in 1977. When we went out of office there were seven parliamentary secretaries——

The Deputy should keep to the amendment.

Now there are 15 junior Ministers and the Minister did not tell us precisely where the money would be got to pay for the extra eight Ministers. Perhaps if I give way he will tell me now who is being taxed to pay for them.

The Deputy should conclude on his own amendment.

Would the Minister like to tell us that?

May we dispense with the rules of order? I will answer the Deputy's question if he will answer mine.

The Deputy should conclude on his amendment.

The fact is that the Minister knows this is justified——

I did not think the Deputy would want that.

It was quite obvious from the way he spoke on this amendment that he knows there is justification for what we are proposing here. He knows that small shopkeepers and business people are under considerable strain at present. He knows, because he has got very lengthy representations from the self-employed and small business people on this matter and he has chosen to ignore them all because far more important to him, as there is far greater pressure on him in that regard, is the financing of the demands of this Government since they came into office. Runaway inflation and borrowing, the runaway spendthrift attitude they have had for the last three years require that he should scrape the bottom of the barrel and get every penny he can lay hands on. One of the victims—because he thinks they are least organised and least able to answer back, least hysterical in their demands—are the small shopkeepers and the self-employed. They are now being asked to pay another 50 per cent tax in the one year, only this one section of the community. The Minister seeks to justify this on the basis of equity. If I have one leg he must have one of his own cut off—this is the equity involved. It will not do. The Minister is the victim of the mismanagement of the economy for the past three years. He can do nothing but refuse the amendment but it is most unjust that one small sector who are weak and unorganised and cannot bring political clout to bear to get their demands met will be the Minister's victims.

Is the amendment withdrawn?

Question: "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.
Amendments Nos. 16 and 17 not moved.

We come to amendment No. 18 in the name of Deputy Barry. No. 19 is related to it and No. 20 is consequential. The three may be discussed together.

I move amendment No. 18:

In page 29, between lines 19 and 20 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 20A, section 24 of this Act shall not apply for the year 1980-81.".

Deputy Barry will be contributing and he can explain this in more detail.

There will not be any limitation on the speeches apart from order. Amendments Nos. 18, 19 and 20 will be discussed together.

The purpose of amendments Nos. 18, 19 and 20 is to retain the notional system of taxation for farmers for one more year. There are two basic grounds for this. The first is that farmers were asked last year to opt to stay on the notional system for three years. If they went on to the notional system they had to stay on it for three years even if the rate of notional were to be dramatically increased and it was suddenly to become a much less profitable thing for them to stay on it in the second year than it appeared in the first year when they originally made the option. They were told by the Minister for Finance then that if they went on to the notional system, regardless of what happened to the rate at which it was being assessed, they had to stay on it for three years. The Minister was asking the farmers to make an act of faith in him that the notional system would be maintained at a fair level over the three-year period and that in fact it would remain over the three-year period. There was no point in a person tying himself to something for three years if it would not remain for three years.

What happens this year? The Minister comes along and abolishes the notional system. He suddenly, having got farmers to commit themselves for three years, in the second year of the three-year period, abolishes it completely. I believe he broke faith with people whom he asked to make an agreement with him for a three-year period. That is what is contained in amendment No. 18.

In amendment No. 19 we are seeking to retain the notional system of taxation for one more year. The Fianna Fáil Party in their election manifesto promised that the notional system would be retained. They even went so far as to refer to the notional system in part of their manifesto as the "Fianna Fáil notional system". They called it this as if they had invented it. It had become part of the Fianna Fáil bag of tricks together with the twin national aims.

It ended up in the same place.

Fianna Fáil were elected in 1977. Governments are usually elected for four years so one would expect that if Fianna Fáil entered into a commitment in 1977 they would have the decency to adhere to that commitment for the normal term of a Government, which would be to the end of the 1981 tax year. After three years, having given this solemn very specific promise in their election manifesto to maintain this system, in the third year they come along and abolish it completely. We are merely seeking in this amendment to hold Fianna Fáil to the promise they made of their choice in the election manifesto. We did not make any promise in our election manifesto about retaining the notional system but we are now seeking to get Fianna Fáil to keep the promise they made to the people. I have a vivid memory of attending a large, packed meeting of farmers two days before the election in an hotel in Navan and Fianna Fáil TDs came in and said: "We will keep the notional system. If we are elected we will hold on to the notional system of taxation". Now, long before the normal term of the Government who were elected as a result of those promises made in 1977, they propose to go back on the promise they made and abolish the notional system.

Fianna Fáil need not have promised to retain the notional system of taxation in their 1977 manifesto. They probably would have been elected without it but they deliberately chose to keep the notional system of taxation for farmers and they deliberately put it in their manifesto. The Deputy who is now Minister for Finance was a member of the Fianna Fáil front bench who drafted this manifesto and he cannot walk away from it any more than can any other member of that front bench. The least Fianna Fáil can do is to keep that promise for the normal term of office of the Government elected in 1977. We are not asking them to promise to keep it for the rest of the eighties. We are only asking them to keep it until the end of the 1981 tax year, one further year, in order to keep the promise given in the manifesto.

That is a reasonable request. If the Government do not adhere to their promise it shows they never meant what they said in their election promises. Any promises they make to farmers or any other section of the community in the next election campaign can be treated in the same light as we can now see the promise given in relation to the notional system can be treated.

I would like to support this amendment. When the farmers got that promise it had a great bearing on their business. It is no use now for any Minister for Finance to promise the farming community anything because the Government are no longer taken seriously.

A farmer I spoke to the other night told me that the promise does not mean anything because in three months' time there will probably be a different Minister for Finance. It is no use for members of the Government to go down the country and say that it was the fault of Deputy Jim Gibbons and Deputy O'Donoghue. It is the same Government since 1977, we just have a change of Ministers. One-third of the Deputies who sit on the other side of the House got in here as a result of false promises given to the agricultural community. This is an opportunity for the Minister for Finance to redeem the promise made in 1977 and accept this amendment.

We dealt with this issue in the course of the Committee Stage debate and the same arguments are being advanced now. People who look at the question of farm taxation or taxation of any other sector have all come to the conclusion, as the farmers and their leaders have also, that they want to pay their fair share of taxation the same as anybody else and they want to be seen to pay it. They want to have an end to all the bickering going on. I also want to have an end to this and I want to have an understanding between farmers and every other section of the community because all of them are vital to our economic development. It is evident that to achieve that one pays what is in reality the appropriate share of tax on the income actually earned after allowance is made for all of the expenditures set down in the Bill and for all of the appropriate claims.

Why did Fianna Fáil not say that in the manifesto?

I will come to that in a moment. Some of the Deputies opposite seem to go to bed like babies with soothers. They do not sleep unless they have brought a couple of sentences from the manifesto with them which they present and misrepresent.

Is the Minister saying that I misrepresented Fianna Fáil's promise in the manifesto?

(Interruptions.)

Acting Chairman

Deputy Bruton will have an opportunity to reply afterwards.

I have been sitting and listening to what has been taking place. The Deputies know, especially on Report Stage, the Minister has only one chance to reply and he sits and listens as I have been doing all the time. I know it involves a certain amount of discipline, patience and restraint. But, if I am going to be subject to it, the Deputies opposite should be subject to the same thing.

The need to have tax paid on the basis of what the actual earnings are as distinct from notional earnings is real and is recognised. I have made it clear in my budget statement and on the Finance Bill that we are talking about the need to demonstrate as much as one possibly can in a Finance Bill that we are dealing with real tax payable on real incomes, not on notional incomes, certainly not opportunities not to pay tax on real incomes. For that reason the notional system was introduced and, incidentally, changed very often. The first multiplier was 40, the next 65, next 90 and the next 125, all of which demonstrates just how notional it was even at 125.

It is time to deal, not with notions, but with facts, and that is a fact about which I am concerned. We are trying to move to a situation where farmers will pay on their accounts that will disclose what their income is, the same as anybody else. While the notional system may have had at least the merit of introducing the farming community to tax-paying when they had not been liable to tax up to then, what struck me in this is that the commitment of the representatives of Fine Gael to the notional system is not, as far as I can see from any discussion I have had, matched by the commitment of those best qualified to represent farmers, namely the farm leaders, but perhaps they understand. On the last day I touched on some glaring anomalies that existed under the notional system. Apparently I did not succeed then in convincing the Opposition of the anomalies and injustices——

We did not promise in our manifesto to keep it.

——that arose under the operation of the notional system. As I did not succeed in doing so the last day, I had better go a little further today. In doing this I want to make it quite clear that I am not implying that the farming community as a whole are not paying an appropriate share of tax or that they do not intend or wish to pay an appropriate share of tax. However, there are numerous examples, not just a few, of very wealthy farmers who have not paid any tax by virtue of the operation of the notional system. I had better give those examples and then see whether it is appropriate at this time that this system should be maintained.

A farmer in Leinster who has over 700 acres of land with ratable valuation over £600 has paid no tax in any year 1974, 1975, 1976 and 1977 by virtue of the operation of the notional system.

(Cavan-Monaghan): What is his valuation?

Over £600, but I have not finished. I am going to give all the examples now, calmly and dispassionately, because I am not making any implications against the farming community. Another farmer in the same province who has a valuation of over £575, and I am not sure what the acreage there is, paid £300 in tax in 1974-75, £500 in 1975-76 and in 1976-77 paid no tax. In respect of 1978-79 and 1979-80 no tax has yet been paid because while electing for the notional basis assessments were still under appeal. The third case is a farmer from the same province with over £540 valuation, acreage again not known: 1974-75 no tax paid; 1975-76, £60; 1976-77, no tax; 1977-78, £10,000; 1978-79 appeal not yet settled. The fourth case is a farmer with over 530 acres, rateable valuation over £480, no tax paid in any year from 1974-75 to 1978-79. The fifth case, the same province, over 400 acres, valuation over £360; 1974-75, no tax; 1975-76, nil; 1976-77, nil; 1977-78, £2,000; 1978-79, not settled. Case six, over £250 valuation, tax position as follows: 1974-75, nil; 1975-76, nil; 1976-77, nil; 1977-78, £1,000; 1978-79, not settled. Case seven, valuation above £150: 1974-75, nil; 1975-76, nil; 1976-77, nil; 1977-78, under inquiry; 1978-79, under appeal. No tax was paid in any of the periods. Case eight, £130 valuation, no tax paid. I have dealt only with examples from Leinster. If I have not convinced Deputies so far I can go on to Munster or any other province they like.

Did Fianna Fáil tell the farmers they were going to keep this?

The Deputy will see that many of these cases—I am talking about 1976-77, 1977-78——

Why did they put the promises in the manifesto?

Perhaps we did not have the knowledge that the Opposition had when they were in Government then.

We put no promises in our manifesto.

I have given examples from only one province. I can go on to deal with Munster, Ulster and Connaught, though not to the same extent for Connaught, if Deputies opposite want it. In respect of the current position it is fairly evident that they are not just exceptional examples. I say very much in the interest and favour of the farm organisations that I recognise their approach and that is not the kind of situation they want. I recognise their stance in this area. They do not want that. The only ones who seem to want it are the spokesmen opposite from Fine Gael. They might explain. If the reason is that there was a manifesto commitment some years before, we could not have known. We were not privy to the knowledge as to what the sources of revenue were at that time.

You did not want to know.

Could we have known?

You could have asked.

Acting Chairman

I ask the Minister not to invite interruptions from the other side of the House.

If I say that we were not privy to the information and that invites interruptions, I have to accept that as being a statement that invites interruptions. It does not seem to me to invite them. What I have said so far should be reason enough——

Did the Minister not say——

Acting Chairman

Deputies on that side of the House will have their opportunity.

——for me now to convince the Deputies opposite apart from any other argument that one wants to advance. If the farm leaders themselves are concerned that that kind of anomaly would not continue, I see no justification for the representatives of Fine Gael standing alone and saying that they have no worry about it. I have.

(Cavan-Monaghan): In the course of his remarks the Minister stated that the Fine Gael Deputies seemed to regard the manifesto as something of a rattle that they could not go to bed without. I venture to suggest to the Minister for Finance that if he brought the manifesto to bed with him he would not sleep at all. It would act as a complete nightmare, a bad dream, something he wants to forget about—and I can understand that. The Minister has made a very reasoned case here about the farmers being prepared and anxious to pay income tax on profits. He went on to say that not only were they anxious that they should pay their fair share but they were anxious that they should be seen to pay their fair share. He pointed out some cases where farmers, under the notional system, did not pay any income tax. He regarded those as cases of hardship to the Revenue, cases that should be detected. I could understand the Minister's argument if he stayed with it right through the farmers' taxation provisions of the Bill but, when he comes to the resource tax, he ignores that logical argument which he appears to be making and says farmers must pay regardless of whether or not they are making a profit. That is completely inconsistent.

The Minister has given examples of people who should be paying tax on the accounts basis but who were getting away with it under the notional system. Yesterday I pointed out to the Minister, when we were discussing the resource tax, a case of extreme hardship where an individual who was in receipt of social assistance from the health board was being asked to pay up to £300 in resource tax. The Minister cannot have it both ways. He is being entirely inconsistent in saying it is reasonable to abolish the notional system in regard to income tax and to introduce it again into another provision of the Bill for the purpose of collecting another type of tax. Surely that is inconsistent?

The Minister should abide by the promises he made in his manifesto and retain this tax, because there are marginal cases and cases where farmers are not liable for tax but they have to employ accountants, at a cost of hundreds of pounds, to prepare their accounts to. show that they are not liable. That, in itself, is a tax. The Minister is being totally inconsistent in his argument. If the arguments he is making here hold good for income tax, they hold good for resource tax.

There seems to be a lot of ballyhoo about the notional and accounts systems. I am a farmer and I would not go on the notional system. I would be crazy to do so. I would go on accounts. My valuation is £60 for about 100 acres. I have always gone on the accounts system. Nobody has complained about being taken off the notional system except those with bigger acreages of land. One farmer told me that when he is switched over to the accounts system he will be caught for £10,000 more. When he transfers from the notional system to the accounts system he will be paying £20,000 if he is paying £10,000 now. Small shopkeepers and so on employ accountants. I see nothing wrong in farmers having to pay accountants. I know some farmers who do not pay accountants. They do the books themselves. My experience of the Revenue people is that they are most reasonable. They have accepted proper accounts showing receipts and expenditure and so on.

There is a division between certain sections of the farming community and PAYE people because the PAYE people are of the opinion that the larger farmers are not paying their fair share. This has antagonised them. A few moments ago the Minister quoted examples. They were most interesting. I did not know about them. Some people in the 500-acre bracket in Leinster did not pay at all. Others paid very little, and some have appealed. We must be reasonable in this day and age. I have met the farmers' organisations on a number of occasions. They think it is reasonable that they should pay their fair share. They are anxious to do so.

(Cavan-Monaghan): Would the Minister of State apply the same argument to the resource tax?

I am not talking about the resource tax. I am sticking to the amendment. I did not interrupt anybody.

(Cavan-Monaghan): Would the Minister apply the same logic to the resource tax?

I have some very interesting figures. Farmers are going off the notional system in various parts of the country. In the Athlone district in 1975-76, 73 per cent were on accounts. In 1979-80, 93 per cent were on accounts.

Could I have those figures again?

In 1975-76, 73 per cent; in 1976-77, the same; in 1977-78, 82 per cent; in 1978-79, 90 per cent; in 1979-80, 93 per cent. In part of the Dublin farming area which would cover a lot of Leinster, the figure has gone up to 94 per cent on accounts. Let us be fair. The Opposition cannot go around shedding crocodile tears all the time.

Fianna Fáil did that in 1977. They did all the crying in 1977.

A vast number of farmers throughout the country have told me they would prefer the accounts system. The figures here show that.

(Cavan-Monaghan): I heard the Minister of State accelerates when he overtakes a farmer.

Deputy Fitzpatrick is not a farmer. He is a member of the legal profession. I am talking about farmers in the middle income group. They were all satisfied to go over to accounts. If you do not earn the money you do not have to pay the tax. If you have a bad year and make a loss, if you are in mixed farming and a disease strikes, if you are on the notional system you are in a very serious position. But if one is on accounts one only pays if one earns the money. This is my argument. Deputy Fitzpatrick does not want to hear the truth.

(Cavan-Monaghan): The Minister promised to give farmers the option.

The Deputy cannot have his loaf and eat it. Let us get one thing clear. If one earns the money one pays the tax and if one does not earn it one does not pay. It is most alarming that under the notional system some farmers with a very high acreage and valuation pay very little tax. We must be fair to everybody, the farmers, the PAYE people and the business community, irrespective of what type of business they are in. Nobody will dissuade me from the idea that the right way to do this is by taxing farmers on accounts. I have heard no complaints in my constituency of Laois-Offaly which has mixed farming and some very big farmers. No farmer can put up an argument to support staying on the notional system. The only reason any farmer would want to stay on the notional system is so that he can pay less tax. All the farmers that I met were glad to go on accounts and that is the right way to run a business.

First of all, it is my belief that everybody in the farming community should pay tax on accounts. It is to our party's credit that in the 1977 election when we could have sought to curry favour with the farming community by promising to retain the notional system we did not do so. It was Fianna Fáil who promised to retain the notional system of taxation. What I am particularly concerned with here is the fact that this section is institutionalising a breach of faith by the Government with the farming community. They did not have to promise to retain the notional system but they did and now they are abolishing it and going back on their promise. That is the point that I am trying to get across, a point conveniently ignored by the Deputies opposite.

It was very interesting to contrast the speech of the Minister for Finance and that of the Minister of State. They were two completely contradictory speeches. We had the Minister for Finance trying to give us the impression that everyone who was on the notional system was getting away with paying practically no tax. Of course one can take exceptions to prove almost any case and the Minister, of course, did not choose typical cases of the notional system; he chose a few cases in order to illustrate his point.

I made it clear that they were not typical cases. I said these cases existed at that level.

What point was the Minister trying to make then? One can produce an individual case of people in business who are paying no tax at all even though they are making large profits because in a particular year they had been able to off-set large amounts of interest against their tax payments. But that is no argument for saying that business people are not paying their fair share of tax and that the system of taxation of business is unfair. It would be no more logical for the Minister to argue that because two or three farmers on the notional system got away with paying tax because of peculiar circumstances in their case that ipso facto the notional system is unfair. The Minister was arguing from the particular to the general in a most dishonest way while at the same time protesting——

I am entitled to take issue with that.

Acting Chairman

Order, please.

When the Deputy imputes dishonesty to me I can take issue with that.

Acting Chairman

I did not hear any imputation of dishonesty.

The Deputy said I was arguing in a dishonest way and if that is not an imputation of dishonesty I do not know what is.

Acting Chairman

The Deputy said that the argument was dishonest.

If someone presents an argument that is dishonest he has to be dishonest himself and the Deputy knows that.

I do not wish to get into a personal tangle with the Minister. I believe that he was using a dishonest argument. I adhere to that and I will not go any further than that. He was using a dishonest argument in taking an individual case which proved nothing.

I did not take an individual case.

The Minister took a number of cases in Leinster and said that if the Deputy wanted some cases relating to Munster he would give them.

The Minister having tried to give the impression that being on the notional system was like being on a tax holiday his colleague, the Minister of State at the Department of the Environment, comes in and says that all the farmers are trying to get off the notional system and that the numbers on accounts have gone from 73 per cent in 1975 to over 93 per cent in 1977-78. If the notional system was such an easy and happy thing to be on as the HiMinister was trying to say why, I ask Deputy Connolly, were all the farmers getting off it and going on to accounts as he seems to suggest? Never, in my view, could there have been two speeches from two Members of the House seeking to prove the same thing which were so contradictory as the speeches of the Minister for Finance and the Minister of State, notwithstanding that they were both speaking from the same brief. Although they were speaking from the same brief prepared by the same officials they have succeeded in contradicting one another. It is quite an interesting exercise in the problems that one gets into when one tries to use prepared speeches.

If we were saying what the Deputy says we are saying we would be contradicting each other but of course we are not.

The Minister said exactly what I said he said.

Let me confirm what I did say and then the Deputy can make what he likes of that.

My hearing is as good as that of anybody else in this House. But if the Chair will allow it, I will concede to the Minister's request that he be allowed to clarify it.

The only way the Minister can come in at this stage is on a point of explanation.

(Cavan-Monaghan): Are we recommitting it?

The Minister is getting worried.

There seems to be some difficulty between the Minister and the Deputy. The Minister is really not entitled to come in except on a point of explanation.

I would like to come in on a point of explanation and I acknowledge the Deputy's generosity. I quoted nine cases in the province of Leinster. I indicated that there are an equal number in the province of Munster and not quite as many in Connacht and Ulster which makes, in that bracket, at least 30 cases. The ones I quoted were all from the top earners in terms of valuation. They are the very wealthy farmers who did not go off the notional system. All of those farmers for their own reasons, as I demonstrated very clearly, because they had valuations of about £500, stayed on the notional system as a consequence of which they did not pay tax. That is not the same as what the Minister of State was saying in respect of the majority of farmers who are entitled to opt for one or the other.

I am delighted that the Minister has had the opportunity of satisfying himself that he made himself understood. It allows me to say to him that, if it were not the notional system that he is now against but simply the abuse of the notional system by a small category of farmers, the solution then would have been not to abolish the notional system and go back on the solemn promise made in the manifesto but to say that over a certain valuation threshold the notional system would not be open to a farmer. For instance, he could have provided that if a farmer had a valuation of £100 or £150 the notional system would not be open to him but that he would allow the notional system to be retained for the small intensive farmer. The Minister would have had an immediate solution to his problem. But that is not what he wanted to do. He did not want to eliminate the abuse of the notional system. He wanted to do away with it completely and go back on the promise that he made to the people. We made no such promise. He did and, in producing cases of that sort, he has produced what I still say is a specious argument, deliberately designed to muddy the water and create an anti-farmer impression. He took individual cases like this where there was a perfectly easy way out by simply abolishing the notional system for people with very large acreages and making it available only to small farmers.

I certainly deplore the situation where large farmers, such as the cases mentioned by the Minister, can use the notional system to avoid paying tax. I deplore it as much as the Minister and more. But there was a way of getting around that problem by not allowing the notional system to be available to people over a certain valuation. However the Minister either did not think of that or shut his mind to it. There was a substantial case for maintaining the notional system in respect of small farmers for another year. That is what the amendment seeks to do.

I do not think that is contained in the amendment.

The amendment is framed generally but, then, I did not have access to the figures cited by the Minister. I should be happy to amend the amendment to the effect that the notional system be retained only in respect of farmers whose valuations are less than £100. Such provision would eliminate the abuses of which the Minister has given examples. As I have allowed the Minister to intervene to explain a point, perhaps he would be prepared to intervene again to say whether he would be prepared to accept an amendment on the lines I am suggesting now, that is, that the notional system be retained in respect of farmers whose valuations are less than £100.

The Minister may not intervene again on the amendment.

Because of the anomalies that exist in the notional system, the answer to the first question is in the negative and so far as the other question is concerned, I cannot accept amendments to amendments.

The position is that I did not have access to the figures that the Minister has cited.

The Deputy must conclude on his own amendment.

The Minister who had access to all the facts and figures and who realised the danger of abuses in respect of the notional system could have overcome these difficulties by amending the motion which was brought in in defiance of a specific promise made by his party.

The accounts system is the only suitable system.

(Cavan-Monaghan): The Minister did not tell us either about the resource tax.

I shall tell the Deputies all about that later.

Amendment put and declared lost.
Amendments Nos. 19 and 20 not moved.

I move amendment No. 21:

In page 30, to delete lines 1 to 37.

As I explained when we were dealing on Committee Stage with the taxation of farmer profits and when we had a similar amendment, the purpose of this amendment is to ensure that both business and farming are treated in the same way. I am sure that this is something with which every section of the community would agree. If business is allowed 100 per cent depreciation against taxation, the same facility should be available to the farming community. I think everybody will realise the justice of such a provision especially having regard to the very bad year experienced by farmers last year and to the indications for this year which would seem to be that farmers may not expect to have a very good year either.

On Committee Stage the Minister introduced an amendment to the effect that anything that was fixed, for example, a milking parlour, would be allowable in terms of depreciation of up to 100 per cent, but the same provision is not to apply in respect of something out on the farm such as a tractor. The implications of our amendment go beyond merely what happens on the farm, though primarily the beneficiaries would be the people on the farm. The amendment would extend the provision also to the suppliers of farm machinery, and we all know that those people have not been doing well for the past 12 or 18 months whereas those who supply fixtures within the farmyard will, presumably, continue to get their fair share of business.

Many farmers will now be receiving advice to the effect that the notional system will not be available to them any longer. Because of the switch to the accounts system they will have to employ accountants. Having regard to the importance of farm machinery to the farmer the provision in question should apply in this instance also. It is vitally important that farmers be encouraged to use the best machinery available, thereby ensuring that their productivity is increased. Therefore, our reasons for tabling this amendment are, first, to put farmers and business people on the same level in regard to this aspect of taxation and also to help stop the redundancies that are occurring within the firms manufacturing machinery.

I dealt with this matter on Committee Stage. As I indicated then, I had already made considerable changes in regard to the proposals that were announced last year and which were to be implemented this year in respect of capital allowances generally and not excluding from this limitation farm buildings, farm development and farm plant and machinery. In respect of farm plant and machinery other than that installed in farm buildings I considered that there was a case for limiting the allowances on the basis of what was announced last year and I conveyed this in the course of discussions with the farm leaders both before and after the budget. This was on the basis that, first, there was evidence of over-investment in farm plant and machinery.

This year?

I am talking about last year. It might at least be argued that in the event it might have been more costly for the farmers concerned that they had paid their tax bill and not subjected themselves to a fairly heavy burden of meeting repayments on farm plant and machinery which would not be utilised fully. It is evident that this was the gap in the provision which needed to be filled as was announced last year and I am proposing to implement that provision this year. But in the interest of farm development generally and of promoting real productivity whether in terms of farm buildings, of farm development or of plant and machinery, I have acknowledged the case made to me by the farm leaders. I think the provision being made will make a significant contribution to the development of farming in the course of this and subsequent years.

Let me, at the same time, make it clear that the restriction on accelerated allowances in respect of plant and machinery — and this is important — will apply only after full allowances have been given in respect of the ordinary wear and tear allowance for all plant and machinery. The restriction on the farm plant and machinery allowances does not come into effect until after free depreciation on fixed plant and machinery used in the farm buildings, the increased allowances in respect of expenditure on farm buildings and free depreciation in respect of expenditure on reclamation, drains, fences, holding yards and roadways have been used.

After these allowances have been given, if accelerated allowances are also claimed in respect of the ordinary plant and machinery, the amount of such extra allowance — and it is only the extra allowance which is being dealt with here — would be restricted to such an amount as will not bring the total amount of the capital allowances granted to more than 30 per cent of the chargeable profits.

Could the Minister clarify the point about fences which I raised on Committee Stage?

I shall deal with that point by way of amendment. I shall deal with the point when it comes up and I hope Deputy Bruton will be totally satisfied at that stage.

It is a very good point.

It is a good point.

I want to make it quite clear that any such restrictions will apply only to extra allowances claimed on plant and machinery. In relation to all the other allowances mentioned, there will be no restriction, even where they exceed 30 per cent of the profits. That, as Deputies will appreciate, is a significant advance on the announced intention last year. I have given the reason why this is a significant exception from the other areas.

Reference was made to the effect this will have not so much on the farmers but on the agricultural machinery industry. The regrettable reality, which we all hope will change, is that 80 per cent of the machinery in question is imported. This is something of which I am very conscious, having regard to the impact that has on our balance of payments and on the potential for this industry to supply the Irish farmers' needs, so that the industry itself can grow and develop and that that corrective impact will be made on our balance of payments.

Let me say, in passing, that the impact of the new corporation tax rate of 10 per cent will be very beneficial for this industry, which is almost exclusively engaged in manufacturing for the home market and, therefore, obviously will benefit considerably from the effects of this. There is a variety of good reasons, which I hope the Deputies opposite will appreciate, for the concessions given already as a consequence of the discussions we have had with the farming organisations and for maintaining the limitations in respect of farm plant and machinery, only after the other allowances have been used.

Finally, to the extent that we are dealing with similar situations, at any rate, we are treating farmers here at least as well as any other sector. I am not saying that we are making fish of one and flesh of another or giving any special privileges. The same provision which applies in respect of vehicles for industry applies here. I cannot see how it can be suggested that we are not giving farmers the same treatment as the other sectors of the community. If there is any distinction — and I would not want to press this point at this stage — it would be in favour of the farming community in concessions given already.

The answer, of course, is that there is an intrinsic difference between farming and industry in that industry is carried out usually in one small place, in a factory where one uses machinery fixed in place, whereas on the farm, because of the nature of the activity, it is carried out over a large acreage and one must have mobile rather than fixed machinery. If one were anxious to treat both in the same way, one would not draw a distinction between fixed machinery which is granted an allowance and mobile machinery which is not. Because of the nature of the farming industry, the farmer must rely on mobile rather than fixed machinery.

The Minister said in his contribution that there was evidence of over-investment in plant and machinery last year. That may be so, but there certainly is no evidence of over-investment in respect of farmers this year or, indeed, of anything else. There is a tremendous amount of not only new machinery lying about, but also second-hand machinery being put up for auction by farmers because they cannot afford to meet their outgoings and have to sell off machinery in order to keep themselves above water. This may prove that, as the Minister says, there was over-investment last year but we are not now talking about last year, we are talking about a tax to apply this year and next year. Certainly there is no danger of abuse of a concession in relation to the purchase of farm machinery this year, next year, or, indeed, in the next two or three years. As the Minister is making tax for the future, he should not, perhaps, make his case based on experience of the past which is no longer relevant.

I gather from the Minister's contribution that he is not going to take notice of the points made by Deputy Bruton and myself and that he will not accept this amendment and extend the relief being given to all sectors of the community. I regret this, because it is a worthwhile amendment.

Amendment, by leave, withdrawn.

I move amendment No. 22:

In page 31, line 8, after "made" to insert "under this section".

Deputy Bruton remembers, particularly, in the course of Committee Stage, a debate on the amendment which introduced this section into the Bill. He suggested that the inclusion in the section of a reference to fences or other works if made in the section might restrict the allowance to a maximum of 30 per cent, notwithstanding that free depreciation for these items is provided for by section 14 of the Finance Act, 1977. Section 14 of the 1977 Act provides that where an allowance was due under section 22 of the Finance Act of 1974 in respect of fences or certain other works, that allowance was to be increased by such amount as the farmer specified. If the reference to fences and so forth is not included in section 22, then there is no allowance to be increased under the 1977 provision. The reference therefore must remain in section 22, as re-written under this section, so that the allowance to be increased under the 1977 provision can be effective. As I indicated on Committee Stage the 30 per cent restriction applies only to any allowance to be granted under section 22 and does not, as I have said already, affect the free depreciation provisions of section 14 of the 1977 Act, which applies to fences and other works. It does not affect them. However, because the Deputy felt it would be better to make specific reference to that to make the matter crystal clear, I am now tabling this amendment which specifically limits the 30 per cent restrictions to any allowance granted under section 22. I would hope there can be no argument after that, that it affects the free depreciation provisions of the 1977 Act. This has been tabled precisely to meet the point made by the Deputy, so that there could be no question of what was the intention. This amendment gives effect to both my own intention — which was covered in the Bill — and to put it beyond any doubt, what Deputy Bruton brought up on Committee Stage.

I should like to thank the Minister for introducing this amendment which, as he has said, arises from a point I raised on Committee Stage.

Amendment agreed to.

I move amendment No. 23:

In page 31, after line 31 to insert the following subsection:

"(3) (a) In this subsection—

‘accounting period' has the same meaning as in section 12 of the Finance Act, 1976;

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

‘person' has the same meaning as in section 12 of the Finance Act, 1976;

‘stock to which this subsection applies' means livestock forming part of the trading stock of a trade of farming which is compulsorily disposed of under any statute relating to the eradication or control of diseases in livestock;

‘trading stock' has the same meaning as in section 31 of the Finance Act, 1975.

(b) Where—

(i) any stock to which this subsection applies is disposed of in an accounting period by a person carrying on a trade of farming, and

(ii) apart from the provisions of this subsection, the value of the trading stock of the said trade of farming at the beginning of the accounting period exceeds the value of the trading stock at the end of the accounting period, the person may elect, by notice in writing given to the inspector not later than one year after the end of the accounting period, that for the purpose of section 31 of and the Third Schedule to the Finance Act, 1975, and section 12 of the Finance Act, 1976—

(I) the value of the trading stock of the trade of farming at the end of the accounting period, and

(II) the value of the said trading stock at the beginning of the immediately succeeding accounting period,

shall be computed as if the said stock to which this subsection applies had not been disposed of:

Provided that—

(A) this subsection shall not be construed as enabling the value of trading stock at the end of an accounting period or at the beginning of an immediately succeeding accounting period to exceed the value of the trading stock at the beginning of the first mentioned accounting period,

(B) nothing in this subsection shall affect the provisions of section 12 (8) (inserted by the Finance Act, 1977) of the Finance Act, 1976, and

(C) this subsection shall not have effect in relation to any year of assessment prior to the year 1980-81."

The purpose of this amendment is to provide relief to farmers who — because of compulsory disposal of livestock due to disease control measures — might be subjected to a heavier income tax liability than they would otherwise be.

This situation arises from the operations of the provisions governing stock relief. As was mentioned on the last occasion, the stock relief takes the form of a deduction allowable in computing trading profits. If stock relief has been granted and the value of stock on hand decreases subsequently, then the relief is withdrawn to the extent that the value has decreased. The relief is withdrawn by treating the amount of the decrease in stock value as a trading receipt. In the ordinary course of events this position would arise, say, where the farmer decided to sell his stock but not to replace them fully. However, it is considered — I think this was mentioned on the last occasion when I gave notice of my intention to introduce this amendment — that this approach is not appropriate in the case of a farmer whose stock values have been reduced, or wiped out for that matter, because of disease eradication or disease control measures. The farmer in that kind of case has no option whatsoever but to dispose of his stock. It could happen that, at the end of the relevant accounting period, he might not have built up his stock to its original value, in which event his liability to tax would have been reduced. To cater for this type of situation in effect this amendment will ignore the drop in stock value, due to compulsory disposal of stock in a particular period.

The subject matter of this amendment also was raised by us during the Committee Stage debate, as I presume it was raised with the Minister by the farming organisations. We welcome the amendment. Our only problem is that, having seen it so recently, one is faced with a difficulty in detecting any drafting defects because of the brevity of time available to us for its scrutiny. That is not to take from my welcome of it. It is the inevitable result of amendments being introduced on Report Stage anyway.

I should like to know if there is any limit on the number of times a farmer can claim this relief. For instance, could it arise that he might dispose of half of his herd in one year and the other half in the following year. In those circumstances can he claim mitigation of his tax liability by virtue of having claimed stock relief in earlier years in respect of both disposals of cattle as a result of successive examinations under the disease eradication scheme, or can he merely claim it once? I notice also that he must claim not later than one year after the end of the accounting period which is probably reasonable. Perhaps the Minister could clarify that point.

Yes, he can claim for both years once there has been compulsory disposal of stock under the disease eradication schemes.

Amendment agreed to.

I move amendment No. 24:

In page 32, line 9, after "shall" to insert ", in relation to the farm land so owned,".

This amendment makes a further amendment in the new subsection (8) which was inserted in section 17 of the Finance Act, 1974. Deputies may recall that this section had to do with an anti-avoidance provision designed to prevent farmers avoiding liability to income tax on farming profits by making special arrangements regarding the occupation of the farm. I am now referring to section 17 of the Finance Act, 1974.

The new subsection (8) was amended on Committee Stage to exclude from the deeming provisions for threshold purposes cases where farmland was owned and occupied by a wife and to bring in cases where farmland was owned jointly by two or more persons. As Deputies will recall, if I did not make that amendment on Committee Stage, the deeming provisions of section 17 of the Finance Act, 1974 would not have excluded a case where the land was owned and occupied by the wife separately for threshold purposes.

A further amendment is required now to ensure that changes made already do not have the effect, in joint ownership cases, of excluding from the total rateable valuation to be taken into account the rateable valuation of farmland which is not jointly owned. The consequence of the amendment I introduced on the last occasion in case of this situation is that it is important to distinguish between them in the case of farmland which is not jointly owned. That is the purpose of this present amendment.

I might mention that subsection (8) introduces a special rule for determining the rateable valuation of the farmland where each joint owner of such land is deemed to occupy. In the absence of this amendment it might be contended that subsection (8) supersedes the other sub-sections of section 17 and that, therefore, land not jointly owned is to be disregarded in determining total rateable valuation for threshold purposes where some land is jointly owned. This is not the intention of the subsection and the insertion of the words of the amendment I propose here puts the matter beyond any doubt.

The Minister's language may be plain man's language but I do not think there are very many plain men who would understand it. To judge from what the Minister is saying, it would not be the intention to create the type of anomaly that would arise if the amendment were not made. Therefore, it is probably desirable to make this amendment. Unfortunately again we have not had time to analyse it in depth or indeed consult with people outside the House who would be more expert in tax matters than we are here. Therefore, with that caveat entered, we can accept this amendment.

I presume it covers the points raised — I cannot remember which Deputy raised them at the time — to the effect that there were anomalies that could arise, as Deputy Bruton has just said, in the division of lands. It may have been Deputy O'Leary who raised the point. Was it?

I think perhaps it was Deputy O'Keeffe.

But it is covered now by this amendment.

Amendment agreed to.

I move amendment No. 25:

In page 32, line 16, after "person" to insert "(other than a body of persons, or a trust, established for charitable purposes only)".

Deputies will recall that on Committee Stage I indicated I would introduce an amendment in relation to section 30 of the Bill as amended in Committee. This amendment should commend itself to the House. If Deputies have any questions I will deal with them.

This deals with an interpretation of "charities". I suggest the Minister should clarify the position. I will put a few cases to him.

Some of these may be more appropriate for judicial determination. I will not try to adjudicate on them here.

There is very substantial case law as to what are and what are not charities. The Minister is not using the phrase "for charitable purposes only" in the dark: he has a good idea of what is covered in statutes and case law and he should be able to answer some questions to clarify the position. For instance, will educational institutions be exempt from the resource tax, farms owned by bona fide schools, farms owned by agricultural colleges, farms owned by AI stations? The Dublin District Milk Board have an AI station with a number of bulls which provide a service to the farming community. That service is provided by that body for or on behalf of the State on an agency basis.

Will the Dublin District Milk Board or any other milk board providing a similar service have to pay the resource tax? The Agricultural Institute have substantial parcels of land on which they carry out agricultural research. Are they charities? If they are not will they have to pay the resource tax on their farms? The Department of Agriculture own substantial areas of agricultural land, for instance the various cereal stations and other agencies operated by the Department. Will they have to pay the resource tax on land owned by them?

If a local authority build up a land bank of agricultural land intended to be used later for housing, will they have to pay the resource tax when that land reaches a valuation in excess of £70? It is quite likely that the land held, for instance, by Dublin County Council would exceed a valuation of £70 because they must have substantial areas of agricultural land. Will they be bound to pay resource tax on that land?

I do not think it is the intention of the Minister or the House that the resource tax would be levied on such bodies. We do not have sufficient information on what constitutes a charitable purpose. I have serious doubts whether the concept of charity would apply to such bodies, who would therefore be liable. I am sure other Deputies will think of other examples of land being held by corporate bodies. For instance, Deputy Taylor, being an ex-Army man will know that the Army have considerable areas of land at the Curragh which is primarily agricultural land. Will the Army have to pay the resource tax on that land? The Army are certainly not a charity and apparently charities are the only bodies excluded.

The Minister said the resource tax will apply to "a person". A body corporate is a person, and I presume that any of the bodies I have mentioned are incorporated. Perhaps the Minister would claim that the Army are not a person. The Agricultural Institute are clearly a legal person because they are incorporated. I presume they would be liable unless a specific exclusion is made. I would be very much against the Government by administrative action excluding Government sponsored bodies simply by saying "We will not ask you for the tax". If anybody is to be excluded it should be by statute. For instance, I would not be agreeable to the Revenue Commissioners saying to the Army; "Really you are liable, but you being who you are we will exclude you, you will not have to pay". If it is necessary specifically to exclude these bodies the exclusions should be written into the statute.

We welcome the amendment but we are in some difficulty, as Deputy Bruton has said. Perhaps the Minister could cut short the discussion by explaining what is meant by "other than a body of persons, or a trust, established for charitable purposes only". Is it a definition used in other legislation to cover all these situations? The Minister will agree it would be undesirable if every institution in the country had to go to the courts for a definition.

It is in the Income Tax Act, 1967.

I do not think it has been tested in the courts since 1967.

This is separate legislation and we cannot just adopt the Income Tax Act.

We are adopting a definition in a previous Act.

What is the position of some of the giant co-operatives in Minister in regard to the resource tax? I am primarily interested in co-operatives engaged in dairy processing, like Mitchelstown, Ballyclough and so forth. All of them over a period of years have purchased a land bank for the purpose of expansion, to experiment to improve the different breeds of livestock and to supplement the earnings of the societies. These co-operative societies should be exempt from the resource tax.

There is a very large volume of case law in relation to what are charities and how they are defined. The law on charities is covered as much by case law and the decisions of the court as it is by legislation. Legislation deals with the application of that legislation to charities. What is a charity, and the purposes of a charity, are set out very clearly. That is where one must go for the principles involved. There are Charitable Donations and Bequests Acts and the Commissioner for Charitable Donations and Bequests who makes some adjudications in this area.

I could not, nor could anybody else here, attempt to define what charities are at this point. Organisations deemed to be charities and listed as exempt, are exempt from income tax charged on farming profits if, in the words of section 334, of the 1967 Act which applies to any trade carried on by a charity, "that trade is exercised in the course of the actual carrying out of the primary purpose of the charity".

Are agricultural co-operatives charities?

I do not think so. To decide if bodies are charitable, one must look at the deeds which set them up to find out if they were set up for charitable purposes. The purpose for which they were set up will be a better guide than the actual definition of the charity itself as to whether they are charities within the law.

Another purpose would be if a trade was exercised in the course of the actual carrying out of the primary purpose of the charity. A typical example would be a school or an agricultural college. That would be exempt because that is the primary purpose of that charity. There is no doubt about that.

I agree, but what about the others?

I did not say I would deal with each case but, in my opinion, the majority of those the Deputy mentioned would not be considered charities.

On what grounds?

There is another criterion under which charities are exempt from the tax on farming profits, that is, if the work in connection with the trade is mainly carried on by the beneficiaries of the charity A good example would be a laundry carried on by a religious community in which girls looked after by the community were employed. They are the beneficiaries of the charity and they are doing the work. This is one of the guiding provisions of the reliefs from income tax liability in respect of trades conducted by charities. There are two main exemptions — the primary work of the charity or if the trade is mainly carried on by the beneficiaries of the charity.

As far as the other organisations mentioned by the Deputy are concerned, I can give only a general reaction. I do not think co-operatives would qualify as charities nor would AI stations.

Will they have to pay in resource tax?

Certainly. Whenever I introduce an exemption, as I am doing here, I am asked why I am only exempting charities. Why not the military, which is the Department of Defence? Why not AI stations? Why not co-operatives?

We are getting a lot of information about the applicability of this tax we did not have before. I am sure the co-operatives did not know they would be liable to pay this tax.

The Debuty has already spoken.

What about Bord na Móna?

That is not the point at issue here. The point at issue is whether organisations will be exempt as charities and I have tried to clear up that point. I said that in my opinion — I am not claiming to make a judicial interpretation of this — AI stations, local authorities and so on, would hardly come within the scope of a charity as such.

They will all come within the scope of the resources tax. Very few bodies realised that.

Amendment agreed to.

Amendments Nos. 26, 28, 29, 34, 35 and 36 from a composite proposal.

I move amendment No. 26:

In page 32, lines 17 and 18, to delete "or any subsequent year of assessment" and substitute "only".

Section 30 of the Finance Bill, 1980, as amended in committee reads:

This section applies to any person who at any time during a year of assessment (being the year 1980-81 or any subsequent year of assessment) occupies, or is deemed to occupy, farm land the rateable valuation of which amounts to £70 or more.

Deputy Bruton and I propose to delete "or any subsequent year of assessment" and substitute "only". The purpose of this amendment would be to limit the application of the resource tax, which was passed here by a vote during the Committee Stage, for one year. The reason we wished to do that is to give effect to the promise, and the Minister may dispute this, given by the Taoiseach when he spoke on the budget debate last February. This resource tax was bound to be, and is, extremely controversial because it affects people who are finding it very difficult to make money. Even if they have not made profits in the current year they will be asked to pay this tax. I am sorry the Minister of State at the Department of the Environment, Deputy Connolly, has left—

He had to leave but he will be back shortly in a different capacity.

The Minister might tell him that we appreciate the points he made earlier today when he spoke about the ability of these people to pay the tax. He said the notional system of taxation bore just as heavily on those who made money as those who did not. If he was in the House now he would speak against the resource tax and in support of this amendment because the same principle applies in this case. The resource tax has to be paid by farmers with valuations of £70 or over, even if they have not made a profit this year.

This tax is a totally new form of taxation. As in the case of rates, which this Government have been so anxious to increase in regard to the farming community, they will have no option but to pay whether they can afford it or not. Following much criticism in the hours following the announcement of this measure in the budget, the Taoiseach told the House the next morning that the tax was intended to be of a temporary nature. It is to allow the House to give effect to that promise that we have tabled amendment No. 26, which will ensure that the tax will be limited to this year and will not be effective in the year 1980-81. This additional tax was imposed on the farming community by the action yesterday of the Fianna Fáil Party who walked through the lobbies in support of this resource tax. Less than an hour ago the Minister of State at the Department of the Environment said that the notional system of taxation was unfair because it did not take account of the ability of people to pay, but yesterday he walked through the lobbies to vote in favour of the imposition of a similar tax.

We dealt with this matter on Committee Stage and I put some statements on record, including a clarification of what was being represented as a conflict between the Taoiseach and myself on this issue and on farm taxation generally. Deputies opposite have referred rather vaguely to my budget statement but none of them has actually quoted from that statement. My budget statement was as follows:

As I indicated to the farming organisations in my consultations with them, the operation of this revised scheme now being introduced will be kept under review in the interest of equity and in the light of experience of its operation.

This is what I had indicated to the farming organisations before the budget.

A meeting was held on 14 April between the Taoiseach, the Minister for Agriculture and myself and leaders of the farming organisations and a statement was issued afterwards, part of which was as follows:

The Government indicated that it is not their intention that the Resource Tax should be a permanent feature of the tax code. The termination of this tax will be considered by the Government in the light of the amount of tax paid by farmers in relation to farm income generally in the current year.

These two statements are entirely consistent and the significant point is that the matter will be reviewed in the light of the operation of the farm taxation package generally. That has been and remains the position. It is on the income for last year that tax will be payable, with the exception of those coming into the net for the first time who will have the option of having their assessment based on income for last year or for the current year. The Taoiseach said it is not intended that this should be a permanent feature and I reiterate that. The termination of this tax can only be determined in the light of the operation of the system this year. This is what has been indicated at all times to the farm organisations and their leaders. There is no inconsistency in what was said in my budget speech or by the Taoiseach or in the joint communique issued following our meeting with farm leaders.

Deputies opposite are now asking for quite a dramatic change. They are saying there should be no question of reviewing this package in the light of its operation and want a statement saying that the tax will definitely and absolutely operate only for this year. It will come as no surprise to these Deputies that I could not accept that amendment. Neither will it be a surprise to the farmers or to their leaders because we made our position quite clear. We will have to see how the whole package operates before coming to a decision regarding termination. Our hope is that we would be able to terminate it at the end of this year.

Just a hope.

It is a firm hope, but we must await the operation of the system. We have conveyed this quite clearly to farmers and they recognise the position. In reviewing the system we will take account of the fall in incomes last year. Deputies will already be aware that in the amendments I have introduced and the concessions I have given I have probably reduced the estimate of what can be expected from farm tax generally. The Government will take all these factors into account at the end of the year in reviewing the operation of the system.

What estimate would the Minister accept as sufficient?

The Deputy must be naive if he expects me to put everything on the line so that he can exercise his benevolent judgment as to whether or not I have satisfied him. I do not intend to let Deputy Bruton be the judge here; that is the function I discharge.

I am asking the Minister to put it on record so that everyone can judge.

Deputy Bruton will have his opportunity to speak.

The question is rather naive. It is clear that I could not accept this amendment, but I wish to make it clear that it is not our intention that this should be a permanent feature of the tax system and it will go as soon as possible. It is our firm hope that we will be in a position to terminate it this year. However, legislation cannot be framed on firm hopes. It deals only with absolute finality. I cannot accept the proposal made by the Opposition.

In the manner of the cleric giving a sermon, I wish to take as my text the earlier contribution of Deputy Connolly, Minister of State.

He said in the constituency recently that he had helped to draft the budget.

I have no doubt about that. He is an influential man and he has many wise and wonderful things to say. I should like to quote from what that influential oracle, Deputy Connolly, said earlier today:

The Deputy cannot have his loaf and eat it. Let us get one thing clear. If one earns money one pays tax and if one does not earn it one does not pay.

In common with Adam Smith who in his time laid down certain canons of taxation, Deputy Connolly has laid down his canons of taxation and I must admit that I agree with what he said in the passage I have quoted. It is unfortunate that the Minister of State is not here to apply to the section his undoubted wisdom in the matter of the principles of equity in taxation. It is unfortunate he is not able to bring his philosophical principles to bear on the resource tax because it is very clear that with regard to that tax it does not matter whether one earns money or not one must still pay that tax.

The main objection to the resource tax is that it will have to be paid whether people have an income or do not have an income. As everyone knows, farmers will have little or no income this year but will still have to pay the resource tax and that is inherently objectionable. The Minister for Finance and the Taoiseach have said that it is not intended that this tax will be permanent; in the Minister's words, "it will be reviewed in the interest of equity and in the light of its operation." Later on he said it would be reviewed "in the light of the operation of the farm package generally".

I said that in the budget speech.

We are not sure if it will be reviewed in the light of whether the resource tax works out to be fair or in the light of the entire farm package being unfair. There is a certain confusion here. The matter would be clear if the Minister said that the tax would be removed in the event of the resource tax proving to be unfair but he did not say that. He is trying to have it both ways. Even if it is manifestly clear that the resource tax has worked out in the past year as totally unfair, if some other section of farmers who are not liable to resource tax are paying less than their fair share or if the total package does not yield what the Minister considers an adequate share for the farming sector as a whole, then the Minister will consider himself justified in retaining the tax. There is nothing more liable to tendentious interpretation than the Minister's assurance about the permanency or otherwise of the resource tax. He has given the assurance in such a form, with such a degree of contradiction and double speak that it is impossible to know what criteria, if any, will be applied in deciding whether the resource tax will remain.

There is no guarantee in the Bill that the resource tax will not continue for next year and the following years. The section states that the tax may be levied in the year of assessment, being the year 1980-81, or any subsequent year of assessment. The resource tax can continue until 2080 without having to be renewed by the House. When some novel and extraordinary tax is introduced it is usual to say that it will be reviewed annually. Income tax was introduced in 1814 to pay for the Napoleonic wars. It was considered to be an exceptional tax and it provided specifically that it would have to be renewed each year in the light of experience of the tax. One might describe it as a ritual but there was a real opportunity to consider the matter each year——

Income tax became a permanent tax.

Resource tax bears no relationship to earnings or to the ability to pay but there is no provision in this Bill that it will have to be renewed next year. If the Minister decides to retain it in the following years he does not have to come to this House for the statutory authority to do so. Our amendment provides that the Minister would have to come to the House next year if he wanted to renew the tax and that he would have to introduce another section seeking to apply it for a further year. However, the Minister does not want that. He is telling this House he wants the power to renew this taxation for next year and the following years without seeking the authority of the House. The Minister's intentions in this area are quite clear——

The Deputy is speaking for himself. It is his right to misinterpret me if he wishes but I know my intentions.

We know that when the courts interpret the law they do not pay the slightest attention to what any Minister or Member may say in a speech in this House or outside. Judges consider the law of the land to be what appears in the statute. So far as the resource tax is concerned the statute will say that the a tax was introduced this year and can continue indefinitely. There is nothing in the statute to say that it is a temporary tax that will be subject to review. All that the statute says is that resource tax is being introduced this year and can continue for as long as the Minister wishes to continue it. That is what we object to. We want to change this to ensure that the tax can be levied for one year only.

Will the Minister say what criterion he intends to use in this alleged review of the continuation or otherwise of the resource tax? The Minister said in the budget that he expects to get £86 million from the farming community this year. Farmers will not make much money this year and many will not be liable to income tax. The Minister might discover that instead of getting £86 million he will get only £70 million because the overall income of the farming community for the purpose of statistics includes the income of large numbers of farmers who are not in the tax net and the incomes of part-time farmers. If the Minister took into account the total agricultural income from all of the various sources and found that he got only £70 million whereas in the budget he expected £86 million, will he consider that that is not sufficient in the light of the operation of the farming tax package generally and will he continue the resource tax even though it is unfair because he has not got enough from the farming sector as a whole.

It is perfectly open to the Minister, on the basis of the assurances he has given, to do that. The Minister has not tied himself down to saying that, if the resource tax is unfair, it will be got rid of. All the Minister said is that, if the farm tax package does not give the yield he is hoping for, he can continue resource tax. That is wrong. Each tax should be taken on its merits, not on the basis of other tax. Farmers are self-employed and the Minister might as well say that he will continue resource tax if the self-employed sector, including farmers, have not paid enough this year. A very significant portion of the self-employed are shopkeepers and the Minister could impose a resource tax on shopkeepers. If the self-employed as a whole, including doctors, lawyers and lots of other people who would not be liable to this resource tax, did not pay their fair share, he could continue this resource tax on shopkeepers. In imposing this tax the Minister is choosing a small minority of farmers to pay for the sins of the others. They must pay the resource tax in order that the entire sector may be seen to be paying their fair share. People who are not liable for tax at all will have to pay resource tax. That is quite unfair.

The Minister has not clarified the way in which this will operate. The Minister is unclear as to whom this tax will apply. We asked the Minister if it will apply to co-operatives, AI stations and so on, and the Minister either did not know or would not answer. Perhaps the Minister can answer now. If the Minister is going to review this tax and if he is to have sufficient information to decide whether it is fair or not, he will have to know to whom the tax applies. It appears that the Minister does not even know whether the resource tax will apply to co-operatives, AI stations or to the agricultural institutions.

The Deputy should not misquote me all the time. If it is the Deputy's notion of relevance to bring in AI stations in that context, he should not make a meal of it.

I am asking the Minister the question again.

The Deputy cannot ask any questions and the Minister cannot reply to them. We are on the Report Stage where every Deputy speaks once and once only.

The Minister will have to answer the question in due course but perhaps not today. I hope the Minister knows the answer as to whether co-operative societies, agricultural co-ops, AI stations or such bodies are liable to resource tax.

We disposed of that in the last amendment.

We did not.

We dealt with it anyway.

I raised it and it was not answered on the grounds that it was irrelevant at that time.

It does not arise on this amendment.

It does.

Something that has already been dealt with and disposed of in a fair amount of time cannot be raised again.

This tax should not be allowed to operate for more than one year. The impression has been created among the farming community that this will operate for one year only. Most of the farmers I have spoken to are not worried about the resource tax because they think it is only for one year. The Minister may not be aware that the case is that the vast majority of farmers are under the impression that this will last only for a year. I was at a fair recently in the company of Deputy Dr. FitzGerald and we had a brief discussion about resource tax. The farmers were not aggrieved simply because they believed it to be of such short duration. This is the impression that has been created, intentionally or otherwise, by the Taoiseach and the Minister in saying that this is a temporary tax and presumably saying it in the confidential discussions they had with the farming community. I wonder if in those discussions the Minister told the farming community more than he told us in relation to the application of this tax and if that is why they are not worried. If that is the case it is very unfair to us and I hope that the Minister will tell us exactly the criterion on which this tax will be renewable.

The main fear is not that it will cause a huge problem in the first year but that in subsequent years the rate of resource tax could be increased from £5.50 to £7, £8 or £10 per £ of valuation and that more farmers with valuations below £70 would be brought into the tax net. If the Minister accepted our amendment to ensure that the resource tax would last for only one year, everybody would know that it cannot be introduced at a higher rate. It is very significant, and we will make it well known to the farming community, that the Government would not accept limitation of this tax and that they deliberately said that they want to adhere to the wording of the Bill which allows them to maintain this tax for future years. In so doing they are allowing themselves the possibility of extending it and raising it to a higher rate in future years. If it was merely their intention to raise a certain amount of money for this year only they would have accepted this amendment. That they have not done.

I shall endeavour to be brief although that is difficult on this matter. Last Monday night I met a cross-section of farmers in my constituency and I took great pains to explain to them that I could not find any indication in the Finance Bill on the part of the Minister that the resource tax was temporary and could be removed with a stroke of a pen. These farmers were absolutely convinced of the contrary. They said that a delegation from their organisation had discussions with the Minister and that the result of these discussions was doubly reinforced by a pledge or guarantee from the Taoiseach that the resource tax was only temporary and therefore insignificant. It was the same as if they were to sit only once in the dentist's chair. I explained clearly to them that I could find nothing in the legislation to indicate that. Having heard the Minister I am satisfied that the Taoiseach's undertaking and the statement issued by the Government represent a grown-up edition and twin to the Fianna Fáil manifesto. If Deputy Barry's amendment is not accepted by the Minister it is unlikely to secure a majority in the House when the Fianna Fáil Deputies think so little about this vital matter that there is not a single one of them present with the Minister. I do not think we have discussed in Parliament anything as vital as this because the section of the Bill that we are now trying to amend and improve is the most poisonous injection administered by Fianna Fáil to Irish agriculture since the State was established.

Political brucellosis.

This new resource tax imposes a serious handicap on agriculture. It is extraordinary that it should be introduced at the end of one of the most depressing years in agriculture. The Government statement that was issued was only a lollipop thrown to the farmers after a depressing year in agriculture. According to the agricultural economists and economic experts we are not facing a brighter prospect for the coming year.

Since the Minister refuses to accept Deputy Barry's amendment is the Minister really serious about this being only a temporary measure? In my long experience as a Member of the House I have never seen sections of a Finance Bill, nor any taxation imposed by a Minister for Finance easily removed. Once it was on the Statute Book I did not find any Minister endeavouring to remove it because the departmental advisers, the Revenue Commissioners and others are very slow to advise a Minister for Finance to cancel any section of legislation that will bring in money. I have heard pledges given here in connection with VAT. The Minister at the time gave a guarantee that the VAT percentages as first introduced would not, could not and should not be increased. What was the value of that undertaking? On every appropriate occasion when the public till needed a few more coppers to jingle at the expense of the people the percentages were raised.

I see grave danger in this section of the Finance Bill because of our concern for farmers and every other section of the community in respect of which similar steps can be taken. Once the precedent is set by this resource tax there is nothing to prevent the Minister next year or in the future, as Deputy Bruton so wisely said, from extending the provision to other sections of the community, to other trades, businesses or sectors. The farmers are being used as guinea pigs for the first injection by the Government. Are the Minister and the Government serious? Are they endeavouring to hoodwink farmers? That may not be very difficult; it has been done on numerous occasions including mid-1977. But because of the lessons learned on that occasion and because of the experience of the Opposition now and because of the valuable experience many Deputies have of verbal undertakings, promises or commitments it has been clearly pointed out that these are not worth a straw unless they are written into legislation.

The vast majority of farmers feel at the moment that the undertaking given by the Government and by the Taoiseach and the pronouncement within the past hour by the Minister for Finance means that this can be described as a temporary, emergency provision for a very brief period. I will meet farmers in my constituency during the next weekend. I know Fianna Fáil and the promises made by various Ministers for Finance from time to time. How can I give an assurance to those farmers, as a result of the debate taking place at the moment, that this resource tax is only temporary? It has been pointed out to the Government by farmers organisations and I am sure also it has been pointed out to the Opposition that the resource tax must be paid whether or not farmers are making money. I do not know of anybody except somebody in Grangegorman who would insert in a Bill a provision to compel farmers to pay this tax, irrespective of whether or not they are making money, especially based on the experience of the past 12 months and of the first six months of this year which has been the most difficult period for farmers since the closing stages of the economic war. Farmers have had to face double rates, unprecedented bank interest, the refusal of banks to honour their cheques or advance them money, the refusal of traders to supply them with their requirements. This section will impose a new tax on them.

The people on this side of the House are aware of the plight of the farming community at the moment. Why do the people on the other side of the House not show their realisation of the economic plight of farmers? This resource tax is unjust. We spoke this morning about the moral responsibilities of the Minister for Finance. Now we have a new tax which we are told is temporary and which farmers expect to have removed after this year. There is nothing in this section to say this is a temporary measure. If it is a temporary measure why not put that into the Bill? Why not indicate what is meant by a temporary measure? Is it one year, two years, three years? The statement by the Minister for Finance a short time ago, which has been published in the papers, and the undertaking given to farmers oragnisations is only chocolate coating on the bitter pill. The Government, in order to keep farmers calm, are using this statement which was very cutely worded and the pronouncement by the Minister for Finance, delivered with extremely well chosen words, to avoid a clear description of what a temporary measure is in relation to this resource tax.

The Minister said that this will be kept under review. What does he mean by that? Does it mean that if he gets a reasonable rake in this year by farmers selling stock so that they will have nothing to pay for any type of taxation next year or the year after, that he will review the matter? What form of review is the Minister undertaking from month to month in relation to the resource tax? The slice of the cake from the EEC, as far as farmers are concerned, has not been very tasty this year. We have been told that the slice of the cake cannot be made any bigger and that the farming community have already got their slice. If the resource tax is still on the books and if the EEC cake cannot be made bigger for farmers what will happen when the Spanish farmers, the Greek farmers and the Portugese farmers have to get a slice of the same cake? Does it mean that this will be at the expense of the Irish farmers? I have already indicated to the Minister certain economic articles he should have read in relation to the entry of Greece, Portugal and Spain into the EEC where there is no question of a resource tax.

The Deputy is getting well away from the amendment. He has had quite a good innings and he need not broaden the scope of the debate. I am giving him every latitude and he should not be going fully into other matters which do not arise.

I will not go into other matters. I am quite satisfied it has been fully debated but I am afraid that Deputies do not realise the seriousness of this new tax. Whatever anxiety farmers may have in relation to this tax at the moment the anxiety can be partly remedied by the acceptance of Deputy Barry's amendment which will ensure that this tax will be for one year only. I do not believe that if the Minister for Finance is occupying the same seat this time next year he is going to wipe the resource tax off the Statute Book. In so far as the farmers in my constituency are concerned, I am not prepared to take the risk of accepting what the Taoiseach has said on the terms of the Government's statement about this being only a temporary measure. This in my opinion is on the Statute Book and it is staying there. I am not in the least interested in or concerned with any form of verbal undertaking in relation to this resource tax. Now is the time, and this House will not have an opportunity again. Once Deputy Barry's amendment is rejected that is the Last Post being sounded clearly and emphatically in relation to this resource tax. The grave danger I see here is that any Minister for Finance this time 12 months or this time two years can proceed to extend and even expand on the resource tax. Once it is on the Statute Book the grave danger exists, and it is disastrous. I am not prepared to accept any verbal undertaking in relation to this matter because it is too serious. It is vital. Too many people in rural Ireland are depending on Irish agriculture for their livelihood and this is the death knell to Irish agriculture.

I fail to understand why any half-reasoning or sensible Government, who seriously and honestly believe that this is a measure for one year, will not be prepared to accept the reasonable Opposition amendment which will provide in the legislation for the resource tax as merely a temporary measure. Fianna Fáil Deputies are parading and masquerading in various parts of the country commenting on this resource tax as being for only a few months. Here is an opportunity now for them to do something practical for Irish farmers instead of making pious expressions of sympathy and regret at unlit crossroads at midnight. I feel that grave danger exists with this resource tax, and this section is the most disastrous one in the Bill. I add my voice to those of the Deputies who have spoken before me to ask the Government to come clean on this by way of inserting a provision stipulating one year only. Then perhaps some farmers may be inclined to put trust and reliance on the statements that have been made already in this connection. I recommend very strongly that this House view this section and Deputy Barry's amendment with greater interest and concern. That is vital for Irish farmers and for Irish agriculture in general.

When I spoke on taxation in general in the budget I made a special request to the Minister for Finance to withdraw the resource tax because I had in mind that it was the last straw. I fail to understand why in the second year within which farmers will have to accept reduced incomes, and the effects which follow, all the forces of the Government party and their members will be concentrated in firing the full charge of taxation and have set as their target the farming community. It is very difficult to understand the mentality of a Government who fire all their taxation on a person who is down — and the farmer is an ailing man in our economy at present. We are moving into the second year when farmers will not be making a profit. They will have to pay taxation on their losses, having had to endure and to pay for inputs at much higher prices. One could not talk too strongly of this tax because it has failed to give any hope whatsoever to a community who are showing already that they have to restrict their output. That is quite evident in the dairying areas, where herds are being reduced, and there is no faith among the agricultural community in the Governments approach to the economy. That is evident in the cattle trade where banks and finance companies are not lending to those who depend on them, such as the traders and the dealers in our marts. The effect of the policy of taxation on our farmers has brought about a sluggish economy——

——which is coming into the second year. There seems to be very little appreciation of the effect that a buoyant agriculture can have on the whole community. The Government seem to ignore entirely the fact that an economy which is buoyant because of buoyant agriculture can infiltrate its benefits right through our society. We know that the fuel costs add in a major way to the costs on the land. The diesel and petrol costs increase the cost of journeys to creameries and the cost of operating our milk tankers to co-operatives. Therefore, there seems to be a poor appreciation of the present trend in agriculture, especially in remote areas rather than in areas where transport costs are not as high.

The budget has withdrawn the purchasing power within our economy as a whole particularly because of indirect taxation. What effect on our economy has combined taxation, including this resource tax? Our traders, having purchased stocks of machinery, have to endure finding them lying in their yards unsold and this applies particularly to agricultural machinery. The hardware merchants, those who deal in manure and so on, realise that their trading has dropped to about 25 per cent of what it was last year.

One finds it very difficult to interpret the mentality of a Government who pursue a policy which will ensure that our economy will be deflated. We are appealing, even at this eleventh hour, for some gesture which will show that the Government understand we cannot survive unless agriculture prospers. In years gone by when policies were introduced which deflated farmers' incomes, we know what happened. Lessons like that should not be forgotten. Obviously we can make the same mistakes over and over again.

There is one aspect of this taxation to which I take particular exception. The Minister for Finance said he had discussions with farmer groups. Undoubtedly that is true. The implication is that there is a silent acceptance by the farming community, and by their spokesman, of the introduction not only of income tax at a valuation of £40 but also resource tax on people with valuations of over £70. I deny that there is any acceptance by the farming community of any taxation, income tax or resource tax at the levels of £40 and £70 valuation.

Over the past few years, for the first time farmers saw a prospect of having a stable future. They were encouraged to purchase land for their families. They went to the banks and the finance companies. The result is that a farmer whose valuation was £35 or £40 now has a valuation of over £70. He finds it difficult to make his repayments and he is victimised in that he has to pay a resource tax. The stupidity of a policy which seems to ignore the plight of the farmers in a period when everything should be geared to boosting the economy and creating an atmosphere of confidence is obvious.

I am surprised that members of the Fianna Fáil Party who own land are continuing to support this policy and are not exercising their influence to see that this tax is withdrawn. They used their influence when the Minister tried to withdraw the necessary funds to maintain school transport in the rural areas. They were successful in having that policy reversed. If they pursued the same course now, they would be successful. The people who must be relied upon to support this little State are being steamrolled.

Whether we like it or not, agriculture will always be our main industry. If the Government do not accept this amendment, they will do harm to their own party, and this will be reflected at a later stage when they meet the people in the rural areas.

If the Minister is not accepting this amendment he should make a statement to the people tonight that he has decided not to abolish this tax this year. I had the experience in my county council of one of the members of your party, one of your Deputies——

Through the Chair.

——during a discussion on the abolition of the agricultural grant. The case was made that this resource tax would be payable this year only. As a result farmers accepted it for this year. The Minister used his constituency very well in the 1977 campaign. You and your colleagues wept for the farmers in that constituency. Because of the fact that I have a friend there I know that during your canvass you promised——

Through the Chair.

——that there would be no farming taxation if you were elected.

Now I have heard everything.

The Deputy must speak through the Chair.

Throughout the entire country you did——

I did not do any of these things and that is what is being alleged.

The farmers are not getting back what they are entitled to in the form of grants. They could pay the resource tax if they got the money.

The Deputy must speak to the amendment.

The Minister should not deceive the people any further. He should tell the farmers, "You will have to pay that tax next year", or else accept the amendment.

The case against this tax has been made extremely eloquently. It is notable that the Minister of State at the Department of the Environment. Deputy Connolly, did not come in — he was here earlier defending other taxes—to speak against the amendment. He knows, and the Minister must accept, that members of his party are saying, "Do not worry about this tax; it is only there for a year".

Our amendment seeks to allow the Minister to give statutory effect to what members of his own party are saying outside the House. He says the tax will be reviewed in the light of events to come, that it is of a temporary nature, and that it would be unheard of to write something of a temporary nature into a Bill. That is not so. The Minister has not made it clear exactly what form this review will take. Is it that if the resource tax is not operating satisfactorily it will be discontinued? Is it the amount of taxation which will be collected in bulk from the farmers? Is it, as Deputy Bruton said, that if the farmers pay what the Minister considers a sufficient amount of taxation, including the resource tax, he may consider discontinuing it? Is it that if the whole Exchequer finances will allow it that he may consider discontinuing it. There is no indication as to what form the review will take, or how he will judge how temporary the tax will be.

We have no option but to vote for our own amendment and to try to ensure that this tax is for a limited duration. We object to the tax because, as Deputy Taylor said, this is a tax on losses. The farmers made losses last year. They will be making losses this year and, in spite of that, they are now asked to pay a new tax. In this regard we consider the Minister should write into this legislation provisions to give statutory effect to the indications that have been given directly to farmers' associations, by innuendo by the Taoiseach and the Minister here and, in a much more explicit manner, by members of the Minister's party at meetings with farmers all over the country.

Question put: "That the words proposed to be deleted stand."
The Dáil divided: Tá 59; Níl, 47.

  • Ahern, Bertie.
  • Ahern, Kit.
  • Andrews, David.
  • Andrews, Niall.
  • Aylward, Liam.
  • Barrett, Sylvester.
  • Brady, Gerard.
  • Brady, Vincent.
  • Callanan, John.
  • Calleary, Seán.
  • Cogan, Barry.
  • Colley, George.
  • Collins, Gerard.
  • Connolly, Gerard.
  • Crinion, Brendan.
  • Daly, Brendan.
  • Doherty, Seán.
  • Farrell, Joe.
  • Faulkner, Pádraig.
  • Filgate, Eddie.
  • Fitzgerald, Gene.
  • Fitzpatrick, Tom (Dublin South Central).
  • Fitzsimons, James N.
  • Flynn, Pádraig.
  • O'Hanlon, Rory.
  • O'Kennedy, Michael.
  • O'Leary, John.
  • Power, Paddy.
  • Reynolds, Albert.
  • Fox, Christopher J.
  • Gallagher, Dennis.
  • Gallagher, James.
  • Gibbons, Jim.
  • Haughey, Charles J.
  • Herbert, Michael.
  • Hussey, Thomas.
  • Keegan, Seán.
  • Kenneally, William.
  • Killeen, Tim.
  • Killilea, Mark.
  • Lenihan, Brian.
  • Leonard, Tom.
  • Leyden, Terry.
  • Loughnane, William.
  • McEllistrim, Thomas.
  • MacSharry, Ray.
  • Meaney, Tom.
  • Molloy, Robert.
  • Moore, Seán.
  • Morley, P.J.
  • Murphy, Ciarán P.
  • Nolan, Tom.
  • Noonan, Michael.
  • O'Connor, Timothy C.
  • Smith, Michael.
  • Tunney, Jim.
  • Walsh, Joe.
  • Woods, Michael J.
  • Wyse, Pearse.

Níl

  • Barry, Myra.
  • Barry, Peter.
  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Bermingham, Joseph.
  • Bruton, John.
  • Burke, John.
  • Burke, Liam.
  • Cluskey, Frank.
  • Collins, Edward.
  • Conlan, John F.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Cosgrave, Michael J.
  • Crotty, Kieran.
  • Deasy, Martin A.
  • Desmond, Barry.
  • Desmond, Eileen.
  • Enright, Thomas W.
  • FitzGerald, Garret.
  • Fitzpatrick, Tom (Cavan-Monaghan).
  • Flanagan, Oliver J.
  • Gilhawley, Eugene.
  • Griffin, Brendan.
  • Horgan, John.
  • Kavanagh, Liam.
  • Keating, Michael.
  • Kenny, Enda.
  • L'Estrange, Gerry.
  • Lipper, Mick.
  • Mannion, John M.
  • Mitchell, Jim.
  • Murphy, Michael P.
  • O'Brien, Fergus.
  • O'Brien, William.
  • O'Keeffe, Jim.
  • O'Leary, Michael.
  • O'Toole, Paddy.
  • Pattison, Séamus.
  • Quinn, Ruairí.
  • Ryan, John J.
  • Taylor, Frank.
  • Timmins, Godfrey.
  • Treacy, Seán.
  • Tully, James.
  • White, James.
Tellers: Tá, Deputies Moore and Ahern; Níl, Deputies L'Estrange and B. Desmond.
Question declared carried.
Amendment declared lost.
Debate adjourned.
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