Finance Bill 1983: Committee Stage (Resumed).

Question again proposed: "That section 11 stand part of the Bill".

For too long there has been a division as between the workers generally and the farmers. People who had any property were almost told by others that they had no right to such property — in other words, that they were not paying their fair share of taxation. The fact that 90,000 farmers with valuations of less than £40 are being brought into the tax net in accordance with the farm profile form which the Minister outlined today is going a long way towards bringing about equity in the situation. People not having taxable incomes will have nothing to fear because they will not be asked to pay taxes. This is a far better system than the one proposed by Fianna Fáil in Government, that was, the imposition of a 2 per cent levy and a resource tax regardless of ability to pay. I am asking the Minister to extend the farm profile form system to people with valuations of up to £80. I do not want to see a continuation of pyramids being built up and down the country by accountants when they are assessing farmers' incomes for the Revenue. Many farmers who have not got taxable incomes would prefer to pay to the State the few hundred pounds they pay to their accountants. The State would be much better off. I hope the Minister will keep that in mind.

I am very disappointed that the Government are bringing farmers with valuations under £40 into the tax net. This involves 90,000 extra farmers, who are the hardest worked people. They work about 80 to 84 hours a week and the majority of them do not employ labour.

I do not wish to interrupt the Deputy, but I should like to remind all Deputies that this is not a Second Stage debate. It is a Committee Stage debate. We cannot have a broad general debate. If we do, some Deputies who wish to speak will not get an opportunity to speak.

The Minister told us that bringing 90,000 extra farmers into the tax net will bring in about £2½ million. If these 90,000 farmers were charged £200 by their accountants — and I am sure the charge would be much higher — that would be £18 million going to the accountants and the Government would collect only about £2½ million in tax. The Minister mentioned the farm profile form which will be sent out to farmers. The Revenue Commissioners will then make an assessment of their liability to tax. The Minister has not explained to us how simplified this form will be and how acceptable it will be to the Revenue Commissioners. We will have to wait and see.

The Government have reneged on their promises to the farmers, promises made before the last election and promises made by the two parties when formulating their policies to form a Government. The farmers are very disappointed at the way they have been let down. Bringing 90,000 small farmers into the tax net is a disincentive to increased production. Many small farmers will not think it worth their while to farm, now that they are being brought into the tax net. The Minister should reconsider this. Farmers with valuations under £40 should not be brought into the tax net. They have a difficult job. They are on the job 365 days a year with no holidays and no hired labour to relieve them at any time. This is the death knell of the small farmers.

I listened to Deputies on the opposite site of the House putting forward various views on what they would have done had they been in the Minister's position. We are all concerned about the level of productivity from farming and how it should be encouraged and improved. Any form of taxation which tends to decrease that level of productivity is a serious disadvantage to the economy in the long term.

Farmers are to get farm profile forms and an assessment will be carried out by the Revenue Commissioners. It will then be seen whether they are liable for taxation. They may have to have audited accounts. This cost is causing concern to a number of farmers, but there are a number of people outside farming and inside farming who have not been paying the level of taxation to which they would normally be liable.

Deputy O'Keeffe referred to the livestock and milk industry, in which he is very much involved. Farmers with 80 milch cows have a gross income somewhere in the region of £20,000 to £30,000 if their business is reasonably well managed. These figures are there to be inspected. The taxation level is quite low. If we pursue the level of taxation envisaged for other sectors a very serious disincentive may be created. I am concerned about that.

In our programme we mentioned the farm management survey. I see a good deal of use and value in that. It has been seen by various farming organisations as a big advantage to the bigger operations. It does not take account of the 90,000 people we are talking about in this case. The great majority of those people will not be affected by any form of taxation because their incomes are low enough not to be considered for taxation. I do not understand the concern of the Opposition. Let us see how it works over a period of time and then we can have a further look at it in the light of developments.

The Fianna Fáil Government introduced resource taxes and levies which were a far greater imposition and also a disincentive to productivity. Rather than creating an air of hysteria with regard to the whole area of farming taxation, we should be giving farmers a lead and asking them to produce more. There will be a market for it, if it is produced. We all recognise that to a large extent the economy is dependent on what is produced. If we continue to tell farmers that they are going to pay and more, that the system the Government are introducing will in the long-term extract a greater share from them, that will be counterproductive. What we are concerned about is the creation of income for accountants. All farmers have expressed this concern and we should like to see a way devised to get around that. There is undoubted value in farmers keeping accounts, because in that way they can identify exactly where is their level of productivity. A great number of farmers have not kept accounts over the years and their land had been totally underutilised. In the restructuring of land an attempt should be made to make better use of it so that a greater level of productivity will derive therefrom. I do not think we should create a scare in the minds of these 90,000 small farmers, because they will pay only a very small amount.

On a point of order, a Cheann Comhairle, I feel we have now reverted to a Second Stage debate.

There is a very thin line between Second and Committee Stages, but I would appeal to Deputies not to make Second Stage speeches. Because of the nature of the section with which we are dealing it is difficult to draw a line between what would normally be a Second Stage debate and a Committee Stage one, but the Deputy should be fair.

I accept the point, a Cheann Comhairle. It was not my intention to revert to a Second Stage debate.

I shall dwell on the taxation measures incorporated in this section. A simplified form of account, rendering it less expensive to the many farmers who will eventually be forced to produce accounts, is of vital importance here. We gave that commitment to the farming community and I am confident that we can deliver on it. The greater the certainty with which farmers can move towards keeping accounts the greater level of productivity they will achieve, not alone for the economy at large but for their own bank balances. The farm management survey had undoubted advantages for a certain section of the farming community; but I do not think — and I emphasise this — it will have the advantage some people feel it should have for the 90,000 small farmers now being brought into the tax net. There is a degree of concern being felt among the farming community. Rates have been abolished and in some cases land is lying grossly underutilised. Farmers tend to make no effort to utilise that land because they do not have to pay rates on it. In order that the overall economy will benefit it must be ensured that accounts are reasonable and accurate. The method by which such can be achieved has to be seriously considered and implemented in so far as it affects our economy.

I might say that the concern being expressed about this section is not at all justified.

I cannot accept that.

I must tell Deputies that I have a guide, or sort of yardstick, which I will have to use in calling Deputies, if I am to be fair. At least I will have to guide myself and I propose doing that from some information I have before me.

I am concerned about this section. I want to make a few brief points. Ninety thousand farmers have now been brought into the tax net, which is of major concern to us here today. This is our only concern in regard to this section. The Minister tells us that he expects that £2,500,000 will be the yield as a result of these 90,000 extra farmers being brought into the tax net. Does the Minister still believe that £2,500,000 will be the yield from these people this year in the light of the fact that it has been a very bad year in farming to date?

I was amused to read the statement by the Minister's colleague, the Minister for Agriculture, that, even with the bad weather, he expected that it would be a good year for farming. I wonder is the Minister for Agriculture aware that about 50 per cent of the sugar beet of the country is still not sown, that the cereals that are sown are yellowing and that there are many acres of cereal still not sown. Furthermore, dairying farmers find that their yield has dropped by about 20 per cent.

In the light of those facts I would predict there is no way that the Minister could expect to receive £2,500,000 from these new people being brought into the net. I might add also that the administrative costs involved will definitely underwrite most, if any, of the money that will be yielded here. I might ask politely if any consideration has been given to the fact that the administration costs will be severe. We talk about the farm profile, that it is a very simple form. To date I have yet to see a form emanating from any Department that could be regarded as simple. I do not believe it is as simple as the Minister says. I feel also that he does not believe it himself, because any form that has ever emanated, particularly having any connection with the Revenue Commissioners, has never been simple. I am certain that in the heel of the hunt farmers will be forced to go to an accountant and this constitutes my greatest fear. I am not trying to scare anybody, I know how farmers think and I feel the people opposite do not.

It was suggested earlier that accountants would get £20 million from this whole exercise. Perhaps that figure is exaggerated, perhaps it will be £10 million only. But the point is: who will gain? Will it be the Government? In my opinion the whole exercise should have been considered in greater depth. What is its purpose? Is it to pander to the whims of the Labour Party? If the Exchequer is to receive money from it there must be a rethink because it is my opinion that the Government will lose out on the exercise through administration costs and so on.

The Minister drew a comparison between companies and farmers. I think he said that this would not be confined to farmers only but would apply to companies as well. Can the Minister honestly compare a five or a ten-acre farmer with a company director? Surely this shows how far removed the Minister is from the small farm scene.

That is nonsense and the Deputy knows it.

The Minister can reply afterwards. I think the Minister is falling into the trap himself, that he has not a full grasp of the scene at small farm level.

I support my colleagues here in the call for equity. One hundred and twenty hours a week may be put in on a family farm. Deputy Farrelly talked of putting in 15 hours a day himself, that is 105 hours a week. Is there any comparison to be drawn between him and the PAYE worker who puts in 40 hours a week; or those on the family farm putting in 120 hours, with the PAYE worker again on 40 hours per week? I should like the Minister to comment on that.

I feel this proposal will drive people off the land and further depopulate rural areas. This is wrong. I should like to comment also on the incentives. Taxation in farming should encourage farm production and I have no doubt but that the Minister's proposal will do the exact opposite, because there is no incentive given to produce more. If there was an incentive to produce more that would create extra jobs as well. Indeed, I often wonder do those people who cry loudest for farmers to be taxed take that into consideration. For example, do they take into consideration—as Deputy E. O'Keeffe has said—that encouragement and incentive on the agricultural scene will create jobs and could be the salvation of the economy. The Minister has fallen into this trap and has been taken over by people who are crying "tax the farmer".

I would ask the Minister to consider using the figures put forward by the Agricultural Institute, an independent body, as a base.

Much concern is being expressed on the other side of the House about an alleged inconsistency in the way we have prepared and enunciated our policies and what we are actually doing, but the time of Deputies opposite would be better spent in comparing past statements and pious platitudes by their party with their record while in office. I see no contradiction between what we have said we will do and what we are doing. The idea of presenting a document to achieve a farm profile on which decisions can be taken as to whether or not farmers are liable for tax is completely consistent with what we have been saying, that every farmer who has a taxable income should have to pay on his disposable taxable income. We will not force each individual farmer to go to an accountant in order to prove that he has not a taxable income.

There is no doubt that the legislation before us arises in part because of the politics of envy, jealousy and misunderstanding. The pressure would be on any Minister for Finance to introduce this kind of legislation.

The Minister says that this provision will cover an extra 90,000 farmers. Does anybody know how many farmers there are, what size of farms we are talking about or whether we are talking about farmers as defined under the farm development programme, those who spend more than half their time and earn more than half their money from agriculture? I have never yet been able to establish how many farmers we are talking about. How many of these 90,000 farmers have valuations of under £20 and are already in the PAYE net? Very few of them have a taxable income and according to the farm management survey carried out by the Agricultural Institute in the west more than 50 per cent have incomes of less than £60.

It is entirely regrettable that economic difficulties and political thinking should have created a climate in which those people are seen as polluting the environment and refusing to pay their taxes. It is a shame that in a small country there is such gross misunderstanding about the standards of living and the difficulties of life experienced by people who live in relatively close proximity to the towns and cities. The agricultural community are genuinely willing to pay their share of tax on the disposable income they earn. We should not force them to pay tax on their entire profits because that would lead to a situation in which they would not be able to invest.

There are people who think that agriculture is a wonderful opportunity to make a tax-free income. I have experience of politicians on the other side of the House telling people in Dublin that the amount of tax being collected from agriculture is derisory and their colleagues in country areas warned people about the danger of a Coalition Government taxing them out of existence. I have known it to happen among my own party as well. It is very sad. That is the kind of politics that has created the atmosphere in which it is so poorly understood——

On a point of order, I have been looking at the chapter but Deputy McCartin does not seem to be referring to its provisions.

My difficulty is that we are dealing with four sections together and one of these sections abolishes the threshold and brings thousands of farmers into the tax net for the first time. In my opinion that leaves the matter open to something in the nature of a Second Stage debate.

Deputy Ahern has been looking at the chapter but he has not been listening to the debate. I have done both and what I am saying is relevant. I have been making an important point in the context of a section which introduces large numbers of people to the income tax net for the first time.

The point which worries me most is that our tax collection system is already overburdened and the Revenue section must be entangled still further with legislation that compels them to examine the accounts of another 90,000 people. This is being done to collect only £3 million, an amount which will be greatly exceeded by the fees paid to accountants. Only a couple of years ago we abolished a system of rates with which farmers were happy. It was yielding ten times this amount and was seen by farmers as a tax levied on their farms in order to give them a service in return in the form of roads, water facilities and so on. We applauded ourselves for getting rid of that system and now in order to please people who do not understand we must bring into the tax net all these people from whom we cannot hope to get any money. I do not believe it will be a disincentive because I believe there will be increased agricultural production on the part of those farmers already keeping accounts. In the highly competitive world of agriculture in Europe increased production will have to be sought from those who are already extremely efficient and, remember, we are in surplus in practically all commodities in the Community and so we must impress on our farmers——

I am afraid we are reverting again to a Second Stage debate.

(Limerick West): On a point of order, in fairness to others who want to speak I would appeal to Deputies on both sides to keep their contributions very brief.

Strictly speaking, that is not a point of order. The Chair can only rely on Deputies to be reasonable. There are largely just two parties involved and both have their Whips and it is up to them to maintain a degree of reasonableness on the part of the various speakers.

I appreciate there are other speakers who wish to contribute. I do not think I have been disorderly in comparison with other speakers in the way the debate has been carried on. I should like to allay the fears of those who may be fearful. I have been working in this industry all my life for hours equal to those worked by any Deputy from Cork or anywhere else. As I said, I do not believe it will be a disincentive. The industry has been growing for the last 15 years or more. The pressure to keep accounts and understand fully the effects of their financial circumstances will be a help to farmers and I rely on the good sense of the Minister, who is experienced in this particular area, not to take the paperwork any further than is absolutely necessary. Like everyone else he knows there is no oil well and no gold mine there to be tapped. What we are doing is a purely political exercise. It is regrettable that we have to do it but I appreciate that the Minister has no other option.

I am interested in the determination of the farmers' income and I have some questions to put in this respect. Will account be taken in the disadvantaged areas of the special position of those in these severely handicapped regions? Will the assessment include items like headage grants and unemployment assistance? Will some provision be made to exempt those who fall into these categories? I am sure the Minister is aware of the resentment felt about the farm profile. There are reports of the farm profile being burnt.

It cannot be burnt. It has not been issued.

It will be burned when it is issued. A large section of the farming community will be reluctant to complete the profile until they get some assurances in regard to the methods which will be used in assessing their incomes. It is unlikely that the profile will be completed. It possibly will not be returned by many farmers unless there is some indication of the method of assessment. Again, a large section of the farming community are anxious to have an option in the accounting system used in the determination of income. The case has been made very forcibly by one of the organisations in my constituency that the production unit accounting system should be used or an option should be given to the farmer. Can the Minister say if that will be the case? Secondly, will any allowance be made in the treatment of those in severely handicapped areas?

There have been attempts over the past few weeks to generate a certain amount of hysteria and confusion about this farm profile document. In the part of the country I represent the surveys carried out over the past number of years indicate that the vast majority would not be eligible or liable for any income tax even under very, very low guidelines. The system of issuing profiles to farmers is designed in a way to filter people out of the system rather that into the system because the Revenue Commissioners have already indicated they simply could not cater for the 90,000 extra were they all liable.

I would like the Minister to indicate who decides the criteria for a judgment by the inspector of taxes as to whether a farmer who fills up a farm profile is or is not liable to taxation. Are the criteria laid down by the Department of Finance, by the Revenue Commissioners or by individual tax inspectors? Would it mean that on the instructions of a tax inspector a subordinate could decide whether a particular farmer might be liable for a second assessment? If that were to happen there might be a substantial number of borderline cases paying a very small amount of taxation. I should like some clarification as to whether those people would be expected to go to the expense of paying an accountant when the end result might be liability for a very small amount of taxation. Overall, the implications of the farming profile will be acceptable provided we have an assurance from the Minister that the information will not be designed to switch people into the system. The Department of Finance and the Revenue Commissioners are probably aware now that the majority of farmers accept that this must go ahead but they do not like too many questions asked about the development of their farms over the last five or ten years. If the information sought on the profile document is merely to form a background picture of development up to the moment, that will be all right. Most importantly, who will set the criteria for sending out a second assessment?

Mr. Leonard

A figure of 90,000 farmers has been mentioned. The situation is that out of the 269,000 holdings we have 63,000 from one to 15 acres and another 61,000 between 15 and 30 acres. It would be very hard to visualise a farmer with 30 acres in the category of tax liability. Will any consideration be given to those in receipt of supplementary benefit or those who have been assessed for medical cards? You have a farm profile there which has to be completed by the health boards. Will the situation be that the Revenue Commissioners will spend a great deal of time and considerable expense examining the financial position of recipients of supplementary benefit? To me there would appear to be duplication here. We are told about simplified farm accounts. I never yet saw a simplified form emanate from the Revenue Commissioners. They are all invariably very complicated.

The previous speaker mentioned the fact that we would be looking to those who keep farm accounts for increased agricultural production. I come from an area similar to his. We must look to the smaller farmers. This Government have disregarded them. They have curtailed and withdrawn grant aids to them. I would like the Minister to tell us whether they are just looking to the most efficient farmers, who represent only 25 or 30 per cent of the entire farming population, for increased production and are forgetting about the other 75 per cent of farmers who were in the process of development? When we have a fall-off in employment, in manufacturing production and such severe competition in the world markets for our products we should be turning towards agriculture. It is the area which is crying out for development. It is the area which has the potential. We have only to look at the massive imports of practically everything that is down in the restaurant today to know how agriculture is crying out for development. It has the potential to increase the jobs and the Minister should be looking at that. The farming organisations and every person in this House agrees that if we are to have a fair system of taxation each one will have to pay his due amount. When one looks at the figures and the administrative costs I would ask the Minister to take cognisance of the need for development when he is examing the system of taxation.

I welcome the moves the Minister is making in the direction of bringing many farmers into the tax net. I have reservations about section 13 in relation to the 110 per cent stock relief and so on. Those of us who have argued for years that farmers should be brought into the tax net are simply arguing that everyone should pay in accordance with their means. If these sections bring about some equity in the tax system, then they are to be welcomed. I might contrast the practically total unanimity there was last year between Fine Gael and Fianna Fáil in relation to the resource tax when they were seeking to do away with a tax which farmers were paying and the disunity there is today in relation to attempts to bring farmers into the tax net. I have argued a number of times that agriculture is in complete disarray and disorder. It is completely underdeveloped. I do not accept that leaving the farming sector outside of the tax net will be an incentive to them to improve their position in any way. They have been outside the tax net for many years and the situation is deteriorating, not getting better, apart from the fact that there are hundreds of millions of pounds paid by way of incentives to the farming sector every year. It is argued that the PAYE sector work a 40 hour week. I would make the point that no one, whether he is in the PAYE sector, farming or any other sector should have to work 80 hours a week to survive. That is utterly disgraceful.


I am simply arguing that farmers should pay their share of tax in relation to what they can afford. The PAYE sector if they work overtime can bring home about £1 out of every £5 they earn. That is a disincentive. Nobody wants to see a situation where anybody has to work an 80 hour week in order to survive and where all of his effort goes to the tax man. Everyone should pay his share and where incentives are provided they should be directed towards production and not simply towards allowing off the hook those who can afford to pay.

Somebody mentioned nationalisation of farms. It is not the tax system that is causing the fragmentation of farms or the continuation of a situation where small farmers are ekeing out a living. Farmers have been leaving the land for years. For as long as they decide that they want to hold on to their few acres, live in isolation from the rest of the community and not co-operate with their neighbours in developing their farms, then certainly they will continue to go off the land and will continue to be unproductive and inefficient. We want equity and we do not want to allow off the hook those who can afford to pay.

I should like to ask the Minister whether all farmers regardless of their valuations will be liable to pay tax. If small farmers were given the chance to do the accounts system, perhaps in two years' time they could be asked to pay tax. It is ludicrous to tax all small farmers, particularly those with valuations between £5 and £20. The small farmers have been penalised enough in this budget. They have no incentive to modernise their farms because the grants under the farm modernisation scheme have been withdrawn. We were getting pound for pound from Europe and still the grants have been withdrawn. A farmer cannot develop his farm now because there are no grants there at present.

I stopped Deputy McCartin at that stage.

They have been withdrawn by the Minister in the budget.

The Deputy should come back to income tax.

They are still available under the western package.

They are available under the western package for land drainage.

Progress reported, Committee to sit again.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.