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Dáil Éireann debate -
Thursday, 27 Jun 1985

Vol. 359 No. 11

Farm Tax Bill, 1985: Second Stage.

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

The national plan Building on Reality envisaged measures for reform of farmer taxation including the introduction of a new farm tax. The present Bill is designed to provide the statutory basis for the farm tax. The separate matter of the amendment of the income tax code in so far as it affects farmer taxation will fall to be dealt with by the Minister for Finance in due course through appropriate provision in the Finance Bill for 1986. The intention in that respect is that occupiers of farms above 80 adjusted acres would continue to be liable to income as well as farm tax when the latter is in operation but that they would be given a credit against income tax for farm tax paid.

Taxation is a necessary, if unpopular, support of all organised societies. One of the great achievements of Ireland's economic and social history has been the transfer of our land resources from large landlord holdings to the rural people of Ireland. This transfer, won over a protracted period of time has meant that much of the country's real or capital wealth is and will remain vested in the farming community.

From this position within the Irish economy, farmers obviously owe a contribution in taxation to the common good, and this should not now be disputed by anyone. The new farm tax is designed to achieve this simply and in a manner appropriate to a key economic feature of farming, the tenure of productive agricultural land. Taxation proposals strikingly similar to those in the present Bill were in fact advanced in 1979 by the current president of the IFA.

Much of the criticism which has been made of the new farm tax amounts to the complaint that it is not an income tax. There are a number of comments to be made about this argument. The first is that the Irish income tax system is already bearing a disproportionately large burden of overall taxation effort and that, like other progressive administrations, we should be trying to develop a better balanced spread of taxes.

The second is that the farm tax will represent a much simpler system than income tax, not just for collection purposes but for the benefit also of farmers, a large number of whom will be spared the time-consuming onus of keeping detailed accounts for tax purposes. Most fundamentally, however, a tax based on the productive capacity of a farmer's principal asset is a fair one, particularly given the linkages with the income tax code and the provisions for hardship which I will detail later on. As I have said, it was independently advocated by the present president of the IFA in 1979.

The present Bill provides for the calculation, levying and collection of the new farm tax. The main features of the tax as provided for in the Bill are that it will be determined on the basis of the number of adjusted acres in each farm. Smaller farms — those below 20 adjusted acres — will be exempt from the tax. The rate of tax will be uniform for all local authority areas and the determination of the number of adjusted acres in each farm will also be done centrally by a body established specially for that purpose under the Bill. The tax will be levied and collected by the local rating authority in each area.

The proceeds of the tax will form part of the current revenue of the local authority in each case. I should mention though that it is envisaged that there will be adjustments in the amounts of the grants in relief of rates by reference to the revenue from the farm tax. These adjustments are outside the scope of this Bill and will be determined as part of the process for settlement of the amount of the rate relief grants for each year at the appropriate time. The Bill also contains provisions for appeals, enforcement of collection, dealing with hardship cases, etc., to which I will refer as I deal with the main provisions of the Bill in more detail.

The farm tax will be based on the adjusted acreage of farms. Section 2 defines an adjusted acre as the area of land having the equivalent productive potential of one acre of the best land in the country in ideal growing conditions. In adjusting the acreage of any farm, the factors which are to be taken into account are spelt out in some detail in the Bill and include the quality of the soil, the prevailing climate, aspect, shelter, and so on. In adjusting acreages, land will be assumed to have a reasonable level of management, maintenance and investment applied to it.

The task of classifying land into adjusted acreages will fall to a new farm tax office under the control of a farm tax commissioner, which will operate on lines somewhat parallel to those of the Valuation Office in relation to rateable valuation of other property. The farm tax commissioner, whose appointment is provided for in section 14 of the Bill, will be appointed by the Minister for Finance under whose general oversight the classification process will be carried out. The appointment will be a temporary one for a period of five years but this period may be extended if required.

It is the Government's intention that the farm tax commissioner will continue in office until the classification of land is completed. After that, the commissioner's residual function of keeping the classification up to date will pass to the Commissioner of Valuation. It is anticipated that a staff of about 200 will be available to assist the farm tax commissioner. About half will be officers of the Land Commission, the remaining number being recruited temporarily for the purpose. I might mention that the recruitment process is well under way. The commissioner will have power under section 15 of the Bill to delegate his functions under the Bill to any of his officers.

The commissioner's staff will have the right, under section 17 of the Bill, to enter on land and to receive a reasonable level of co-operation from the farmer for the purposes of classifying land or dealing with appeals. There are penalties of a fine of £1,000 and up to one year's imprisonment for obstructing the classification process and the Bill also contains provisions designed to enable the classification process to overcome any obstruction.

I might mention while on the subject of penalties that there has been a certain amount of misunderstanding, if not misrepresentation, about the nature of these provisions. Let me clarify the position on this. Under existing tax legislation — specifically section 94 of the Finance Act, 1983 — there is a list of offences which apply to a wide variety of taxes from income tax to capital acquisitions tax. These offences include failing to make returns and obstructing the officers of the Revenue Commissioner in the performance of their duties. The offences are punishable on summary conviction by fines of up to £1,000 and imprisonment of up to one year. Where the conviction is on indictment, the penalties are considerably stiffer. These provisions apply at present to farmers' income tax. The provisions in this Bill are no more severe than in other tax legislation and I make no apology for including them in the Bill.

The impression has also been created in certain quarters that the farm tax commissioner will adjust acreages from Dublin without inspecting the land. I want to make it clear that this will not be the case. Land will be inspected by officers of the commissioner before the adjusted acreage is determined but, as I have already mentioned, provision is included to deal with the situation where farmers refuse entry on land should that arise.

The classification will start as soon as possible after the Bill is enacted and will take some years to complete. It will start in each county with the bigger farms and work progressively downwards until all farms of 20 adjusted acreage or more have been classified. Section 3 of the Bill enables interim thresholds to be specified by the Minister for Finance until the classification of all holdings down to the 20 adjusted acres has been completed. This will enable the farm tax to be applied during the classification process by reference to the interim thresholds obtaining at a particular time.

There will be a classification list prepared for each local authority area which will contain particulars of the owner, occupier and adjusted acreage of each farm. The classification list will be made available to each local authority at intervals specified in section 4 of the Bill until the list will be available before 1 Octoof the list will be available before 1 October 1986 to enable the tax to commence in 1986. It is the intention to assign manpower to the classification process in such a way that it proceeds at an even pace throughout the country.

Upon receipt of the classification lists, the local authorities are obliged to publicise and make available the list for public inspection for a period of 21 days and to notify individually farmers whose land has been classified, so as to enable those farmers to consider lodging appeals.

I should mention that the question of appeals is one to which I have paid considerable attention in the Bill. As Deputies will be aware, one of the reasons for the collapse of the valuation system on land was that there was no procedure for having land valuations reviewed in the light of changing circumstances. The appeals provisions which I have included, and which I will now briefly describe, are designed to ensure that adjusted acreages are kept fully up to date.

The farm tax commissioner will be the initial vehicle for dealing with appeals. Appeals to the commissioner will arise in two ways. Firstly, there will be an appeal open to either the farmer or the local authority against the initial classification decided by the commissioner's office. Secondly, once the initial classification has been finally determined and circumstances, such as land sales or arterial drainage, cause the classification to require revision, then the farmer or the local authority can request the commissioner to revise the initial classification. The commissioner's decisions on appeals and revisions are appealable to a farm tax tribunal the special purpose body for which the Bill provides in section 8 and in the Schedule. There is further specific right of appeal to the High Court on a point of law against a determination of the farm tax tribunal.

The tribunal is designed to provide a speedy and flexible system of dealing with appeals. The members of the tribunal will be appointed by the Minister for Finance and will hold office for a three year period. The tribunal's proceedings will be in private and it will be empowered to call witnesses and to award costs against unsuccessful applicants. While it will largely be a matter for the tribunal to regulate its own proceedings, the Schedule to the Bill envisages the tribunal operating through three of its members being called together as necessary to hear appeals. This should ensure a flexible system whereby the tribunal can be scaled up or down depending on the volume of appeals arising. The tribunal will, unless there is good reason for not doing so, award costs against unsuccessful appellants. I must emphasise however that these costs should be modest by comparison with court costs.

In my comments so far I have been outlining how the base for the farm tax is to be set. The Bill also provides for the levy and collection of the tax and for some residual arrangements. Section 9 provides for the levy annually of a farm tax at a flat rate per adjusted acre. The rate of tax will be prescribed by the Minister for the Environment and the local authorities will levy and collect the tax and, as I already mentioned, the proceeds will form part of the income of local authorities to be spent locally by them.

The tax is payable by the person who stands entered as the occupier of a farm in the list of adjusted acreages produced by the farm tax commissioner. The procedure for levy and collection of the tax resembles the procedure with rates. Local authorities are obliged to prepare details annually of each farmer's adjusted acreage and his tax liability. These details, to be known as the farm tax record, which are similar to those in the rate book, must be publicised and put on display in local authority offices and specified Garda stations. There has been comment on this aspect of the Bill.

Let me clarify the position. The purposes of the record are two-fold. Firstly, it allows farmers to inspect the record and to report any last minute inaccuracies to the local authority before the bills are sent out. Secondly, it is the formal record of tax liability which may be required as evidence in court cases. The purpose of the record is not, as has been suggested, to criminalise the farming community. It follows the procedure for publicising and displaying the rate book except that, for the convenience of farmers who live some distance from the county town, the Bill provides that the record may be inspected in Garda stations. In relation to the question of display in Garda stations, I will, of course, take account of any views expressed by the House on this matter.

Once the record has been put on display for 21 days, local authorities are to send out farm tax bills and payment is due two weeks later. The Bill envisages payment being made in one lump sum or, alternatively, under regulations which I intend to make, in instalments. It is my intention to encourage local authorities to develop payment patterns that suit their own and farmers' requirements as far as possible. Where tax remains unpaid after two months of being due, interest at 1¼ per cent per month — the same as applies to other taxes — accrues on the outstanding amount.

The Bill provides that payment of the tax must be made where appeals have been entered. Deputies will appreciate the reason for this provision, which mirrors existing rating law provisions and is somewhat similar to the income tax code.

Clearly, it would put local authorities and the farm tax commissioner in an impossible position if the mere entry of an appeal was sufficient to halt the collection of the tax. This would encourage frivolous appeals and would disrupt the whole assessment process. The Bill, however, makes it clear that the outcome of appeals — whether they be in the farmer's favour or otherwise — will have retrospective effect. Where this results in a lower adjusted acreage, local authorities must make a refund to the farmer concerned.

We recognise, of course, that there will be circumstances where payment of the farm tax would cause undue hardship and the Bill provides that the local authority can agree in these circumstances to postpone action to collect the tax for a specified period. During any such period, interest will not accrue to the outstanding amount. I have to stress, however, that the tax remains due and will indeed be a charge on the land until it is paid. I believe that the provision in the Bill provides a flexible system which will adequately cater for the inevitable hardship cases while at the same time protecting local authorities from claims for relief which may not be well based.

Section 10 of the Bill is designed to ensure that farms just above the threshold of 20 adjusted acres will not have to pay the full farm tax. A farm of 20 adjusted acres but less than 21 adjusted acres will pay only one-fifth of the tax; 21 to 22 adjusted acres will pay two-fifths; 22 to 23 adjusted acres will pay three-fifths and so on until a farm of 25 adjusted acres will pay the full tax. The same form of marginal relief will apply to interim higher thresholds which will apply before the land classification is completed.

The Bill provides adequate powers of enforcement. Firstly, the interest provision should act as an incentive to early payment of the tax. Secondly, local authorities may pursue defaulters through the courts. Thirdly, in the event that a local authority owes a defaulter money, the farm tax can be set off against the moneys owing. Fourthly, in common with the capital acquisitions tax, farm tax will automatically become a charge on the land until it is paid, but small sales of land will be exempt from this provision.

There has been much speculation about the rate of tax and how the rate will be adjusted in future years. Let me clarify the position. The rate of tax in the first year will be £10 per adjusted acre and I will be prescribing that amount for the first year under section 9 of the Bill, just as I have to prescribe the rate for each subsequent year. Indeed, if it is the view of this House that it would be more desirable that the rate of £10 per adjusted acre for 1986 should be specifically mentioned in the Bill, this can be done by an amendment on Committee Stage and I would be prepared to put down such an amendment. As regards those years after 1986, section 9 (4) (b) of the Bill sets out the parameters within which I must work in fairly specific terms. The rate of tax must be set having regard to the change in family farm incomes and taxes generally. This provision will ensure that changes will be in line with farm income changes and changes in the burden of taxation the rest of the community is asked to bear.

The classification of land will take some years to complete and will, as I mentioned earlier, commence with the bigger farms and work downwards. The tax will commence in 1986 and will be levied on the larger farms initially. The Bill facilitates this. The effect will be that if, for example, by 1987 the classification has progressed down to, say, 40 adjusted acres, the threshold for liability to the tax in that year will be prescribed by the Minister for Finance at 40 adjusted acres. Farms with adjusted acreages below the threshold will only become liable for tax as they are assessed in the following years. In these cases the farm tax will not apply retrospectively. Income tax exemption for full time farmers with farms between 20 and 80 adjusted acres, to be provided for in the Finance Bill, 1986, will take effect as liability to the farm tax arises.

Since the abolition of agricultural rates we have not had a satisfactory and easily administered system of taxation for farmers. I believe that the Bill will ensure a more realistic contribution from the farming community to the provision of local services and that this will be achieved in a manner which involves no disincentive to agricultural production. I look forward to a constructive debate on the Bill.

Finally, I wish to advise the House that I will be bringing forward some amendments of a technical nature on Committee Stage. I commend the Bill to the House.

This farm tax proposal affects not only the farming community but every sector of the community, particularly the tax paying community. This proposal, which is being introduced by the Minister for the Environment, runs contrary to every established principle of equity and fair play between the farming community, and other sectors of the community, and even within the farming community itself. This proposal was born out of a nonsense compromise to satisfy some notional ideological conflict between the Government parties. As a consequence we get the nonsense of a Minister for the Environment introducing what is if it were passed — and hopefully it will not — the most revolutionary change in the principles of taxation here or elsewhere.

It is left to the Minister for the Environment to introduce this legislation. That, in itself, underlines how woolly and unconvinced the Government at this stage must feel about the purpose and validity of such a proposal. There are some factors which are emerging very clearly. First, the proposal to tax farmers on a basis other than income is particularly unfair to the PAYE sector.

The Deputy has a short memory.

Deputy Farrelly will be allowed make his own enlightened contribution in his own time and I am sure everyone will be anxious to hear it.

The Deputy has a short memory. What about the 2 per cent levy?

Tax equity demands that every section of the income earning community be taxed on the same basis and at the same rate, but this proposal segregates farmers from the rest of the community and ignores actual income in determining the rate of tax payable. It deliberately, and with blind determination ignores those two fundamental principles. Not surprisingly, the injustice — and that is what it is — and anomaly of a tax at a flat rate on the means of income as distinct from the actual income is now arousing opposition from every section of the community.

The Government for the first time have actually succeeded in creating a cohesion within the country from the tax paying community on the common basis of total antagonism to their proposal. I worried that this Bill would create divisions but in view of yesterday's statement from the Irish Congress of Trade Unions it is clear that every sector of the community, albeit for different reasons, are totally and utterly opposed to this legislation.

Clearly this Bill is demonstrably unfair as between farmers and other income earners. If that were not enough, it discriminates against farmers themselves by imposing a flat rate of tax on producers who have an entirely different level of income. Could anyone who understands the basis of income tax or tax liability produce any justification from any tax system for a principle such as that — a flat rate of tax on the basis of the means of production irrespective of income?

This Bill cannot, and must not, be passed by this House as being in the interest of tax equity. If the Government succeed — and I now believe they will not — in forcing this legislation through, it will create unnecessary tensions between the agricultural sector and other sectors and it will create deep divisions and tensions within the farming community itself. At a time when we want to avoid unnecessary confrontation, when we want to get a sense of national purpose based on developing our most important national resource, our farmland, when we want to demonstrate the interdependence between farmers and workers, particularly those in the agri-food industry which needs to be developed to a greater extent, which is the national priority, this nonsense proposal would achieve the very opposite.

The fact that it would suit some farmers while penalising others underlines the injustice of this legislation. It might suit some farmers because the level of tax they would pay would in no way be related to their income, but it would penalise others because their tax liability would arise irrespective of whether they would otherwise be exempt from income tax under the provisions of the income tax code which exempts a married couple with an income of up to £5,300 from paying income tax.

If the same principle that the Government are proposing to introduce here — and by the time this legislation is dealt with in detail in this House even the Government will run for cover — were to be applied, for instance, on the basis of what might suit certain sectors — the PAYE, business and professional sectors and the self-employed — we would have a spontaneous and universal demand for the application of the most favourable or suitable system to each income earner in each section. Why not? If we are going to apply a tax system on the basis that it will suit those who are in an intensive form of production but might not suit those who are not, is that a justification for any tax implementation — that it will suit some but not others even in the same major productive sector in our economy?

The primary concern in any tax code must be first to secure tax equity and secondly to reform and streamline the taxation system to ensure a fairer distribution of the growing burden of taxation between all sections of the community. Let me remind the House that we now have the privilege, amongst all the 24 countries of the OECD, of having the highest level of taxation. Our burden of taxation has grown to the point that the OECD have referred to it as the tax wedge — the squeezing of the life out of our economy. Because of this, the Government are attempting to create the illusion that they are going to get at everyone in the same way by introducing a nonsense such as this, which exists nowhere else. In fact, they are doing quite the opposite.

In March of 1980, when I established the Commission on Taxation, one of the reasons which prompted me to do so was what was evident in late 1979 and early 1980 — a sense of hostility that seemed to be evident between what for me and my party are two inevitably interlinked communities in our community the PAYE sector and the primary producer, the farmer. When we saw public demonstrations that tended to divide instead of unite, we realised that the problem was central, to a considerable extent, to the burden of taxation and how it was applied. For that reason, I specifically obtained the approval of the Government to set up the commission and I set down, in the terms of reference for that commission, clear and specific points. I quote from them briefly: "To inquire generally into the present system of taxation and to recommend such changes as appear desirable and practicable ...."

— both those words, desirable and practical, are important —"... so as to achieve an equitable incidence of taxation,"— note the word "equitable"—"due attention being paid to the need to encourage development of the national economy and to maintain an adequate revenue yield".

Those terms of reference were universally welcomed at the time, even by all in this House, and were accepted by the members of the Commission as a sound basis for their study of the existing system and for proposals to improve it. In my view, the proposal here will never get much further than being a proposal, but it confronts every principle that the Commission on Taxation were asked to consider. Let us take the term of reference "to recommend such changes as appear desirable and practicable." There is so much nonsense in this proposal that it would not be even possible, much less practicable, to implement. It turns its face entirely against anything that is either reasonable or practicable.

Let us take the phrase "so as to achieve an equitable incidence of taxation". It is clear from what the Minister has said this morning that the Government are not interested in an equitable incidence in taxation. They are interested in trying to demonstrate that "farmers obviously owe a contribution in taxation to the common good and this should not now be disputed by anyone". Of course, that is true. They do not dispute it themselves. However, this blunt instrument is simply an attempt on the part of the Government to resolve the differences within the Coalition. If the consequences of resolving those differences are to create unnecessary differences within our community and tensions where they should not exist so be it; this Government are prepared to sacrifice the most fundamental elements in our economy, of primary producers in agriculture and workers in the manufacturing or service sectors, in order to somehow cement over the differences which are becoming more and more apparent within that Government. That is basically why we have the Minister for Labour introducing this legislation.

No, I am not Minister for Labour.

The Minister must forgive me for forgetting. With the way things are going these days, it is not going to matter much longer. This was another of the major priorities of this Government. They were going to demonstrate that the Labour Party had muscle enough to show that any of the proposals, particularly in the tax area, would implement their particular ideological nonsense in Government.

Let us look at "the equitable incidence of taxation, due attention being paid to the need to encourage development of the national economy". If ever there were a proposal guaranteed to discourage the development of the national economy, it is this. It is quite clear, as the

Minister has acknowledged this morning, that the adjustment can be readjusted ad infinitum. Once a farmer undertakes a programme for development, even allowing that it will eventually be fixed at a certain adjusted acreage — and “eventually” is the word, in view of what the Minister has disclosed this morning — if that farmer becomes more progressive he can be adjusted again and again according to the criteria laid down in the concept of this nonsense of adjusted acreage.

Adjusted acreage apparently will now be on a basis that cannot be properly defined, much less understood by anyone who will be asked to interpret it. It provides that an adjusted acre is an area of land with the equivalent productive potential of one acre of the best land in the State. In heaven's name, where could one find any basis of agreement of what would be one acre of the best land in the State? Perhaps it is in the constituency of Deputy Yates, of Deputy Bruton or in my constituency. We are also proud of our farm record. Did anyone ever hear of such nonsense in any legislation?

However, it is not left at that. Other factors that have to be taken into account when considering the productive potential of the land include the range of uses to which the land can be put, access to the land, the nature of the soil, the climate, location, aspect and the structure of the farm and other natural factors. The Government also state that in classifying land a reasonable degree of management and of investment in land will be assumed to apply. That shows the nonsense of this entire proposal.

There will be a system of examination by people who will be given access to the land and nothing will be done until such time as these people inspect the land. In that connection, let us talk about equity. Even if there was a sufficient number of people who have been displaced from the Land Commission to inspect every single acre on every farm, I do not know if they could be expected to have the necessary expertise to consider, for instance, the range of uses to which the land could be put. With regard to access to the land, they will have to spend a long time studying the area, considering the highways and the byways, all the side roads and byroads. With regard to the nature of the soil, how qualified will these people be to deal with that problem? The next factor is the climate and the question must be asked if they will have people from the Meteorological Office to assist them. We are told that the aspect of the farm will have to be considered — I supose that means the view — but I do not know what that has to do with farm potential or development. All of this nonsense is being introduced to have a classification of what is an adjusted acre related to the notional best acre of land, wherever that may be. Does the Minister not realise this is engaging in fantasy which is the very opposite of what should be considered in setting out a tax proposal. Edmund Burke said that any fool can contrive a new tax. If he were around now he would have thought that even the depths of foolery could not have contrived such a nonsensical tax as this proposal.

Let us consider the reactions of the various groups to what the Government see as their determination to impose a fair tax on the farming community. It will be of benefit to the House if we consider the principles adumbrated by members of the Government and particularly the Taoiseach in relation to their approach to a fair system of taxation. I should like to refer to an article in the magazine Magill dated July 1979, one of the many interviews given by the present Taoiseach when he was Leader of the Opposition. At that time I was taking office as Minister for Finance. He had some clear statements on the principles on which tax should be levied and he spelled out the Fine Gael position on farm taxation. He said that during the National Coalition in the mid-seventies he proposed a 12 per cent levy on farm sales. He made the following comment in that connection:

This was merely an option I proposed at the time. The idea was that if we were able to raise about £120 million through this means we would be able to revalue the Irish pound upwards against sterling by about 5 per cent and greatly reduce the element of imported inflation in our general inflation rate. We would have been able to lower income tax, increase food subsidies and eliminate rates on private houses and agricultural holdings. However, I was convinced that the inequities to which such a levy would give rise would offset the benefits that would accrue. Therefore, the proposal was rejected in favour of a straightforward tax on farmers.

In that interview the Taoiseach was asked what form of farmer taxation he would favour. He said, "Farming should be taxed on the basis of accounts, on the same basis as any other business". We could not have a clearer statement from a man who is not given to making very clear statements. He gave a specious reason why the idea might have been feasible, namely, the revaluing upwards of the Irish pound by 5 per cent that would greatly reduce the element of imported inflation. Did anyone ever hear such nonsense in terms of the basis for levying tax? However, by the end of the interview fortunately he was converted to reality and he came to the conclusion that farmers should be taxed on the basis of their accounts. I wonder what has happened to him since then?

In discussions we had in this House he attacked the rates system on agriculture on the basis of the same principle, that it was a levy on productive capacity as distinct from income. In the Official Report of 9 December 1980, Volume 325, columns 740-741 he made the following comment:

The rates system takes no account of family circumstances so a farmer with ten children pays as much as a single farmer. It is not related to the capacity to pay and as a form of taxation in that respect is unjust.

I was Minister at that time. That is what the Taoiseach had to say then. He called it a singularly inequitable form of taxation which was not only unjust in a distributive sense as between the different people paying it but which imposed an additional penalty when incomes were low or non-existent. The reasons he put forward opposing the rates system at that time are still valid in opposing the system which the Government have now brought before the House. The Minister for the Environment has introduced it and he should be much more concerned with clear air and keeping our rivers and lakes clean.

I will be doing that this afternoon at a Council of Ministers meeting.

That is where the Minister should be now. Our rivers and lakes are being polluted as the Minister is introducing a tax measure.

What rivers are being polluted?

The Minister knows what is happening around the country.

That is the kind of nonsense the Deputy comes out with. We have heard enough of it already.

A precedent has been created in that the Minister for the Environment has taken over responsibility for tax reform. God knows, that is in line with the other nonsense we get from this Government.

The Deputy set up a commission and that was his answer.

The Government's answer is to ignore it.

The Deputy set up a commission to get away from the problem and to push it to the end of the priority list. It was the usual Fianna Fáil reaction to a problem: set up a commission.

The Minister for the Environment would be happier dealing with matters relating to the environment than he is dealing with matters relating to taxation.

The Fine Gael policy document of October 1982 suggested that:

Poor law valuation be replaced as a means of determining liability thresholds for income tax by a system based on standard results for enterprise based on the farm modernisation service.

It was also proposed that farmers should have the option of having their liability and eligibility assessed on that basis or on the basis of factual assessment. That is what Fine Gael went before the people on. They are now repudiating what they asked the electorate to accept at that time. Some reference should be made to the Labour Party irrelevant though they may be at this time. In their policy document of November 1982 they stated: "all farmers with a taxable income should pay tax and health contributions". This proposal, introduced by a Labour Minister for the Environment, is being introduced on the basis that farmers irrespective of income will be levied on an acre poll tax of an adjusted acre of the best acre in Ireland wherever that might be. Labour did not go before the people on the basis of this proposal but suddenly, in Government, they want to demonstrate their muscle. We are dealing with this nonsense as a consequence. It has been proved that the sinews in that muscle of the Labour Party are very tenuous and weak.

I thought the Minister for Finance or the Minister for Agriculture might have introduced this measure. Least of all did I think it would be the Minister for the Environment. What did the Minister for Finance say in an interview in the Irish Independent in November 1982? He declared Fine Gael's opposition to any new form of capital taxation on farmers to replace agricultural rates when they would be finally phased out and rejected out of hand the notion of property tax on productive assets. He said:

Farmers should be taxed on the income they get from their farms and any subsequent profits should be taxed on the same basis as manufacturing industry.

At that time Fine Gael were about to enter into Government. Today the Minister for Finance has repudiated every principle in that statement. In the Joint Programme for Government, if that means anything any more, the chapter on taxation states:

In drawing up new tax proposals account will be taken of the cost of the care of dependent children.

One of the most inequitable consequences of this nonsensical proposal is that it takes no account of dependent children. For the first time no difference is made between the income earner who has dependants and the one who has not. I remember well the day the Minister presented the 1983 budget. It was his first time to address the nation on his perception of how tax should be implemented and what would be a fair system. That Budget Statement was the beginning of all our disasters but if the Minister had followed up on what he said in that we would have something to go on now. He said: "The public perception of tax equity demands that all income earners should be liable to tax on an equal footing". How in the name of heavens can the Minister pretend that a proposal which has nothing to do with actual income but with the notional basis of the means of income will ensure that all income earners should be liable to tax on an equal footing?

In a statement issued on 17 May 1983 the Minister stated that if farmers were allowed the option of a system under which taxable income would be based on standard results the more profitable farmers would be systematically undertaxed while the less profitable would have to keep accounts to avoid excessive income tax charges. He said that in any event a notional system of taxation for farmers would be inconsistent with the objective of treating all taxpayers on an equal basis. I could not rely on any clearer statement from any source as a ground for fiercely opposing this proposal than that which is on the record from the Minister and the Government.

This morning the Minister for the Environment told us that farmers owe a contribution in taxation to the common good and that this should not be disputed by anyone. It is not disputed by the farmers or the PAYE sector. The indication that this is the only means through which farmers could make contributions to the common good is utterly ridiculous.

I presume the Minister speaks for the Government in relation to this Bill or is it a case of two voices from the Government as happened yesterday when the Minister for Labour was speaking on behalf of Labour in relation to the Dooge report? This morning the Minister told us that a tax based on the productive capacity of a farmer's principal asset is a fair tax especially given the linkages with the income tax code and the provisions for hardship. Let us compare that with what the Taoiseach and the Minister for Finance have been insisting is the only basis of equity, that is, that farmers should be taxed not on the basis of their asset capacity but on the basis of actual income. How, then, can the Minister on behalf of the Government say now that the basis of fair play is a tax on the productive capacity of the principle asset?

If this is now to be the principle on which tax is to be promoted will that mean that from now on in respect of business there will be a poll tax per square foot of the equivalent of the best square foot of business or shop floor, wherever that might be, and regardless of whether it yields income? If this is the principle that is to apply to the agricultural sector why not provide likewise for the business or professional sectors and tax doctors, engineers, lawyers and so on on the basis of what the best income earner in the corresponding profession would be? Is there any basis on which that principle could be accepted as being fair, much less as being in line with the need for national development?

Regarding the impact the proposal has had so far, I have not concentrated on the attitude of the farmers because, as there are different kinds of businessmen, there are different kinds of farmers but the farmers have made their position very clear. This proposal discriminates between them and it is unfair to them as it is unfair to the PAYE sector in the sense that it conveys the notion that not only now but for evermore, farmers cannot be relied on to pay tax on the same basis as anyone else and that the only way to ensure they pay their fair share is to hit them with a blunt instrument like the Bill we are discussing. That is very damaging not only to the farmers but to the economy generally. Most significantly of all, in support of the principles that were stated clearly by the Minister for Finance and the Taoiseach and by the farming community, the ICTU have made a remarkable and very clear attack on the Farm Tax Bill. This must signal clearly to the Government that in attempting to proceed with this nonsense, they will not only further undermine Government but will ensure that there will be an attack from all sides on this nonsense. This tax is unfair to the PAYE sector particularly. In their statement of yesterday, the ICTU say:

Congress supports the proposed farm tax but only as a replacement for rates on agricultural land.

Clearly, the tax is not meant to be in any sense a form of income tax. The statement continues.

We are, however, completely opposed to the Government's proposal to exempt almost all farmers from income tax, a proposal which we condemn as compounding the inequities in the tax system and as a repudiation of the promises that the Government has frequently made about tax reform.

Some farmers will be exempt form income tax as a result of this proposal. The statement continues:

Rates on agricultural land were not abolished by any decision of the Dáil. ...

That is also recognising that the Government nearly claimed they were. The sentence continues:

...nor did any political party propose that they should be abolished. The decision of the Supreme Court about the constitutionality of agricultural rates concerned the basis of assessment of rates and not the principle of levying rates. It was, therefore, a matter for the Government to rectify this technical matter. This it has done through the farm tax proposal under which, what in effect are rates, will be levied per "adjusted acres" in order to conform with the Supreme Court judgment.

That is what Congress seem to think the Government are doing in order to conform with the Supreme Court judgment. The statement continues:

The proposal of the Government to exclude all farmers with less than 80 "adjusted" acres (a substantial size farm) from income tax is indefensible...

Is the Deputy in agreement with that? Does he think they should be exempted?

Congress say that the proposal to exclude any one of income earning capacity from income tax is indefensible. The case I have been making all along is that farmers should be subjected to income tax assessment with the same allowances and liability as anyone else. I am glad to be in agreement with the ICTU on that.

The Deputy should read the first sentence again.

Once is enough. Congress go on to say that this is

...an insult to PAYE workers who have lobbied and campaigned through the Trade Union Movement for a tax system which would ensure that all sections of the community would be taxed on the basis of their actual incomes.

They are not opposed to it. The Deputy should read the first sentence again.

The Minister can read it for himself.

Deputy O'Kennedy, without interruption.

On a point of order, if I have read the document, including the first sentence, am I to be allowed to read every sentence again for the sake of giving some mealy comfort to the Minister who finds that what is being said is a total repudiation of what he is introducing?

I like accuracy.

Perhaps the Minister would read the sentence in his sleep sometime because that is the only consolation he will get in this regard.

Will the Deputy please continue?

I shall read in full the remainder of the statement:

The proposal of the Government to exclude all farmers with less than 80 "adjusted" acres (a substantial size farm) from income tax is indefensible and an insult to PAYE workers who have lobbied and campaigned through the Trade Union Movement for a tax system which would ensure that all sections of the community would be taxed on the basis of their actual incomes. The proposal to exempt nine out of ten farmers from any liability to pay income tax, whatever the level of their incomes, must be rejected by all who have any concern for equity in the tax system. Everybody that has looked at the tax system in the light of equity and fairness has concluded that farmers should pay income tax on the same basis as other sections of the community.

I say "hear, hear" to that, including the farmers, including the Commission on Taxation, including anybody who has looked at the whole tax system. I do not think one will find a better statement of the principle on which this proposal should be repudiated than that from the Congress of Trade Unions and to which all of us can give total and unqualified support.

The Commission on Income Taxation in the early sixties, the National Economic and Social Council and, most recently, the Commission on Taxation have all recommended that farmers should be brought into the income tax net.

They were being brought into the income tax net.

What happens now? We get this switch instead — the income tax which was being introduced on the same principle as for everybody else is now being put aside by this Government who are turning instead to this land tax applicable to all under 80 adjusted acres or the equivalent of that notional best acre in Ireland wherever it may be.

The Deputy is now riding both horses.

I am not. This theoretically has been the position since 1983. I am afraid there are no horses left for the Minister or Deputy Yates to ride at this stage and they know it only too well. The Congress of Trade Unions continue to say:

However, two factors have combined to reduce the amount collected in income tax from farmers. Firstly, there has been the ability to offset interest against income and write off farm investments to reduce the tax liability; secondly —

— and listen to this:

—there has been the inexcusable failure of the tax authorities to access farmers and to enforce collection of the tax due.

I would agree with that. The farmers themselves have acknowledged that. Should farmers be criticised or blamed, much less set up as somehow objects of public odium by the PAYE sector, if they do not even have tax assessments served on them — and that has been the case for the last two years? Are they to be set up as targets of hostility or people of a lower level of public concern than the rest of us if they are not even given the basis on which they should produce their tax accounts? If any of the rest of us were not asked, or were not given assessments, would we be rushing to the taxman either? Because of the total and utter failure of the Government to introduce the necessary staff, as Congress say here, and to implement the existing system, we find that the farmers were those who were blamed for their failure to pay what they were not asked to pay in the first instance. Here Congress is very strong when they say:

In no area is the stupidity of the arbitrary staff embargo in the public service more evident than in the refusal to make staff available to ensure the effective operation of the tax system which would recoup multifold the net outlay involved.

Of course it would. I have been saying that here and at the Committee on Public Expenditure, of which I am vice-chairman, for a considerable time past. They continue to say:

As well, there has not been the political will to compel farmers to pay the income tax they owe.

There has not even existed the means of assessing what farmers may be likely to pay, or obliged to pay, on an income tax basis, in respect of a considerable number. A number of them have been paying on accounts, paying on the same basis after due allowance for accounts. But a number of them have not, and they acknowledge that themselves. Are they to be criticised if they have not even been asked to furnish accounts much less be rendered liable to assessment? Then they say:

The abdication by the Government from its responsibility to enforce the law and collect the taxes due from farmers is totally unacceptable. The only objection that seems to be raised against income tax on farm income is the difficulty and cost of keeping accounts. The relatively simple farm accounts required by the Revenue Commissioners are not an imposition on farmers.

I know. I was the Minister who introduced those relatively simple farm accounts, particularly in respect of farmers on low income levels, and they did not constitute an imposition on them. While in the first instance some farmers naturally had reservations about having to have all their accounts prepared for income tax assessment purposes for the first, second and subsequent years, as Congress says here, the relatively simple farm accounts required — which were arrived at after very detailed consultations with all concerned — do not constitute an imposition on farmers.

—and the wildly exaggerated estimates of the aggregate cost involved lack all credibility.

Congress goes on to say:

In any case it is accepted that accounts are essential if farms are to be worked efficiently as business enterprises.

This proposal is doing the very opposite. It is moving away from accounts, insisting that the notion of productive capacity is what will determine liability to tax. Congress further point out:

The President of the Agricultural Consultants Association has pointed out that the farm advisory service and the Agricultural Institute have actively promoted farm accounts as an essential management tool and that the abolition of tax assessments on income would undermine the progress that has been made.

I welcome this keen interest and awareness on the part of the Congress of Trade Unions in the role of the Agricultural Institute, particularly their commitment to promoting proper management and productive capacity in agriculture. This is the kind of thing we have been awaiting for some time — that sense of mutual interdependence, awareness and cohesion that will guarantee that even after a Government that have proved to be such a disastrous failure as this, we can move together to better achievements. Congress then say:

A further point is that the Youth Employment Levy, health contribution and income levy are levied as a percentage of income. It, therefore, is essential that details of farmers' income should be available.

— and they are right —

It would be intolerable if farmers were to be allowed to opt out of paying these levies also.

I am not a zealot for these levies, never have been, particularly the income levy. I argued against them from the very beginning, arguing that they constituted another way of getting more tax and imposing a penalty on the worker, the farmer or anybody else liable to them. That said, as long as they remain — and I hope that will not be too long — then the Congress of Trade Unions are quite right to maintain that in order, to apply them equally farmers as to others of course one would have to have details of their income. If all farmers below the level of the 80 adjusted acres are to pay on this flat rate basis of £10 — now mentioned for the first time at least in this House — then there is no basis on which these proposals of this Government can be implemented. Perhaps the Minister would care to reconsider the position in relation to that? Or will we have another notional determination of income which will then impose a 2 per cent levy on a notional income? I wonder who will do that? Will it be the same boys who come out to look at the quality of the soil, the prevailing climate, aspect, shelter and so on? Will they arrive at a notional income as well in order to determine the levy? The Minister might consider answering that one for us. The Congress of Trade Unions, in this very considered statement, have pointed out the anomaly there. Incidentally, those income levies will yield over £130 million this year. Therefore it is correct that it should be pointed out by the Congress of Trade Unions that farm income will not be able to be determined for levy purposes.

Congress go on to say that:

The campaign for tax equity to which it is committed, will be maintained and that it will not accept the exclusion of any section of the income-earning community from a liability to pay tax on income.

That is something we should all support.

This is the only way that greater tax equity can be secured. If the Government persists in its proposal to exempt 90 per cent of farmers from income tax, it will stand condemned in the eyes of PAYE workers who have sought over many years to achieve reform of the tax system.

The Minister for Finance indicated that farm tax paid will be allowed as an offset to the income tax payable by farmers with over 80 "adjusted" acres. This is unacceptable. The tax should be allowed as an expense as is the case with rates paid by other business enterprises and not as an offset against tax.

What is now happening is that complications and unnecessary new adjustments would have to be introduced and they would be so complicated that the already over-complicated tax system could not possibly work. Under Government proposals they come up with some specific examples for taxing farmers. A farmer with 75 adjusted acres with an income of £10,000 would pay a maximum of £750 in direct tax or 7.5 per cent of total income. A single worker, taxed under the PAYE system with an income of £10,000 has a tax liability of £2,900, or 29 per cent of his or her income, while a married couple with two children with one spouse earning with a similar income would have a tax liability of £1,800 or 18 per cent of income.

Would the Minister explain to the Congress of Trade Unions, to the farmers and to me on what basis the Government can call that tax equity? The Congress have pointed out what this proposal would mean and are pointing out that it is unfair and totally unacceptable. The only people who suggest that this is fair are this Government even if it means repudiating everything they have said in the last couple of years. They now come up with a notion that it is fair because the small weak tail of the Labour Party seems to have said at some stage that this must be done. We all have to pay the consequences for it. Then they go on to say that a farmer with under 20 adjusted acres with an income of £4,000 a year will pay no tax whereas a single person on the PAYE system with the same income is liable to £380 a year tax or 10 per cent of his income. Not surprisingly Congress are seeking a meeting with the Government to discuss their proposals on taxation and farming. Congress will insist that farm income will continue to be assessed for income tax and the tax to be regarded only as a replacement for rates. What will happen when Congress meet the Government and make a strong and valid point? Will the Government make some concession? Will they concede to the logic of the Congress argument? The Government are then to have discussions with the Irish Creamery Milk Suppliers Association. Will the Government make some concessions to their proposals? If the Government make some concessions to them what will happen to the Irish Congress of Trade Unions? The position of the IFA has been clear from the beginning. They want tax on the basis of income. If further changes arise the Government will only further antagonise every section of the community. That will create an unique record for the Government. We will have unity in dissension. Everyone will be utterly opposed to this nonsense. The Government must recognise that to persist is very foolish not just in the interest of their political survival but in the interests of the nation and trying to reduce the tensions.

I will consider what effects this nonsense, if applied, would have. The first thing we have to do is to have the determination of the amount of adjusted acreage. The Minister said this morning that there will be no adjustment until such time as every farm unit has had its acreage adjusted under the regulations in this proposal. The Minister says that the classification will start as soon as possible after the Bill is enacted and will take some years to complete, that it will start in each county with the bigger farms and will work its way downwards until all farms of 20 adjusted acres or more have been classified. Do the Minister and the Government not recognise that if that is to be the basis they will still be at it well into the year 2000? There will not be a question of getting all these farms adjusted on the basis of what the Government have put into the legislation in section 2, which required adjusting on this basis. They will still be going out adjusting acres for the first time by the year 2000. The law relating to adjusted acres is set out in some detail in section 2 (2) where it says:

(2) In estimating, for the purposes of this section, the capacity for agricultural production of land in any place—

(a) regard shall be had to—

I hope the Government will have regard to the fact that when that is determined by a judge there is no room for discretion. It will have to be shown that each and every one of these criteria will have been considered. A judge will have to ask was every use to which the land could be put for the purpose of agriculture considered, in relation to each acre of each farm. The judge will have to ask was there regard to the adequacy of the means of access to the land, to the nature and quality of the soil and so on. All these questions must be answered in respect of every acre of every farm. The judge must ask about

(I) the nature and quality of the soil,

(II) the location and climate of the place,

(III) whether the land is flat or sloping and, if it is sloping, the direction and the degree of the slope,

We are letting ourselves in for something now. I know the mountain territory of north Tipperary and the flatlands of Wexford. They will have to go out with their measuring tapes to determine the degree of the slopes. I have not dreamed this up. The Government are insisting on it. The judge must also inquire as to

(IV) whether the land is sheltered

What does "sheltered" mean? Does it refer to trees or ditches or sheds?

and whether the land is overlooked by hills or mountains,

What does that mean? Some of the best land in Tipperary is overlooked by hills and mountains. Will that put them in a better or a worse category? It shall be taken into account in law when the adjusted acreage is being determined as will:

(V) the structure of the agricultural land holding of which the land forms part,

(VI) the natural drainage of the land and any arterial, local or other drainage affecting the land and provided by a State authority... or a local authority,

I am becoming tired reading this thing, but by the time the poor unfortunate adjuster comes out with his measuring tape and all of his soil tests and climatic tests, his barometer and thermometer, and by the time the farmer has finished looking at him and dealing with him, what then? The next provision is:

(VII) the adequacy of the natural water supply to the land, and

(VIII) the accessibility of the land to, and its capacity to support, farm machinery and farm stock and to resist damage to it by farm machinery and farm stock,

This is getting into could-cuckoo-land. The Bill states after all those things:

(b) it shall be assumed that the land has been, is being and will continue to be farmed, and that the land and the business of farming the land, has been, is being and will continue to be, managed reasonably and reasonably efficiently,

What in hell's blazes can be the consequences of all that? We are working first of all on the obligations to check on any of eight, nine or ten fundamental conditions and now we turn from obligations to assumptions which are really the basis for no law and certainly for no tax law. It goes on and on. I am becoming tired of pointing out the anomalies in this and I can imagine the effect it will have. We will be dealing with the anomalies on Committee Stage. We will deal with this in such detail on Committee Stage as to expose the total nonsense involved. The Bill continues:

(c) (i) if investment in the land is at a level that is higher than a reasonable level for land generally or falls short of such a level, any capacity of the land for agricultural production, or any lack of such capacity in the land, that is attributable to the part of such investment that is higher than such reasonable level as aforesaid, or, as the case may be, to the short-fall shall be disregarded.

I do not think I have ever seen such a load of nonsense introducing any legislation. I do not want to say that our parliamentary draftsmen are entirely dependent on legislation and legislative draft as in the Statute Book in England, but when we introduce similar laws here we generally tend to use the same jargon. However, because there is no similar law in Britain or elsewhere for once we have had to try to do it ourselves. I sympathise only with the parliamentary draftsman who had to put that into legislation which means nothing to me and will mean less to a court and, no matter what the Minister tries to say. I guarantee that if this nonsense gets through it will not even be able to be interpreted, much less applied in our courts. The Bill continues:

(ii) In subparagraph (i) of this paragraph "investment", in relation to land, means investment in the land in respect of——

Here we go again with a definition of what investment is:

(I) the application of fertilisers or other substances for improving the land for agricultural use,

(II) the levelling and general reclamation of the land,

(III) the clearance of boulders, stones, trees, weeds, gorse or other unwanted vegetation from the land,

(IV) the provision and maintenance of a supply of water and of drains and ditches for the land,

(V) the cutting of hedges on, and the provision and maintenance and shelter for, the land,

(VI) the construction and maintenance of farm buildings, yards, slurry or silage pits and roadways on the land, or

(VII) the provision of machines (including farm machinery) for use on the land,

or in respect of other similar matters.

Look at the end of it. What in the name of blazes is meant by "other similar matters" in respect of these things, in respect of investment to the land? No court could possibly begin to interpret it with any degree of confidence, and much less the farmer who has to begin to understand, and he is entitled to understand, the basis on which he is going to pay this tax. What liability to tax is he going to have as a consequence of all of this if it is introduced? I can say with some degree of experience in the law that if this gets through — it will not — it will be a lawyers' bonanza. It has to be. I can imagine any first year barrister looking at this and saying, "This is my meat" because the law says, "You shall have regard to all these things". Every adjuster inspector who comes into court will be cross-examined at great length on each and every one of these things. It does not say any one of them; it says the lot of them. He will be cross-examined at great length on all this business about investment and the nature of similar investments and in respect of any of the other matters. If we have money to spend we can spend it better than on having all these things dragged through the courts. The legal profession are doing well enough already, having regard to the tensions that arise in other sectors of the economy and the fact that so many people are being pursued in terms of their incapacity to pay and their obligations either in commerce or in other contracts that result in the huge growth of law cases going through the courts. It is remarkable that when things are going badly in the country litigation soars. One thing we do not need is to have people who want to have no recourse to the courts, namely the farmers, being dragged in on this basis to prove that they have no liability to tax.

The Minister says that the classification will start as soon as possible after the Bill is enacted and will take some years to complete. The Minister had better come clean now to whomever this Bill is meant to appease and admit that whatever tax is to come from this farm tax proposal will not begin to emerge for at least five to ten years. How can it? Start with the top fellows. All right, someone at the top will surface in the first year or two, but we are talking about tax liability on all the farming sector. There is no point in fooling ourselves that 200 people who are going to be transferred from the apparently defunct Land Commission can do this job within those years, having regard to the obligations the Minister is setting down for them in this legislation. I hate to see legislation introduced here on such a notional basis. I invite the Minister, Deputy Yates, or any of their colleagues to let us have their comments on it and see whether they believe that this can be done. If it is not done who will be blamed? It will not be the Government or at least that is not what they would want. Blame the farmers again for not paying tax when this nonsense cannot be got under way; then you create more tensions, just the opposite of what we want to do.

Does the Minister not recognise that for as long as we do not provide adequate inspector resources within the income tax system, that failure on the part of the Government is attributable as blame to farmers and causing divisions we do not want? As long as this inoperable legislation will not be operated that failure too will probably be attributable to the farmers, which is totally and utterly unfair. If a farmer reasonably and properly goes through the motions, which are available to him here by way of appeal either through what is called the farm commissioner or the farm tax tribunal, that will be seen or interpreted in some cases as an attempt by him to avoid tax liability. He is perfectly entitled, as anyone else would be, to question the nonsense on which this is based — soil, climatic conditions, slope, aspect, overview and underview from mountains or whatever else. Not only the Minister for the Environment but the Minister for Agriculture and the Minister for Finance should recognise that this is utterly impossible to implement.

I want to state also what is very obvious at this stage. I have only mentioned it so far in passing. Can any person on the other side of the House, before we finish Second Stage of this Bill, justify the fact that the single farmer with 45 adjusted acres will be liable for the same level of tax as the married farmer with 45 adjusted acres and five, four or three dependent children? Will somebody from the other side of the House come in and say: "that is right and by God we will do it, because we believe that is fair play and justice". If anybody can come in here and say that, we will at least begin to consider that the Government may have some notion that is how things should be done. It is time for some Minister to come in and say: "We know it is unfair. Let us be honest about it, we know it is not based on any notion of equity or on notional income, we do not care if it is a 60 year old single farmer with no dependants or a 35 year old married farmer with five dependants, we will impose the same tax". Would the Government at least be honest enough to say that.

People cannot understand how a proposal is introduced which repudiates any basis of fair play between people like that. I note this morning that a new position is arising and it comes very clear from the Minister. Hardship can arise from a variety of factors and ill health is the obvious one, particularly of the farm manager, the owner or his family. It can arise from farm disease where the actual income is reduced as a consequence of the hardship. When it arise the Government will be a little bit reasonable. The Minister said this morning:

We of course recognise that there will be circumstances where payment of the farm tax would cause undue hardship and the Bill provides that the local authority can agree in these circumstances to postpone action to collect the tax for a specified period.

Where did we hear that before? Is this not the same Minister who told the local authorities to be very careful in the way they actually imposed the water charges? He left it to the local authorities to exercise their discretion. He told them to be careful, not cause unnecessary tension, not do anything that would upset the people, get the water charges but do it in a nice gentle way.

Here the same Minister is passing the buck on to them again. He said they will be told to collect the tax for a specified period. He said that during any such period interest will not accrue to the outstanding amount. The local authorities will be the people who will have this discretion. Then comes the sting. He went on to say:

I have to stress, however, that the tax remains due and will indeed be a charge on the land until it is paid.

There can be many families who for three or four years suffer a loss of income because of the effect of farm disease and they find they cannot meet it. They find that farm enterprise has been so badly affected that eventually they have to sell out and move to something else. They transfer to somebody else. What happens then? Along comes some young man who will take a chance and try to develop the whole thing on a different basis, perhaps change the nature of the farm production. He will know there was hardship in that place for four or five years. Now, according to the Minister the tax remains due and will be a charge on the land until it is paid. I did not know that land paid income tax, I thought it was people who paid it. There will now be a charge on land. If ever there was hardship which was not finally disposed of by way of payment it will now remain as a charge on those who might take over that land either by transfer or otherwise. That is utter nonsense.

I would like to point out some other anomalies in this area which will give rise to increasing costs, particularly legal costs, and will ensure that farm mobillity, which is so vitally important, will be obstructed. A new proposal is being introduced to keep a register in local authorities. Every person will have to notify the relevant local authority of any transfer in land from now on; otherwise it will be an offence by fine mentioned in the Bill. That will mean that any person who wants to buy land from Deputy Yates, for instance, who will have a fair bit to sell, or from somebody who will have a small amount to sell like Deputy Blaney in Donegal will not only have to check with the people from whom he is buying what is the situation but that there are charges on the land and all the usual legal requirements which have to be complied with and he will also have to find out from the relevant local authority if a notification was given to them at any time in 1985, 1986 or 1987 that any part of the particular land was disposed of. The local authorities will have to keep a register of this. We all know that this will be the beginning of another nonsense. Local authorities have more to do if they are given their heads in terms of development than to be dealing with the title of land and keeping a register of all the land that has been disposed of either in full, in part or subdivisions. The Government must clearly recognise that this proposal involves a consequence which will place a very heavy burden on farmers and on everyone else except lawyers.

I want to say something about the provisions the Minister referred to this morning. He stated:

The provisions in this Bill are no more severe than other tax legislation and I make no apology for including them in the Bill.

When I hear the phrase: "I make no apology" I feel this is a brave man. Before the Minister starts making no apology he had better correct his information. The provisions in this Bill are not the same and are more severe in that respect in terms of the provision of allowing access for the purposes of classifying land than anything which exists in other legislation. I want to quote what the Minister said and then I will demonstrate where he is wrong. He said:

The Commissioner's staff will have the right, under section 17 of the Bill to enter on land and to receive a reasonable level of co-operation from the farmer for the purposes of classifying land or dealing with appeals. There are penalties of a fine of £1,000 and up to one year's imprisonment for obstructing the classification process and the Bill also contains provisions designed to enable the classification process to overcome any obstruction.

The Minister says that is the same as anywhere else. Clearly it is not the same. There is no provision in relation to corporation tax or tax on the income of the self-employed or professional sector whereby for the purpose of establishing the tax liability an inspector is allowed to enter property, examine the productive unit, the machines, the employees and their skills or the shop shelves. Yet such a provision is being introduced here. It is nonsense for the Minister to say that these provisions are the same as applied to others. To inspect records or ask for information is one thing but to inspect total property for the purpose of assessing tax liability is something quite different. Farmers can justly say that they are being discriminated against and not being treated on the same basis as others.

On Committee Stage we will go through each section in great detail. My speech has not been nearly as long as it might have been since I picked on only a few points. This legislation if passed would succeed in damaging not only the interests of agriculture but the whole economy. This is a time when we need a new degree of understanding and sense of common purpose between primary producers and the workers in every sector. When we lift this nation again the basis of that leap forward will be the development of agriculture and the agri-food industry, with the employment that follows from it. You and I, a Leas-Cheann Comhairle, know this from our own place. We know the number of people in the creameries, the meat factories and the shops who are totally dependent on the farming sector as the primary producers. It is about time we recognised that this is the only basis for moving forward.

The Government should concern themselves with a real programme for the development of this essential national asset in terms of training, education and marketing. The Minister for Finance provided a miserable pittance of £250,000 for agricultural marketing out of a total of £9,000 million. If we had the wit to exploit the markets which are available the farmers would produce to supply those markets and the PAYE worker would benefit in the process. This would lead to that sense of cohesion which is long overdue and which could bring us into a new era. Nobody outside will solve our internal problems. The Canadians, the Japanese and the Americans clearly will not do it. With them it is a case of come day, go day. Those who have the real commitment are those who have been here from the start — the farmers and the workers. I look forward to a day when we will have common marches in Dublin with PAYE workers, the ICTU and farmers joining hand in hand to tell the Government that this nonsense will not be accepted.

I hope the Government will see the light and withdraw this Bill before it reaches Committee Stage. If not, tensions will be caused which will damage all sectors of the economy. I hope I will not be addressing myself to this nonsense on Committee Stage, that the Government will get sense and that the Minister for Finance or the Minister for Agriculture will inform us to that effect, letting the Minister for the Environment deal with matters appropriate to him.

I have listened attentively to Deputy O'Kennedy and I was very impressed with his ballerina act when it came to the ICTU statement because it showed the supreme dishonesty of Fianna Fáil on this issue. They want to have an each way bet. I have no doubts from reading the same ICTU statement that they are not satisfied with the tax yield of farmers, not satisfied that a credit will be issued to farmers having over 80 adjusted acres for this land tax payment and not satisfied that 92 per cent of farmers would be exempt from income tax. Deputy O'Kennedy failed to say whether he was satisfied with the tax yield of farmers, whether they should pay more or not. That basic dishonesty can give farmers no confidence whatsoever in Fianna Fáil's false and hollow utterances about repealing this Bill. There is no respite for farmers in what Deputy O'Kennedy said.

The whole purpose of this measure must be to increase the tax yield of farmers but Deputy O'Kennedy did not say whether he was in favour or not. He did not address the ICTU comment. That sort of hypocrisy and dishonesty is camouflaging the ICTU statement as sympathy for farmers when the truth is that there are very few Deputies who are genuinely concerned in honestly representing farmers.

In my constituency of Wexford I represent farmers and I do not need to be told by any farming organisation whether I represent farmers. I see it as my job to do so in the best way I can. If there is heat in the kitchen on this issue, Wexford is right beside the stove. It was there that the litigation on the PLV system was initiated and I as a farmer contributed to the fund to abolish the PLV system because of the gross inequities in it. I could have had four acres of land which carried a £1 valuation and a similar one acre which carried a valuation of £1.20p. The basic injustice and inequity was rightly repealed. It must be remembered that 10 per cent of all agricultural borrowings are in Wexford. It is probably the most productive and intensive sector. I estimate that in County Wexford 7.5 jobs in every ten are dependent on agriculture, whether they are in Albatros Fertilisers, or Waterford Creamery, producing "Yoplait" and many other products. I do not need to be reminded of the importance of agriculture and I do not need to be told about farmers' views in this regard.

Wexford County Council were very prudent, and they had a balance of £1 million prior to 1977. Today they have a deficit varying between £2 million and £3 million. No public lights have been erected in County Wexford off national primary routes, no services have been provided and there are no new roads. The resurfacing programme of 14 years has now increased to 35 years because there is no money. The property tax paid in the form of rates has resulted in local authorities being starved of finance.

I am not in anyone's pocket. I am not afraid of the IFA and I will take them on in any election. But there are aspects of this Bill which need to be looked at very closely. The history of farm taxation has been a nightmare for politicians and farmers but it must be said that the farming sector are the only group who refuse to pay tax. In my work on the Joint Committee on Small Businesses I have seen representatives from the motor industry, the SIMI, hoteliers, publicans and the electrical trade who were devastated by high VAT and other impositions. They complained and said that they would vote against us, but they never refused to pay tax.

There has been a litany of taxes — the 2 per cent levy, wealth tax, resource tax and rates — which farmers have refused to pay; and, while they are perfectly entitled to go to the courts on any issue and to lobby and complain about any unfair treatment, they must realise that every time they refuse to pay any tax, they are cutting a stick with which to beat themselves because, although they may win the battle on this issue, they will not win the war on public relations with the rest of the community.

Politicians may come and go, but Governments are elected by the people. Unfortunately, too many urban people are under the wrong impression that there is a crock of gold in the agricultural community to be taxed and that is the basis of misinformation on which the urban-rural rift has evolved. That misinformation is fuelled by farmers who appear to be unreasonable. It is in the interests of farmers and their representatives to be seen to be reasonable. I should like to think, whatever the outcome of the Bill, that once and for all, we may reach a situation which exists in France, Germany and the United Kingdom whereby they stick with their systems so that farmers can get on with the job and politicians can get on with their other duties. This is such a sensitive and difficult area that we are all being distracted from the many other problems in the agricultural and other sectors.

Any farm tax system will be criticised on either of two grounds. If you make it an actual system, it will be criticised on the grounds that it is a disincentive, as has happened in the case of the current account system. The argument is that the harder you work, the more you earn, the more you invest and the greater the return, the more tax you pay. Of course there is a disincentive in that regard and I have met many farmers, especially in the dairy sector, who say that this system is a disincentive.

The other factor is that somewhere between £12 million and £17 million is being paid in some instances by farmers to prove that they have no tax liability. Some farmers have said to me that they would rather give some money to the Government than pay an accountant. In the first year, the accountant's fees of £300 are reasonable but many farmers in the tax net now find that the bill has gone to £600 or £700. There are two contradictory systems. A national system does not take account of ability to pay and the actual system has a disincentive effect. No matter what system the Government introduces, they cannot win.

There are two types of farms — business and subsistence. Basically, the larger farmer runs his farm as a business. He seeks to invest and develop and to get a return, whereas a man with six children on 30 acres is merely ekeing out a living. In the west, because of the farmers' dole, the policy is to keep them on the land, although there are difficulties in that regard. Is the system of 80 adjusted acres fair? When it is over 80 acres, is it a business and, under 80 acres, is it subsistence? Should there be a notional system beneath that and a factual system above it.

It must also be said that the timing of this Bill is not good. From 1979-81 farmers' income dropped by half. Since then, there has been a slow but gradual recovery in real and nominal terms. This year, with the price of cattle and sheep, the cut in grain prices and the increase in the price of fertilisers, it is obvious that the price squeeze is coming back. In the more profitable areas of milk and beef, there are great confines on production in one from of quota or another. Therefore, in many instances this impositions on farmers comes at a time when their incomes are depressed. The outlook is not good either, which makes it even more unpalatable for farmers.

However, they must realise that politicians have to talk to everybody, and I should like to give a few examples of where I find it difficult to sustain the current position for farmers. According to AFT figures, agriculture incomes for last year amounted to somewhere around £800 billion or £900 billion and the total net receipt of income tax from farmers was about 5 per cent. That is in contrast with people working in Enniscorthy who pay 24 per cent of their income in tax, which is very unfair. They say to me that that is unfair. I fully acknowledge that the income-labour unit on farms, because of farm sizes and so on, could be as low as £3,900 and the discrepancy between 24 per cent and 5 per cent may not tell the full story. However, it is very hard to convince people of that. We must remember that we are a very jealous people and a begrudging type of nation. In my canvass in the local election campaign I found that the people who were working in one house were very jealous of those next door who were on social welfare because they did not get a medical card or had to pay higher rent. The same applies between urban and rural people. Farmers must have an understanding of that position.

As chairman of the Joint Oireachtas Committee on Small Businesses I have no doubt that the heaviest tax paying community are those involved in small businesses. They pay rates on their business regardless of whether they have a profit or loss. Deputy O'Kennedy said that no other sector were treated in the way those caught under the Bill would be, but in my view that is not correct. Some of the specific points he made may be correct, but in general business rates, are just as unfair and do not bear any relation to anything other than the property value. A garage proprietor last week had his PLV trebled and there was little he could do about it under the appeal procedure. Politicians must explain equity to those involved in small businesses.

I had a more difficult case to deal with in the course of my canvass. I met a farm labourer whose gross pay was £94 per week and I found it impossible to explain to him why he should pay tax while his employer did not. I am not saying farmers should be singled out for special treatment and I will outline later cases where they are being ill-treated in this regard. However, farmers, and their organisations, must have sensitivity to other people in the community. As Deputy O'Kennedy said, we are the highest taxed community in the 22 OECD countries. Everybody is crippled with tax, but the problem is that the politicians do not have the guts to cut public spending. In the context of very high taxation farmers must be sensitive to what other people have to pay and the type of burdens they have to carry. They must also be sensitive to the fact that, for every pound of all tax we take in, we spend £1.20.

The urban communities, and those involved in small businesses, must realise that farmers have to endure circumstances that no other sector face. No other sector is subject to climatic conditions like farmers or to the ravages of things like brucellosis which can overnight destroy small dairy farmers. Those farmers may have their farmes locked up for years and do not get adequate compensation. Last year I bought a number of lambs in the springtime at £38 per head, the same price that I paid the year before. I sold them the following spring and I averaged £52 per head although in the spring of 1984 I averaged £76 per head. There is not anything farmers can do about that. They cannot diversify into a fish and chip business. They do not have any control over their income because they are a primary producer. The price lead system is EC operated primarily and farmers here do not have any discretion about the level of price they can demand for their output. That must be realised in the overall urban-rural rift.

If we examine the taxation system of farmers in other countries — I am thinking of the German and French systems — we will see that there is ample precedent for a two-tier system of taxation such as we are proposing. In other countries the lower half is based on turnover. If a farmer is beneath a certain turnover he pays tax on a notional system and if he is over it he pays it on accounts with a credit. While there may be aspects of the Bill that farmers do not like, there is a long-term benefit in it in terms of farmer taxation policy for realising the difference between subsistence and business type farmers and operating on some form of notional basis to overcome the difficulties of smaller farms.

The principle of the farm tax is a replacement for the rates. The adjusted acre is a replacement for the PLV. I do not think anybody can dispute that. However, farmers have forgotten that there are advantages as opposed to the rates position. Farmers under 80 acres will get some exemption and farmers under 20 acres will be totally exempt. The inequities of the PLV system are completely removed. Deputy O'Kennedy referred to section 2, which deals with points about access, shelter, drainage and so on. I am not a lawyer but I am glad to see those points included. I would hate a slipshod system under which farmers would not have a case. Deputy O'Kennedy is not doing farmers any service in saying that this is so detailed that one could not make any sense of it. The effort is to be as generous as possible to get all the ameliorating factors for farmers into this so that the tax will be on a fair basis, that the acre is a fair acre, and, I hope, a generous one.

Last September the three Fine Gael TDs in Wexford issued a statement, which was much maligned in Fine Gael and other places, expressing our anxiety and fear about the proposed land tax. At that stage the Bill had not been published and we were not aware of the details of the national plan. I can recall at our meeting with the county executive of the IFA making it clear that we saw it as our role in signing the party pledge to vote for whatever the Government decided on and we pointed out that we saw it as our role to represent farmers at party meetings. Since then in our discussions with many Minister we operated on the basis of getting the best possible deal, but the major issue on which we unreservedly spoke against was that we did not want double taxation. Deputy O'Kennedy this morning ignored the fact that the ICTU required double taxation, the paying of the farm tax, no credit over 80 acres and no exemption under 80 acres from income tax accounts. That was the point we felt was unfair. As in a lot of cases, eaten bread is soon forgotten. It must be realised that that is not proposed in the Bill.

The subsequent stance of the IFA was regrettable. Many of my friends lost their council seats last week although they were not responsible for the land tax. I do not mind if the Front Bench of Fine Gael suffer, because if they decide that the Government should take a certain course of action at a general election they will sink or swim on that issue. It was very unfair that councillors who would be very vocal on behalf of the IFA position within Fine Gael should be decimated in the local elections last week. Over the years the IFA have been given a reasonably good service by Fine Gael, but that organisation has done severe damage to our party. It was very unfair of them. TDs will survice because they have a personal vote, but those who suffered last week were innocent victims. There is fault on the Government's side for the way this was handled just prior to the local elections, but the way the issue exploded was not helpful to the Fine Gael Party. The bullying and intransigence of the IFA was verging on the undemocratic. Certainly, it gave little recognition for the work and service some people have given to the IFA on issues such as taxation, disease eradication grants or social welfare payments. Eaten bread was very soon forgotten.

I will be explicit about my position on the Bill so that there will be no misunderstanding. I represent the farmers of County Wexford and I will support this Bill but amendments must be made because there are inequities in this legislation. I hope the Government will realise that while there may be no political losses or gains in Dublin city in this Bill, politics will stretch into the rural areas and rural TDs will have to bear the brunt of it. It is not only for political reasons that I ask that amendment be made but in the interests of justice and equity.

My first amendment would be that the rate of tax be linked to an index of agricultural incomes as laid down by either the Central Statistics Office or An Foras Talúntais. The Government have consistently said this tax will be linked to the tax requirement of the day. The Minister for Finance told me that could be to the benefit of farmers. It has been said in the national plan that tax levels in the economy will be held at 36 per cent of GNP and if there is a reduction farmers will benefit. Frankly, I and the farmers would be prepared to take our chances on being linked to increases and decreases and to cut out the tax requirement because the fear is that, as with all taxes, they are only going one way and that is up. I hope this amendment can be included on Committee Stage.

My second amendment, which is a major departure from what is in the Bill, relates to severe hardship. I have given a lot of thought to this. I meet many farmers who are suffering great hardship. A farmer could owe £70,000 on 50 acres of land; I know people who owe £45,000 on 36 acres. They are in receipt of home assistance from the South-Eastern Health Board. I know another who owes £500,000, but I will not go into detail on how he got into these difficulties; I know people with large families who are surviving on very small holdings and I also know widows who have set their lands but are not getting a great deal of money because in areas along the coast the value of land is not high and the most a person can get for setting is £50 a year. Many people are developing their farms, and there are many other hardship cases — some with money problems, some with family problems and others with developmental problems. It will be almost impossible to adjudicate on who is worst off, someone who owes £1,000 an acre or somebody who lost six out of 26 cows through brucellosis.

In my opinion these difficulties can be got over by one simple mechanism. The Minister should include a hardship clause in this Bill and if a farmer could prove he had a nil income tax liability, he would not have to pay farm tax in that year. That nil income tax liability would only arise if a farmer satisfied the inspector of taxes that he did not have a taxable income because of hardship. This is the fairest system because it is related to the tax code. It is simple, it is fair and it is seen to be fair.

Over the years considerable friction has been caused in County Wexford by the poor law valuation system. I would not have confidence in discretion being left to the county manager. I have the highest respect for the Wexford County Manager, but it might not be realised in the Custom House the difficulty that has arisen in my county because all the litigation was based on Wexford cases. If the adjudication of hardship is left to officials in the county hall, this will lead to great difficulties. This adjudication must be fair and must be seen to be fair. If a farmer can prove to an inspector of taxes that he did not have a tax liability on hardship grounds, I do not see why he should have to pay tax under this Bill. I beseech the Minister to investigate this possibility.

Section 5 is a most insensitive section and caused acute political difficulties in the local elections. This relates to the display in the Garda station of the adjusted acreage of farmers and nonpayment of the land tax. I do not know why a Garda station was picked, or whether it is coincidental that in my constituency many claims for unemployment assistance and unemployment benefit are made through Garda stations since there are only four major employment exchanges in the county. This is the wrong way to go about selling this Bill.

If I have 100 acres and it has been adjusted down to 70 acres and another farmer has 100 acres which has been adjusted down to 60 acres, then I should know about that because if I am appealing my case I can refer to your land, as business people do under the current PLV system. I hope this section can be amended so that the adjustment of the land can be available — I emphasise "available" as opposed to displayed — in a valuation office in the valuation hall so that farmers about their business can make comparisons. I do not want this section to pass as it is worded because in my view it criminalises farmers by displaying this information in Garda stations.

I have had great difficulty trying to explain something about which there should be no difficulty, and that relates to the full credit of land tax payments to local authorities for farmers with over 80 adjusted acres. Over the years it has been stated that full credit will be given but farmers seem to doubt that this will happen. This case only needs clarification and I hope that and the 80 acre threshold will be cemented in this Bill.

Another amendment I would like to see made in the Bill — there has been some confusion about this — is where holdings are split between father and son or favoured nephew or niece that they would be treated as separate holdings. At present we have an incentive through the suspension of stamp duty collection for farmers who transfer land to full-time farmers who are under 35 years of age and who have some agricultural qualification. This Government have said by continuing this measure each year, that our priority is to get more land into younger hands, but the opposite will be the case if we include the words "genuine transfers of land to the younger generation". The traditional position is what is mine is mine, what is my father's is his and what is my son's is his. People who have already made transfers should be treated as having individual holdings with individual tax liabilities. I hope that in a few years' time there will not be an argument as to what was a genuine transfer to a son and what was not, or what was a tax evasion measure or a genuine land transfer.

The other amendment I should like to see relates to the adjustment of land procedure. Much of this adjustment procedure will be subjective. There are so many factors to take into account that it will be a matter of opinion as to what is the best acre of land and so on. There is also the question of a time delay. My understanding from the Government was that the Land Commission had already, through their workings over the years, developed a procedure which had been accepted by the High Court for arriving at one adjusted acre. In other words, five acres of bog were worth one adjusted acre, as were ten acres of mountain — and one excludes roadways and ditches. I am not sure about the position and perhaps that could be clarified.

I cannot understand why the profile system has not worked. That is not good enough. Surely that matter is within the domain of the Government. I accept that it is not the farmers' fault. What really irks me is that I can go to farmers who have 67 adjusted acres and who are going to pay less tax under this legislation and they are complaining bitterly. The propaganda campaign is such that it has convinced people who would be better off under it that they should be so hostile to this Bill. Part of the reason for that is that many farmers with under 80 adjusted acres have never seen a taxman in their lives and would freely admit that. They have never seen a profile from. It is not altogether their fault that they have not. It is not good enough that those forms were not sent out to farmers. They were prepared to pay.

If farmers who had been sent out tax assessments for £6,000 or £7,000 — because the way it is done is that one thinks of a number and trebles it — they would welcome this Bill wholeheartedly. However, by virtue of the fact that they have never seen a taxman, it is a case of the devil they never knew compared with the devil they now see coming in the form of this land tax. It may mean that what the IFA did to Richie Ryan in the seventies could be the case in 1985 or 1987. Many farmers would be delighted with this. Many members of farming organisations who are now upset with the legislation may be quite pleased in the fullness of time. We cannot overlook that. It is unforgivable that farmers are basing their comments and reaction to this legislation on ignorance of the fact that they were liable for income tax since 1983, but by virtue of the fact that the Revenue Commissioners have failed abysmally to get their act together this has not been collected. I am not saying that farmers should be victimised. What I am saying is that this system should at least be tried. If it had been made to work, the whole reception of this Bill could have been different.

It must be stated that there are benefits to this Land Tax Bill. Naturally, if one is fighting tooth and nail to pressurise the Government into not proceeding with it, one would not stress these points; but they should be made. The current receipts of income tax from farmers are of the order of £35 million. One of the ways in which farmers have avoided paying tax is by claiming capital allowances. These have been limited to 30 per cent, which is unfair relative to manufacturing industry, but to some extent if I build a shed, drain land, or buy a tractor, I can write off 30 per cent of that amount in one year against income tax — but I can only write it off so many times. Therefore, the income tax yield from farmers is depressed by virtue of the state of farm development. There is a set of figures which suggest that if farm incomes were to continue on the growth ratio for, say, 1982, 1983 and 1984, the income tax yield from farmers in the 1986 and 1987 tax years would be of the order of £86 million because it has worked its way through the system.

In many cases there would be obvious benefits for many farmers in this land tax, by virtue of simple arithmetic. There are also benefits accruing from the fact that farmers to some extent, especially in the more rural areas, are cute, cautious people, and they worry. What they hate is not knowing where they stand and to some extent with this land tax, although it is notional, at the beginning of the year they will know their liability and can plan accordingly. I do not accept that that is such an unreasonable imposition. That is the way farmers have always worked with rates. That must be seen as a benefit, as well as the fact that £12 million to £17 million will be saved — not all of it for those farmers over 80 adjusted acres-because they do not have to go to an accountant.

It must be said that the 20 acre threshold beneath which there will be no tax liability is most reasonable. It must be realised that farmers enjoy public services as much as anybody else. Their children go to school and get hospital treatment, they drive on the same roads and benefit from the same public lighting, and the best of good luck to them. I would not hold that against them for one minute. But the point I am making is that the great problem facing this whole country is that we must pay for our services. Unfortunately, Fine Gael and Labour are the only parties prepared to tell the people that and they are getting mighty little thanks for doing so. One of the benefits of this land tax is that at least the proceeds will go to local authorities. There is no doubt that local authorities have to be restructured in terms of finance. That is a very positive benefit.

A point has been made about a farmer's number of dependants. Deputy O'Kennedy cited the single farmer as against the farmer with six children and I appreciate that point. First, the man with more dependants gets a much better deal from the State. I am not saying that that is a good tax point, but if you are married, with six children, you get children's allowances and educational and health services that the single man never requires. Secondly, in January of next year the children benefit scheme will have particular unique benefits for farmers with under 80 adjusted acres. The more children they have, the more they will benefit. There is a reorganisation of the child benefit scheme. Whereas on the social welfare side some of the children's allowances and dependants' allowances have been cut, on the other taxable. If dren's allowances have been taxable. If you are not taxable according to income and are on a national system, you will be able to obtain all the benefits of the new child benefit scheme. This applies to farmers with under 80 adjusted acres. I maintain that the only way that you can get over injustice is to have a single mechanism and if someone can produce a certificate stating that he or she has a nil tax liability, surely no other sector can complain. If people say that they are stony broke, they should not be expected to pay tax. Deputy O'Kennedy's point about family size would be relevant to the nil tax liability.

There are some queries that I should like the Minister to clarify when concluding on Second Stage. These are relevant to the levies, health, youth employment and 1 per cent. As long as that situation remains unclarified, you can rest assured that it will be more difficult to sell the farm tax because it will be construed as being £13 an acre instead of £10.

There has been a difficulty in the past few years regarding the gross and net amount on which the levies are calculated. Farmers have not been allowed to claim capital allowances and they have been assessed on an income that they do not have. If a farmer has 40 calves which he eventually sells as 40 bullocks and makes £200 a head on paper and if he buys a tractor costing £8,000, he cannot write off that tractor against the levies. Farmers are being asked to pay levies which are assessed on income that they do not possess. I accept that borrowings have been allowed for the calculation of levies but that does not solve the problem. I and other backbenchers have spoken to various Ministers about this matter. There are two issues that must be determined: first, what will be the future operation of the levies and, secondly, in making the rearrangements the issue of gross and net income must be clarified. I hope the Minister will clear the air on that point.

In respect of land tax for farmers with less than 80 adjusted acres there is a major problem for people involved in the agri-business. In the budget, VAT was increased from 5 to 10 per cent for agricultural contractors. Because 92 per cent of farmers will not have to keep accounts these contractors fear that the business will go to those in the black economy because farmers cannot afford to go to registered agricultural contractors. There are many such cases of people in the silage cutting business, in the ploughing business and in the corn sowing business. They have told me that when they are registered for VAT and when they charge the rate at 10 per cent they get less for themselves. A farmer's son who is not registered for VAT and who operates in the black economy can charge less and still get more for himself than the registered operator. As farmers will not have to keep accounts that difficulty will increases and it will apply throughout the agri-business sector. Because we are taking people out of the accounts net, registered operators in the agri-business sector will be hit severely by the black economy. I should like to know from the Minister if there is any way around that problem.

For farmers with less than 80 adjusted acres, what is the position with regard to their entitlement to higher education grants, medical cards and other meanstested benefits? What will be the position in this regard if we do not have figures for such farmers? Because they have less than 80 adjusted acres, will they be deemed to have a national income of less than £7,000 a year? Will it be that a certain number of adjusted acres will be the threshold figure? There can be a great variation between the earnings of a dairy farmer on 62 adjusted acres and a dry stock farmer with the same acreage. This whole area must be clarified.

I understand that delayed payments of the tax will be liable to interest charges. If a farmer pays the tax, subsequently appeals the adjustment of the acreage and wins his case, will the refund of land tax carry an interest charge? If there is an overpayment in respect of corporation profits tax, interest payments are paid by the Revenue Commissioners to the company concerned. I appreciate that there are no interest charges in respect of VAT and income tax rebates. If it will take such a long time to make the necessary adjustments and appeals, as Deputy O'Kennedy said, one can realise there will be a lengthy period during which the money will have been paid.

This matter is of considerable interest in County Wexford. During the PLV rates campaign some people paid the rates while supporting the IFA campaign, while others refused to pay. I and others who paid are right suckers because the other people won the case and apparently they do not have to pay. There is no refund to those who were honest enough to pay. In that case it did not pay for farmers to be honest. The same situation will apply in respect of water rates if there is backtracking on that. What happens is that dishonest people end up looking smart and clever. The whole business is most unfair. What is the position with regard to the people who paid rates prior to their abolition but while the constitutional case was pending? A number of these people feel downright foolish. I do not know what is the right thing to do, whether people should get a refund or whether others should pay. I simply point out that the discrepancy is there and I hope it does not recur in this case.

I say to the farmers and those who represent them that it may be the case that the tail is wagging the dog. I do not know. Fine Gael are a national, broadlybased party with many urban Deputies. I think that when the Government consider this matter there is a consensus against farmers based on misinformation. People believe farmers are getting away with murder, that they are paying nothing. That is totally untrue and unfair. The unions have a lot to answer for in that regard because they have whipped up feeling. However, the farming organisations also have a lot to answer for because they have given the impression, rightly or wrongly, that the bottom line is "We are not going to pay". They tell me privately that is not so, but the impression is given and that is the important point. I ask farmers and the farming organisations to be mindful of this in their stance from now onwards. Like many other people, since 1969 they have played their part in ensuring that every Government have got the boot from the electorate. I do not think the country has gained a lot by it. There have been sufficient farmers, taxpayers or people who are unemployed to throw out whoever was in Government whether after a period of six months or five years. There is a lesson to be learned from that.

If I was a farmer I would not take too much solace from Deputy O'Kennedy's speech. He is riding the horse of Peter Cassells every bit as much as he is riding the horse of Joe Rea. He said that the unions were right and that there would be common marches against this tax, but he is not telling the truth. The truth is that the ICTU want land tax and income tax paid above and below 80 acres. The IFA do not want that. They just want the accounts system. For Deputy O'Kennedy or Fianna Fáil to pretend that they will repeal this tax and the fact that they are making such play out of the ICTU factor suggests that this promise will turn out to be like so many promises made by every party when in Opposition. The farmers best bet is through rural Deputies who are genuinely aware of their problems and anxious to ensure that there is equity and fair play in society.

Apart from the begining and end of his speech, Deputy Yates confirmed everything Deputy O'Kennedy said about this legislation. He showed his utter frustration with the manner in which this legislation was brought in and his almost contempt for the way in which the advice which he and many other backbenchers had given to the Government was rejected. Above all else, his speech was an endorsement of what Deputy O'Kennedy said — that there must be equity in any taxation system.

This is panic legislation designed to take money from farmers regardless of their ability to pay. It has already received the thumbs down sign. Unless the Government take heed of the suggestions made it will create more difficulty between farmers and PAYE workers.

Deputy O'Kennedy dealt with the particulars of the Bill in great length, the anomalies, difficulties, dangers and the various pitfalls which the adjusters will have to take account of. In his speech the Minister spoke about the fact that somewhat similar proposals were put forward by the current President of the IFA in 1979. Like the President of the IFA, the Taoiseach, the Minister for Finance and the Labour Party have changed their stance. In their policy document dated November 1982, prior to the election, it was stated that all farmers with a taxable income should pay tax and health contributions, that that should be the central core of any taxation system. If one has a taxable income one should pay tax on it.

The Taoiseach changed his mind on a number of occasions, but that is nothing new. In an interview in Magill in July 1979 he stated he was convinced that the inequities to which such a levy would give rise would offset the benefits that would accure and the proposal was rejected in favour of a straightforward tax on farmers. He also said that farmers should be taxed on the basis of accounts on the same basis as any other business. That is fair comment. However, this measure does not propose to do that.

The Minister said taxation was a necessary if unpopular support of all organised societies. It is, but he left out the important words "just and equitable taxation". This legislation is neither just nor equitable. In his speech Deputy Yates raised the question of justice and equity, and this them ran through his contribution.

What did the Minister mean when he said that the income tax system is already bearing a disproportionately large burden of overall taxation effort and that, like other progressive administrations, we should try to develop a better balanced spread of taxes? I can see the broad outline of that, but will the Minister be letting people who should be paying income tax off the hook as a result of the provisions of this Bill? As a result of the inequities in the Bill some people will pay less tax than they should, and that a lot correct.

The issue of farm accounts has been raised. I know many farmers, particularly young farmers, who keep accounts as a matter of form because they see farming as a business and accounts must be kept in all businesses. There is little point in a farmer carrying on an enterprise if at the end of the day it does not show a profit. Young farmers are keeping accounts so the argument that it would be of help to farmers not to keep accounts are facetious. If farmers do not keep accounts they will be in severe difficulty. If would be pointless for them to continue losing money on a particular enterprise. In his speech the Minister said:

I should mention though that it is envisaged that there will be adjustments in the amounts of the grants in relief of rates by reference to the revenue from the farm tax.

What the Minister is talking about is reducing the amounts from central funds in relation to the yields from the farm tax.

Deputy Yates said that in certain areas in Wexford people who are receiving home assistance will have to pay this tax. In many areas along the western seaboard the Department of Social Welfare will be paying unemployment assistance to many people while at the same time these people will be assessed for this tax. I do not see any equity in that. One must contrast the manner in which this tax has been introduced with the manner in which the property tax was introduced. There was no income level. Is it correct that a person with 25 adjusted acres will pay £250 in 1986? Is it £10 an acre for the whole 25 acres? This is another point that was glossed over during the election campaign.

There could be a situation in which farmers in receipt of unemployment assistance would also be liable to pay tax. In the case of the property tax a person would need to be earning £20,000 per year and have a house valued at more than £60,000 before liable for that tax, but in this case everyone with more than 25 adjusted acres will be liable to the land tax regardless of income. One must ask why this is being done. Perhaps in certain constituencies, especially in Dublin, there are many more people, some of whom are supporters of the Government, who would be paying property tax if it had been introduced on a proper basis or if it had been introduced in the way in which this land tax is being introduced than would be the case in the entire western region in relation to land tax.

Throughout the Minister's speech there is the approach that almost begs the question of whether we are on the way to the reintroduction of rates on houses. If this is the case, the Government should be honest enough to say so. Instead, they are indulging in the charade of trying to convince people that a great job is being done in terms of reducing the balance of payments and reducing borrowing while at the same time charges are being transferred to many people by way of water and other service charges, charges which would be met normally by way of general taxation. Under this legislation many farmers who should not have to pay tax will be asked to do so.

One must ask how adjusted acres are to be determined. The Minister referred in his speech to defining an adjusted acre as an area of land having the equivalent production potential of one acre of the best land in the country in ideal growing conditions. Deputy O'Kennedy went into that matter extensively but we still have to hear of how this will work in practice. Every acre of land will have to be tested. In many cases even areas as small as roods will have to be tested because, as the Minister will be aware, the difference in soil in parts of the same field can be extraordinary. Therefore, one cannot visualise the procedure being completed before 1986, even taking into account the Minister's statement that the larger farms will be dealt with first. This major task will be beyond the capacity of the limited number of people who will be assigned to it. We are told that these will number 200, that half of them will be officers from the Land Commission while the remainder will be recruited on a temporary basis for this purpose. I understand that recruitment is being undertaken at present.

Deputy O'Kennedy has outlined fully the problems that could arise later in the event of the determination of adjusted acres being appealed by individual farmers. As I do not have confidence in that area, I shall not speculate on it; but obviously there will be involved a legal bonanza for the legal profession.

There will be a very elaborate procedure involved in the whole system of appeals. First a farm tax commissioner would determine an adjusted acre, then the farm tax tribunal would be involved and subsequently the High Court. This procedure will in many cases leave the courts, and particularly the High Court, inundated with appeals, and this is despite the fact that already they are years behind in hearing some cases.

There is the fear — and since this was referred to by Deputy Yates it is obviously a fear that is being experienced throughout the country — that what we are experiencing here is similar to what we witnessed in relation to the introduction of VAT, that is, that when the Minister for Finance needs more money he will talk to the Minister for the Environment and that instead of a tax of £10 per acre there will be a farm tax of £13 or perhaps £15 per acre. The Minister has indicated that he is prepared to consider amendments, but as the Bill stands the rate of tax is to be prescribed by the Minister for the Environment. Section 9 provides for the levying annually of a farm tax. Therefore, unless safeguards are provided, the Minister of the day will be empowered to apply whatever rate he considers appropriate. That is not a correct approach. I have no doubt but that the Bill will become law and that it will be in operation at least until the next general election.

Deputy Yates made a very valid point in relation to the question of interest. I too, should like to know whether interest will apply in the other direction also because it seems likely that in many of the cases of appeals, the liability will be reduced. In other words, will those farmers who are successful in their appeals have returned to them not only the additional tax they have paid but also the interest on that money?

Deputy Yates referred to the proposal to display in Garda stations details of the liabilities of individuals. Tax is a very private matter. To have a farmer's or anybody's liability displayed on a notice on a wall is wrong. What such notice will not show is that farmer could have paid his tax. Many people will misrepresent such notices and will simply read what is there, that farmer A, B or C owes so much, while that tax could well have been paid. The Minister should closely examine that obnoxious section to ascertain whether it can be changed.

Deputy Yates said we are very jealous people. I do not fully agree with that. At the same time if a farm labourer is paying, say, £800 or £900 in income tax himself and sees that his employer is liable to only £300 or £400, he is unlikely to be happy about that situation.

With regard to rates on business, a manager has the power not only to postpone them but to waive them completely, which does not appear to be the situation in relation to farm tax. The hardship in many cases mentioned by Deputy Yates will render it almost impossible for certain land to be sold. For instance, let us suppose there are 25 adjusted acres to be sold on which there are a couple of thousands of pounds due in land tax. Such arrears would render the sale of that land much more difficult. It makes the whole system of buying and selling that much more difficult. One might well question whether power should evolve on the manager not alone to postpone but to waive the payment of tax altogether.

Like Deputy O'Kennedy, I feel that the length of time entailed in bringing this tax into being has been underestimated. For instance, the Minister has less than a year to have the various adjustments effected and I presume he will do so in relation to all of the rating authorities, not just picking a couple of counties, and will have all of the larger farms rated. I presume he is talking about land of between 60 and 80 adjusted acres, to have all of that land rated in all local authority areas. It is a mammoth task and one I do not honestly believe the Minister will be able to fulfil. Indeed, that will give rise to even more inequity in that some people will be paying land tax in 1986 while others who may be sited adjacent to them may not be paying tax although they have a larger income. Is it envisaged that 1986 will be the commencement year? Is it envisaged that in 1987, if a smaller farmer was assessed, he would have to pay two years tax, or will it be applicable from the year of assessment only?

This is not a good Bill. Its provisions will levy a form of tax on the farming community which is wrong and which I believe the Minister and his party believe to be wrong. I believe that what they are endeavouring to do is get more money from the farming community. That is not something I would oppose. But it should be levied on the basis of ability to pay, on the basis of income and, if that is done, then there can be seen to be some sense in it. As the Minister himself said:

I believe that the Bill will ensure a more realistic contribution from the farming community to the provision of local services and that this will be achieved in a manner which involves no disincentive to agricultural production.

I believe it is wrong to say that we need so much money from any sector of the community, that we will get it by means of imposing a levy or a tax that does not take into account one's ability to pay. Certainly, the provisions of this Bill do not appear to take into account the very many hardship cases that would be involved, which are so varied, many of which were mentioned by Deputy Yates, such as problems occasioned by disease, borrowing and many other factors.

In the joint Programme for Government, in the chapter on taxation, it was said that in drawing up new tax proposals account will be taken of the cost of the care of dependent children. That has not been covered under the provisions of this Bill. The Minister for Finance on the introduction of the 1983 Budget said that public perception of tax equity demands that all income earners shall be liable for tax on an equal footing. There has not been such recognition in this Bill and there are many more examples that could be cited.

When one talks to accountants, the point made by Deputy Yates is one that is put across very forcibly, that is, the relief given to farmers, which has now reached saturation point in many cases in relation to capital expenditure. It means that in 1986 the yield from income tax on farmers will be approximately doubled. That is a figure that most accountants contend to be a reasonably true estimate and that in itself will give the Government the return from the farming community they seek.

The Minister should forget about this tax and devise a system under which farmers and everybody else will pay equitably. The Minister should not implement a system that has already divided the farming community and caused further division between urban and rural inhabitants, in many cases because of a lack of understanding of the position.

Deputy Prendergast and then Deputy Blaney.

A Leas-Cheann Comhairle, I have been here since 11 o'clock and I was given the nod by the Chair when the last speaker was called.

It is Deputy Prendergast and then Deputy Blaney.

With all due respect, the Deputy came in since I have been in the House.

Sorry, I was here before Deputy Blaney this morning.

But where was the Deputy for the two hours I was here before he came back in?

He offered at 11 o'clock.

I advised the Whips' office yesterday.

I could have offered yesterday. I understood the rotation was one, one, one, and one.

It is one and one, and you are included on that side, Deputy.

No, there were the Minister, Deputy O'Kennedy, Deputy Yates, now Deputy Calleary and we are back here again.

What is?

That the Deputy is a Member of an Opposition party and it is from the Government to an Opposition party.

I am not a member of an Opposition party.

You are not a member of the Government party.

I am certainly not a member of the Government party but I am entitled to be called after four speakers.

Deputy Prendergast is next and then the Deputy is being called afterwards.

The Ceann Comhairle indicated otherwise when Deputy Calleary got up.

The Chair has ruled that Deputy Prendergast is next and Deputy Blaney will follow.

I will not be following at this rate.

My valuable time is being taken by this, with all due respects to Deputy Blaney.

Anything I say is not in a farmer bashing context. I have stated my position many times on public platforms and again more recently at a meeting of the IFA in the Dunraven Arms Hotel in Limerick some months ago before the local elections. Labour Party policy on this question of taxation and farmer taxation is that we accept that there are many thousands of small farming families who acording to the Foras Talúntais survey are not in a position to pay tax. The same applies in the urban sectors. We maintain that anybody who cannot pay tax should not be liable for tax. The Land Commission should have been retained as a fair instrument that had credibility with a lot of people. It should not have been done away with. It could have been used effectively in the type of exercise that is under way. We have always supported the concept of small farms, going back to the old days even before the Labour Party was founded. We had our origin in the Land and Labour League set up by Davitt, Parnell and others. Many of our traditional supporters in east Limerick, west Clare and south Tipperary are an historic residue of that land and labour movement. It is our policy that the land should hold as many farming families as possible and we totally oppose the concept of big ranch type agricultural outfits. We recognise that our agriculture is probably the most under-capitalised in Europe. It should be brought up to the most modern requirements. Having said that, we go on to say that something will have to be done about taxation.

I was at a function as Mayor of Limerick some months ago when Dr. Miriam Hederman-O'Brien, the distinguished chairwoman of the Commission on Taxation, was speaking. She reiterated what she said in London last year: that, if something was not done soon to introduce equity to the Irish taxation system, there will be a revolt. At the first meeting of the Parliamentary Labour Party when I was elected to this House I said that the most urgent job for this Government was to introduce equity into the taxation system. Unemployment is a major social problem giving rise to many social ills, but it has not yet become a major political problem. Taxation is a major political problem. That has been reflected in the local elections last week. What amazes me is that anyone would profess surprise at what has happened. People predicted long ago that this would be the situation. The urban backlash against the imposition of water rates is merely a reflection of the resentment of the industrial sector at what is happening in the area of taxation. It is important to remember this. I invite my friends on the opposite side of the House to reflect on this. "Ní thig leis an gobadán an dá thrá á fhreastal"—"The waterhen cannot watch the two sides of the stream." One cannot ride two horses on this issue. This is the foremost political problem and it is gathering speed.

When we assumed responsibility for our own affairs in 1922 eighty out of every 100 people lived on the land. The Irish were never an urban society. At that time only one out of every five lived in cities. In another short 15 years the exact opposite will be the case where four out of five people will be living in the towns and cities. This is happening throughout western society due to increasing mechanisation where those societies have moved from blue collar to white collar status as defined by Alvin Toffler in his book Future Shock. That concentration of people in urban areas requires services and these will have to be paid for. I was amused if not intrigued by my colleague, Deputy Ivan Yates, talking about the need for greater sensitivity in dealing with farm taxation. I wish somebody would show the same solicitude for the PAYE sector, who are paying taxation under four distinct and definite headings.

I told an IFA meeting at the Dunraven Arms Hotel some months ago — and our friend Joe Rea was present — that if the farmers of today are not prepared to pay their share their sons will pay the political price long before they think they will, and they will be glad to pay it. All the political energies of the people in the last century were directed against the landlords and towards securing a return of the land to the people. Under various Acts around 1903 the land came back to our people, but we have the same fossilised mentality among the farming community that they displayed in the last century — this idea about "Talamh gan cíos as seo amach agaibh"— from now on we do not pay any rent on the land. That land belongs to the people of Ireland, and Seán Ó Faoláin pointed out in his book The Irish that the lowing of cattle is the leitmotiv of Irish history. Land will always be the problem, but they will have to pay their fair share.

There was blackguardism going on in some farming organisations — and I am using that word advisedly notably in the IFA. In spite of what he thinks he is doing, Mr. Joe Rea, speaking from just below the hip, is the best friend the Irish trade union movement ever had. If John Carroll of the Transport Union, or Bill Attlee of the FWUI, or Matt Merigan of the ATGWU, made the kind of emotive statements that he is making they would be denounced as people sowing the seeds of social revolution and dissension. Joe, like Ian Paisley, might be more of a help to his opponents than he intends to be and he would want to take note of it. Somebody referred to the IFA campaign against the constitutionality of the Griffith PLV of 1850 and 1851. That was not conducted by the IFA as a body, but five of them upfronted it.

When we paid rates at that time the position was this —and I have these figures from top officials of the Department. I will state them now and I defy anyone to challenge me. If I am wrong in these figures I will be delighted to be corrected. Before the rural agricultural rates were deemed unconstitutional, out of every 100 farmers in this country 94 paid no rates, only 3 per cent paid 50 per cent of what they were liable for and only three farmers out of every 100 paid their full liability. During that time people could come into the county councils, as they did in Limerick, and look for higher education grants. When the official told such a farmer that he was not paying rates he would say that he was liable to pay rates although he was not paying them. That was social rebellion on advice from the leaders of their organisation. The official would go out to check with the higher authorities and would have to come back and admit in a crestfallen manner that our friend was right that, although he was not paying rates, because he was liable in law he could get a higher education grant. How many workers in the PAYE sector would get that entitlement to the grant?

Deputy Yates expressed concern for his people. What about County Limerick where a farmer with nearly 200 acres and about 90 cattle could nominally sign the land over to the son and present himself at the regional hospital in Limerick with a blue card for treatment there while he had more land and wealth than some of the big business in Limerick city? The ordinary fellow working for 40 years with a company like CIE is taxed on his couple of bob pension and cannot get what that farmer gets. Mr. Joe Rea is doing this nation a service. Anyone who knows me knows that I am not given to colorful or emotive language. Mr. Rea is heading up a situation and the ICTU have made their position known. Deputy Yates referred to a possible recurrence of marches. We have gone beyond the stage of marches, and I have spoken at every tax campaign in this country. I welcome what Mr. Joe Rea is saying. He urged the farmers to barricade and stampede the Fine Gael clinics. Nobody took up the challenge and told the workers to stampede the Fine Gael clinics and put their point of view.

I welcome at least one convert in that, however belated. The ICTU have a magnificent record. They have never adopted political strikes here, in sharp contradistinction to what has happened in other countries. They have never had political strikes on party lines. If this campaign by the IFA led by Mr. Joe Rea continues to its logical conclusion the ICTU will have to give serious consideration to taking on full belt all Governments and following the lines set by the workers in Waterford Glass last year: let us have a full stop and bring the economy to a halt, because no country can operate without the trade union movement.

Not alone are the PAYE workers being savagely treated; they are being bled white by the unfairness of this present system. They are paying more than 87p out of every £ in taxation, and the farmers are paying less than 2p in the £. At the same time the farmers are getting handouts, roads, education. Let me give some recent figures from the Minister for Education's Estimate. Every child in a primary school is subsidised to the extent of £550 per year. A child at secondary school is subsidised to the extent of £1,000 per year. In a third level institute, depending on where it is, the subsidy is £2,500 to £5,000 per year. Therefore, a farmer, his wife and four children, one in a primary school, two in a secondary school and one at third level, are getting an annual subsidy of £6,000. Multiply that by the years that they receive it. Yet they do not want to pay a fair contribution.

Let us call a spade a spade. They are finding every device for moving away from the system. The only answer to that is to introduce a fair system or make us all farmers and give us all the same benefits that they are getting. The ICTU said yesterday that they welcome this absolutely minimal step in the direction of equity as compensation and replacement for the abolition of the PLV system in rural areas. Suppose the Supreme Court had found that the PAYE system was unconstitutional. Be sure that this House, this Government or any Government would find an adequate substitute in a very short time, which has never happened in the case of the farmers. The workers are all watching this. Take a simple example under the proposed scheme. This morning's Irish Times reports that the ICTU issued a document yesterday which stated that a farmer with £10,000 based on 75 acres will pay about 7.5 per cent of that money. A single man PAYE worker with the same income would pay £2,900. That is 29 per cent. A married couple with two children on the same income with one person earning would pay £1,800, 18 per cent. The inequity there is obvious. The ICTU are saying that the Supreme Court did not rule against the principle of paying tax and rates on land but against the manner in which it was done. I am glad that this distinction has been made because it has never been made previously.

Again Fianna Fáil are trying to ride two horses. They scooped the political pool in 1977 when they abolished rates on domestic properties. It should be pointed out that the Coalition Government had two quarters or a half of that done away with already. In 1978, when Limerick Corporation were given an 11 per cent increase, we all screamed and held up our hands and applied to the then Minister for the Environment, Deputy Sylvester Barrett, and told him that that was not enough money to run Limerick city. He told us that he was giving us the same money as we had given ourselves last year and that when we were free to increase it we did not do so.

There is nothing wrong with saying that we could have made a mistake. Is it time to look at the question of bringing in some combination of a tax on general property side by side with income tax? Last week during my canvass I visited houses in my ward that would fit comfortably into the upper class belt of any country in Europe or America where one would expect such wealth. Their gardens were like many public parks so well kept were they. I complimented one professional man — I would like to take anyone to his door — on how beautifully his garden was maintained and he told me that he had three houses to maintain. That man, on the valuation of his house in 1977, would be paying somewhere in the region of £3,000 on those houses. That is the tax on wealth. All he will pay to Limerick city this year is £50 water rates.

Who would change that? I have seen millionaries, former Members of this House, who when they heard about the water rates took out their cheque books, made out cheques for £50 and said that otherwise they would be paying £1,000 rates on their houses. I am not talking about the white man's approach to the Indian, like we heard from Fianna Fáil — speaking from two different sides of the mouth. If we are at all serious it is about time we took a look at it. We spoke about sensitive issues like divorce — Deputies know my views on that — being dealt with on an all party basis. The most sophisticated people are the electorate and they can play political groups off magnificently one against the other, whether they do it subtly or in the bullying fashion we have seen from the IFA recently. If we are to do something out of a patriotic sense of duty to the future of the nation and our young children, I suggest to the House that it is very timely to set up an all-party committee, taking account of the political dimension as well as the financial side of it, to look at the whole question of taxation. There are two sides to taxation. There is equity and yield.

I should like to refer to a paper by Mr. Liam Coughlan, a graduate of NIHE Limerick, who is now a lecture in taxation with Limerick city VEC. He speaks about equity and the need for it. He questions the equity and rationale of excluding certain types of income from normal personal taxation. However, laudable this might have been in times gone by, when one talks about artists, authors and inventors, the fact is that the more people who are taken out of the system the more unfair it becomes for those who are left to pay the piper. His proposals are absolutely pertinent to the situation we are facing. He wrote a thesis on taxation in Ireland and pointed out where reform is needed and how it could be brought about. He makes two very good points, which are:

(1) setting up of a Government Oireachtas Committee to report back within the year with a tax reform package which would include many of the recommendations of the Commission on Taxation. This package would be designed to yield the same or higher levels of revenue. Major structural changes are needed urgently and the Government should act as soon as possible.

(2) tightening up of controls on State spending, elimination of abuses and wastages in Government Departments and especially in the area of capital expenditure.

He makes another point, which is:

That consideration be given to the idea of self-assessment for the self-employed.

He goes on to make other points on that. I believe it is very timely, because a major political earthquake is looming up if we do not do something about it.

I want to quote from a submission made to the Government by the Consultative Committee of Accountancy Bodies in Ireland, their pre-budget submission for 1984. Speaking about the black economy, they said to the Minister for Finance:

One of the results of the penal system of personal tax at present in force is the existence of the "black economy" and related tax evasion. A great deal of effort is undertaken by tax evaders to generate income outside the normal tax net; indeed some go to extreme lengths to evade tax who would not be liable for tax in fact. The activities of the "black economy" has, without doubt, undermined the competitiveness of those business who comply fully with their obligations under the Tax Acts. The solution to this problem lives for the most part in the return to a simpler and fairer regime of personal tax...

I am a trade union official by instinct and outlook, and one cannot change what one is. I have often stood up here and attacked Ministers for their tradiness. Every Government in the history of the State have funked the farmers on the question of taxation. I use that word in its most pejorative and insulting sense. The IFA are only the same size as my union with 170,000 members. We have only to look at the way they have bullied and kicked every Government about in relation to the whole question of taxation. We have stood up here and correctly lambasted the professional people for what they are doing. I invite the accountants and respectable professions like them to look at their record in assisting these people who can afford to pay consultants to tell them how to evade taxation.

We all know cases in our areas where members of the various professions can go to auctions and pay £5,000 in notes for antiques rather than pay cheques and have them on record. We all know what is going on. That system has to stop. What is being proposed is only a pathetic gesture along that road. As far as the trade union movement are concerned, we criticise industry and we often hear from the more extreme elements on the other side of the House what should be done to companies who do not pay their taxation. I weep at the concern expressed by Deputy Yates for some of the farmers who might not be able to pay up. Some person should do a quick exercise, such as I heard of recently in one of the south-eastern counties when speaking to some of the higher local authorities there, to check out where all the new car registrations are coming from. If this is done it will not be found it is the PAYE sector.

I ask for the same solicitude for small companies. I know a man who came back from abroad after being engaged in the textile industry. He opened a factory in a small town on the west coast where the only public buildings were the public toilet and the Garda station. There was no traditional industry in that area. This man employed 40 young people. He was in the CMT, the cut, make and trim business. It is a very hazardous type of business, because you can be screwed by the multinational companies and the big chain stores, who can say: "We can get a pair of slacks for £3.50, we want you to come in at £3." This man was working on a very small margin all the time. He was not avoiding paying tax. He brought down the officials of my union and the experts and asked them to look at his problem. He said he would pay the tax increases and told the tax people what he was looking for. He wanted time to pay them the money that he admitted he owed them. He was told he would get one and a half years to pay. He said he could not do it, that he would want there years to do it. He said he would pay it bit by bit as he went along. He has now declared himself insolvent and 40 jobs are gone. I heard the same thing about another person in Wicklow, where 120 jobs were lost. This might be a more realistic area to show solicitude.

I would like quickly to take up some of the points made in the debate this morning. A Deputy said that there was a nil liability shown for tax liability. Does that apply to a farmer who has 18 acres and four brood mares and who pays nothing? He is not liable for tax but he might have £100,000 between the four brood mares. Would the Minister say that man is not liable for tax and that he might get away with it?

I would like to refer to some of the blackguarding going on — I heard this from the other side of the House — and asking why the system of income tax was not left as it was. Farmers have told me that before Ranks closed Limerick they were selling wheat to that firm and were buying it back cheaper under an EC subvention. They were selling it back again at the same high price until the officials in the Department of Agriculture spotted it, came down and had to dye the wheat blue so that they could stop what was going on. We had a situation whereby they could declare under the income tax system that they had so many aborted calves last year and they could fool the taxation system. We know what went on in the switching of tags in relation to the TB eradication scheme. That is the kind of system under which it is proposed to introduce some equity. I give it the least possible welcome. It is a minimal and pathetic step in the direction of equitable taxation. Unless something is done by the authorities about tax equity the workers will not put up with it and I will be full square behind them.

I wish to speak on this Bill.

Debate adjourned.
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