Vol. 360 No. 6
I move amendment No. 3.
In page 7, subsection (2), line 2, before "apportion", to insert ", after consultation with the Commissioner".
The commissioner, for whom provision is made in the Bill, will gather information about the occupation of holdings when he is compiling the classification lists. This amendment gives local authorities access to such information when they are deciding on how to apportion holdings under section 3(2) of the Bill.
Normally, we would have spent a considerable time in discussing this amendment. However, in view of the fact that we are constrained with regard to time and that the Minister will not agree to postponing further discussion we will let this amendment go through although not with our agreement.
With regard to amendment No. 4 I should like to point out that amendments Nos. 38 and 39 are related and amendments Nos. 4, 38 and 39 may be debated together.
I move amendment No. 4:
4. In page 7, subsection (2), line 8, to delete "in which" and substitute "for which".
This brings the wording in section 3(2) into line with other amendments being made, in particular in section 9, to provide for the tax to be for each year.
I suggest that the Minister simply move the amendments. We do not need an explanation.
I move amendment No. 5:
5. In page 7, subsection (2), lines 9 and 10, to delete "demanded after the receipt by those occupiers of such notice" and substitute ", after the receipt by those occupiers of such notice, demanded".
Amendment No. 6 has been ruled out of order.
We are now dealing with what is called a taxable farm. It should be noted that as a consequence of the Minister's amendment this morning — I am glad there are two Labour Deputies present to hear this — all intensive farm activity whether it is pig breeding, the intensive husbandry in certain parts of the north of this county or poultry activity, a farm of under 20 adjusted acres will now be totally exempt from any tax.
No, from farm tax.
They are under 20 adjusted acres by definition of the amendment the Minister introduced today. A taxable farm, according to section 3——
For farm tax.
But income tax cannot apply to a farm under 20 adjusted acres.
That is not the case.
That is the reality. The section states that a taxable farm means an agricultural land holding listed in the classification list and the adjusted acreage of which is not less than 20 adjusted acres. That clearly means that the activities I have mentioned under 20 adjusted acres are not taxable farms. It appears that the Labour Party were not consulted about that amendment.
I should like to make another point in terms of the inequity of this taxable farm notion. We are dealing with adjusted acreage and that is the only criterion. I should like to make a point that demonstrates the nonsense of this tax. Certain dairy farms which over the years have been used for dairying activity were not engaged in that activity for various reasons in the last two years, but whoever purchases that land will not and cannot get a dairy quota to engage in diarying activity. Does the Minister not recognise the total inequity of considering such land in the same way as land with a dairying quota. Will the Minister now acknowledge that that is an example of the arrant nonsense and injustice that will arise as a consequence of this piece of total nonsense?
Under the section adjusted acreage of less than 20 adjusted acres will be excluded but surely that will result in some terrible anomalies. There could be a very successful bloodstock farmer with less than 20 adjusted acres in County Kildare making, as some of them are, in the region of £100,000 per year. Under this section such a person will not be paying land tax or income tax although a farmer down the road with 50 adjusted acres who may be up to his hocks in debt and so on will be liable for land tax. He would not be paying income tax if this legislation had not been brought in.
Farmers may have been fooled by this. A number of farmers will be pleased with this legislation because they will be paying less under farm tax than they are paying under income tax. Those with under 20 adjusted acres will not have to pay land tax or income tax and those with more than 80 adjusted acres will not have to pay any more tax because their land tax will be a credit against their income tax. Therefore, in order to get from the £32 million now being collected from farmers to the £70 million farmers in the 20 to 80 adjusted acre group will have to pay the extra money. Some will pay less while others will pay more. Those liable may not be paying tax at present and that is what is wrong about the principle.
How is it intended to collect levies from farmers from now on? There has been a lot of confusion about those levies in recent years and it is only in the tax year 1984-85 that the the levies are being collected by the Collector General. Up to now the health boards were liable for the collection. Now that we are doing away with accounts for a big number of farmers we will not know their income. Will the levies be based on the adjusted acres? The Minister should clarify the position.
I should like to raise a question in regard to those with other incomes such as outside employment or a case 3 source, investment income. Before the local elections I read in an advertisement in a Sunday newspaper a reply to the point raised by the IFA about what would happen to people with other income. The Government's statement was that people with other income would have to pay farm tax, they would not get out. It will be difficult to devise a provision to put that into effect. Will a farmer who has £100 on deposit or who at the end of his harvest puts money on deposit be liable for income tax?
I suggest that the figure of 20 adjusted acres is very low. I understand that marginal relief will be extended to 24 acres. However, the Minister should consider raising the figure of 20 adjusted acres. I cannot see anybody surviving on 20 adjusted acres or less. I am sorry the minimum figure is not 35 or 40 adjusted acres. Many people in my constituency, hard working farmers, are having great difficulty surviving on 35 to 45 acre farms. Even at this stage I appeal to the Minister to increase the figure to a minimum of 30 adjusted acres, or even 35 to 40 adjusted acres. In my view, the marginal relief should be extended beyond 24 acres to encompass additional allowances to many small farmers who are trying to raise families. The money we are speaking of can be of immense importance to small farmers. Again I ask the Minister to extend the acreage or if not at least to consider extending the marginal relief.
Rarely do I disagree with Deputy McCreevy but I want to contradict the notion that as a result of this land tax the farmers with farms between 20 and 80 adjusted acres will pay more. This is where the IFA and the Opposition propaganda succeeded in damaging this farm tax. Most of the small farmers to whom I have spoken with up to 80 acres are delighted with the land tax because they will know at the beginning of the year that they will have to pay £800 tax. They will not have to go to accountants and there will be no hassle. But a farmer with 500 acres who up to now could prove he was not liable for income tax, will have to pay £5,000 land tax, and rightly so. That is where most of the money will come from. There are mostly wealthy farmers in the Gallery this evening; there are very few small farmers there. They are the people who are calling meetings and saying no to the land tax. As yet no small farmer has come to me opposing it.
I would like to ask a few questions. The area where I was born is polluted with small farmers each with 14 Irish acres——
A nice term.
——I live beside the Gaeltacht — and to their credit, many of these people are making a good livelihood from the land. I am glad to see that people in my area would not be liable for tax.
I have my own opinion, as a Labour Deputy, about exempting 20 adjusted acres, and let me spell it out. Anybody who is farming full time should not be liable for income tax or land tax on the first 20 adjusted acres. But the person who has 18 or 19 acres set is not liable for land tax and he is not being pressed to utilise his land properly. A man in my constituency with 19 acres is not liable for land tax and can leave it idle if he wishes. He will pay neither income tax nor land tax on it. That is something the Minister should look at.
Second, if a person with 19 adjusted acres working in a Government job, which most of them seem to be, sets his land, say 20 acres at £100 an acre, getting £2,000 of an income, how will that be taxed? My third question is one about which I think Deputy O'Kennedy is wrong from the way the Minister is nodding his head.
I am not.
If a person with less than 20 acres involved in poultry or pigs is not paying land tax, will he be liable for income tax?
He will not.
I had an amendment down to delete section 3 but it was ruled out of order and I do not know why. The Bill specifies 20 adjusted acres as the threshold where the farm tax will begin. Section 3 destroys that base because it allows the Minister to change that at any time and to raise the threshold to 25, 30, 35 or even 80 adjusted acres. I asked the Minister to delete that section or at least amend it in such a way that if the Minister were to prescribe a larger threshold than 20 adjusted acres he would have to come back to this House to do so. This Bill gives carte blanche to any Minister for Finance to practically eliminate the land tax within the law simply by raising the threshold of land tax to whatever figure he likes. I ask the Minister to look at this again.
The Minister responsible for the Bill may feel this legislation gives him power to raise the threshold in exceptional cases while another Minister who is against the land tax could, without any change in legislation, destroy the effectiveness of the land tax by raising the threshold. If I am wrong I hope the Minister will explain the purpose of this section because if this Bill is to have any effect this section should be deleted.
I am against the tax exemption but that is not in this Bill. The Minister says the Government estimate that only 10 per cent of farmers, 15,000, will be liable to income tax when this Bill is passed. That would be an outrageous idea but the intention is that that would be covered in the budget. If that is true we will be back to the position which existed in 1977-78. At that time under the rates system only farmers with over £75 rateable valuation were assessable for income tax and rates on agricultural land. If the Minister goes ahead with this section, we will have an even worse situation because in 1977-78, 22,000 farmers were liable to income tax but next January only 15,000 farmers will be liable for income tax. I am totally against this exemption from income tax. I am sure Deputy O'Kennedy will agree, and when this matter is raised in January I hope he will oppose it.
As regards the land tax and the leasing of land, this is a new factor which it is hoped will lead to greater land mobility, and I am sure great efforts will be made to encourage farmers to lease land. I do not know what the current leasing rate is, but I was told the average price in 1983 or 1984 was in the region of £45 to £100 an acre.
It is £80 to £130.
The figure of £45 was the lowest figure, and the Land Commission were getting that price. For some reason they always seem to get the lowest price. Farmers are prepared to lease land at £100 an acre and still make money on it. If they were not making money they would not lease it. It is now being said in this House that farmers would not be able to pay the Government £10 an acre while other farmers can lease land at £100 an acre and still make a good profit and living out of it.
The purpose of the land tax has not been brought out by the Government. It was an attempt to replace the rates which were abolished because they were found to be unconstitutional, and this legislation is to ensure that this will not be unconstitutional. I do not know if it will be found so, but it was to replace rates. Basically, when it was being spoken about some years ago it was part of the land structure and land mobility effort that was coming through land leasing and greater incentives to people who were not working the land properly to get off it or lease it to people who would work it. The land tax was to be seen in that light, as an incentive to farmers to use their land. That has not been brought out at all in the Bill and is not being seen in the debate as a factor in needing a land tax. I see it as such.
Hear, hear.
I am supporting the Bill, but on this section I ask the Minister to look again at section 3. It will destroy the whole effectiveness of the Bill.
I genuinely think that the Government Members have very important things to say on this Bill. They are constructive things, but the Deputies are not going to get anything said in the next 20 minutes and would they please appeal to the Minister to allow the House time to discuss this legislation?
It would be better if the Deputy did not interrupt.
The Opposition's Whip is as anxious to complete it in a hurry, too. There are three brief points I should like to make. First, there is no reference to the 80 adjusted acres. I have a very genuine fear that if Fianna Fáil ever get into office this will be reduced to 60 acres. The benefits and incentives effects that Deputy Mac Giolla outlined for small farmers who are trying to move from a subsistence to a developmental level should be cemented into this Bill by this Minister, whom I can trust not to tamper with the threshold of 80 acres. I would ask him to review that aspect.
Secondly, as regards getting this system off the ground, it strikes me that one of the best ways one could do that would be through self-assessment. I do not know if this point was made earlier. There are many farmers who know their statute map acres and their adjusted acreage. They are reasonable farmers who want to operate this system. It would free much of the manpower and resources involved if people were in the first year allowed to operate self-assessment. The margin of error as opposed to the cash flow benefits would point to the fact that self-assessment would be beneficial. I ask the Minister to let us know his views on that.
Thirdly, as time is short perhaps the Minister would deal with the points which I made in detail on Second Stage relating to the hardship clauses. Different points have been made in different guises about numbers of dependants, different stages of development and so on. It looks as if we are not going to reach the hardship section.
If the Deputy persuades the Minister, we might.
Perhaps the Minister could clarify exactly how this will operate. In Wexford there has been friction over the fact that the PLV case was taken in that county involving the Wexford farmers. If the discretion is left to local authorities, it may cause difficulties. Perhaps the Minister could expand on that in his reply?
Could I ask the Minister just three questions to which he might reply later on? Am I correct in assuming that under section 2 of the Bill holdings as low as five statute acres could be classified as being 20 adjustable acres?
No.
Under section 2?
We are on section 3.
I know, but it is relevant to taxable farms. Secondly, if a taxable farm is deemed suitable for dairying but has no milk quota for it, will that farm be valued similarly to one with a milk quota? My third question is — who will pay the extra farm tax revenue?
The reference made in section 3 to the lower threshold is something to which the Minister could give further consideration. Looking again at the concept of a flat tax which is relevant to this section, to the previous section and a number of others that we will not be able to deal with at this stage, I would draw attention to the Farmers' Journal of May 12, 1979 in which is reported an exclusive interview by Des Maguire with Joe Rea, now president of the Irish Farmers' Association. I have great regard for Joe Rea and would in no way attempt to denigrate the man in this House, even though it would now appear that he is on a U-turn from what he was proposing then.
He is not the only one.
I believe that what he was then proposing was an honest attempt to try to achieve a measure of equity in the whole taxation of farming. Deputy Mac Giolla stated that there will be no income tax due from farmers. I do not accept that. This is an income tax package, no matter how you look at it.
(Limerick West): It is not a tax on income.
It is not a tax on resource.
(Limerick West): It is not a tax on income. It is a tax on property and resource.
It is a tax which is relative to the potential prosperity of an acre of ground, adjusted.
It is if you call that income tax.
Would the Deputy please permit me to continue? Time is running short and I shall try to be as brief as possible. On the question of the objective which Mr. Rea had in mind, he says in that article:
It must be the objective of IFA to ensure that the money is taken through a system that does least damage to the industry and especially the least damage to the farmer interested in intensification and increasing output.
In reply to a further question he said that the flat rate of tax he was proposing "is an ideal form of taxation because it rewards the farmer who works. Agriculture is the oil of this country and it is in everybody's interest to have a prosperous agriculture."
The concept of a flat rate of tax was clearly acceptable to him and was clearly being put. Obviously, a number of other people had agreed with him before he came into print on that very important issue. Section 2, which the House has passed, deals with a flat rate of tax on an adjusted acreage basis. I hope it will work to the advantage of the agricultural industry.
Deputy McCreevy said that in 1983 a sum of £32 million was taken from farmers. In 1979 it was projected that £100 million would be obtained by way of rates and farm taxation but in 1983 we got only £32 million from that sector. That is a very small level of taxation when one considers the high level of taxation the PAYE sector has to bear.
Mr. Rea stated:
One of the main attractions of the system which I am proposing is that it is very simple. When you find out what amount of tax is due, you divide that by the number of taxable acres in the country.
On that point I ask the Minister the projected number of taxable acres. How was the figure of £10 arrived at? I realise that the Minister cannot consider it in the context of this Bill but perhaps he could do so in a future Finance Bill. Mr. Rea said that the system would not be equitable if the personal position of farmers was not taken into consideration and that allowances must be made for married people and the number of children in family. I should like to think that could be accommodated. Mr. Rea suggested that could be done by exempting a certain number of adjusted acres. In this case it is 20 acres but perhaps the figure could be 30 acres.
That would be fair.
If that could be done it would alleviate many of the difficulties that have been in the minds of farmers in their opposition to this legislation.
The Deputy knows it is not in the Bill and he also knows that the Minister is not going to change his mind in the last 15 minutes.
It does not have to be in the Bill. The Deputy is a former Minister for Finance and I am sure he is aware it could be accommodated in a Finance Bill. If that is not correct let him tell me so.
This response from Mr. Rea arose from a paper on farming taxation published by Fianna Fáil in 1979. I am sure the Deputy had something worthwhile and interesting to say on it at the time but I was not a Member of the House then and I did not go to the trouble of checking what the Deputy said on that occasion. The late Mr. Colley was the then Minister for Finance and he took a lot of stick from the farming community. Perhaps we were not totally innocent in our opposition to what was then clearly seen as a resource tax that did not take account of the potential income of a farm of land. On that occasion Mr. Rea said:
My system must not be confused with the resource tax because one of the very fundamental elements in it is that the formula will be indexed at all times to farm income in the preceding year.
There is an amendment to that effect and consequently, it cannot be labelled a resource tax or a farm tax. I think it is linked to income and, consequently, it cannot be labelled other than an income tax. If there is any attempt to label it other than income tax we are not being honest with the PAYE sector and the ICTU——
This is the Farm Tax Bill.
Experience in the past number of years has been that there is very little tax to be derived from farmers who have between 30 and 80 acres. The level of take under the accounting system is exceedingly low. This system simplifies the matter. It eliminates the use of accountants and many farmers will appreciate that fact. I am sure they will accept it wholeheartedly. If I were proposing a system of taxation I would not have an upper threshold. I would develop a system along the lines discussed and proposed by Mr. Rea. He was confident then he could get his organisation to accept it. For the information of the House, the publication is the Irish Farmers Journal dated 12 May 1979.
The point has been raised that what is proposed here does not take account of certain exigencies within the farming sector. As I said this morning, the present system of taxation as it applies to certain farmers in a high risk area is undermining their confidence in the industry. It is leading to a point where they are barely ticking over because they want to avoid tax. Consequently, the economy suffers. The question of capital allowances was also discussed at that time by Mr. Rea he said——
On a point of order, we are dealing with the question of a taxable farm. While I am sure that what Mr. Rea had to say is of considerable interest, it is not relevant to section 3. If the Deputy wants to use the last few minutes quoting Mr. Rea I think it will invite certain comments from people. We have very little time left but yet the Deputy has chosen to go back on an interview given five years ago rather than dealing with something more relevant——
The Deputy has been doing the same thing himself.
I am sure the Chair would have called me to order if he thought I was moving outside my terms of reference. Deputy O'Kennedy spoke at length on this matter on Second Stage but I got no opportunity of making a contribution then. I have been here all morning. Under this system the farmer can develop and intensify. His tax bill will not increase and this gives him an enormous opportunity of using capital in the way he wishes rather than having to go to banks and pay bank interest and so on. The number of farmers who will be exempt is important. There is no mention of an upper threshold but there are a number of points the Minister could consider in a future Finance Bill that would help this Bill. Thus, the economy would benefit and a greater level of income would be obtained in a more simple way. Many criticisms have been put forward by the Opposition. It is amazing the way they change their colours when the occasion demands it. They do this in a chameleon-like fashion. They have done that and by that approach they have discredited the political scene.
That is not true. The Minister is the one who has changed course.
(Limerick West): In the interest of equity, would the Minister consider the concept of introducing an amendment which would allow for consideration to be given for certain domestic circumstances, such as illness and so on?
Exemptions in certain circumstances.
(Limerick West): The ICMSA in their discussions with the Minister demanded such a concession but it is not being granted. I note that there is no provision for appeals against tax demands. The appeals will be merely against the assessment of acreage adjustments. In hardship cases there will be provision for a suspension of the tax due but I am concerned the tax will be only suspended and not waived. I can envisage circumstances where a farmer for reasons of ill health or otherwise could reach retirement age with a millstone around his neck in terms of tax. The Minister should consider that aspect. I should like him to reply to those points.
I would be anxious that the base be extended beyond 20 adjusted acres. Deputy Mac Giolla said he was not happy that the acreage starts at 20 but he would find it very difficult to survive on 20 adjusted acres, apart altogether from paying tax on it. There is much to be said for no tax being paid in respect of holdings of fewer than 20 adjusted acres, for tax, and no accounts, to apply to holdings of between 20 and 80 adjusted acres and then for £10 per acre tax plus accounts on each adjusted acre over the 80 acre figure.
Would the Minister consider some kind of option in respect of holdings of more than 80 adjusted acres whereby the people concerned would be liable for the £10 per acre but would have an option for a three or a five year period of accounts or alternatively some further type of tax such as a fixed rate of £3 per additional acre?
We have an amendment to that effect.
The Government are anxious to bring in revenue and many farmers are anxious that the system be simplified so that their costs in respect of accountants and so on might be reduced. Deputy Noonan made a very important point with which I agree. I refer to his remarks about the confusion regarding hardship cases. Though the tax in hardship cases can be postponed without interest charges accruing, we should include a section specifically to define precisely the events that are to be regarded as giving rise to hardship. I have in mind, for instance, a death in a family or a farmer being unable to work because of serious injuries sustained in an accident and when his wife would have to look after the farm. There might also be some serious problems such as brucellosis or TB which might be the cause of wiping out an entire herd or there might be crop diseases and so on.
Deputies Enright and Dowling have spoken a lot of sense but unfortunately we will have no time even to consider the implications of what they have said.
Regarding the proposal Deputy Enright has just made, there is an amendment from Fianna Fáil which proposes to give effect to the question of an option of accounts. We do not have time to go into that now. Instead we are engaging in this nonsense of pretending we have had an adequate debate on what is perhaps the most important legislation in terms of dramatic change that the Government have introduced. We are talking about a change from assessment for income tax on the basis of income. This pretence is no credit to this House and it is no credit to the Minister who brought about the situation. None of us will be forgotten in this facade, for pretending that we discussed such important legislation when we reached only section 3 out of 28 sections and when in the past three days the Minister introduced eight amendments to the Bill. It is time we were honest enough to realise that is not the way legislators should go about their work. I speak collectively when I say that we will not be capable of justifying ourselves so far as this debate is concerned but the Government who forced us into this position are doing a great disservice to the nation. Farmers as well as the PAYE sector or any other sector will say after today that we have engaged in total nonsense. Some serious points have been made from both sides of the House but the Government are deliberately not extending the time in order to allow those questions to be answered.
All of us here would like to encourage the productive farmer or any other worker who is prepared to work, who has the commitment to work, but in this Bill the Government are doing the opposite. They are encouraging the fellow who will wish to opt out. The Bill provides that a single man with 80 adjusted acres who decides to let his land on the conacre system, either because he has not the wit, the commitment or the energy to work the land, and who receives a payment of £100 per acre will pay only £800 on his income of £8,000. That is an example of the nonsense the Government are indulging in. Let us compare that with the man who works the land that he has taken on the conacre system or the man who works his own farm. They will be penalised because they will pay on the basis of income. Are we prepared to stand over that kind of nonsense?
The Deputy is playing with words.
It is clear from the Bill that the owner of land is the person who is liable for a tax of £10 per adjusted acre so it follows that if someone sets his land at £100 per acre he will receive £8,000 for 80 acres but will pay only £800 tax. In other words, he will collect £8,000 while he sits back with his feet to the fire.
Last week the Deputy was telling us about the debts these people would have.
(Limerick West): Does the Deputy accept the kind of situation outlined by Deputy O'Kennedy?
The Government's attitude is forcing us into a position of endorsing nonsense but so long as we endorse this kind of thing in the name of considered legislation there will be on the part of people outside the attitude that we are not really interested in justice. What has happened today has been an abuse of democracy. It is not in any way related to justice.
Deputy O'Kennedy spent far too much of his time today talking about the amount of time available to discuss sections of the Bill. We have heard from Deputies opposite, including Deputy O'Kennedy, a series of Second Stage speeches when they should have been addressing sections of the Bill. Deputy O'Kennedy knows well that last week when, incidentally, he was away, the Fianna Fáil Whip agreed the Order of Business for this week. That provided for the time motion which was agreed without a murmur in the House this morning.
Yesterday the Minister agreed to postpone another Bill which was less important.
If Deputy O'Kennedy is now complaining about the time for debate of this Bill, what he is complaining about is this, his total inability and ineptness. The Fianna Fáil Party are unable to organise themselves to scratch their behinds. If Deputy O'Kennedy had wished to do it we could have gone through a large number of sections with a bit of organisation, of discipline on the part of Deputies on the other side of the House.
Most of the contributions from the other side of the House have had nothing whatever to do with section 3.
It is now 7 o'clock and I must put the question.
The question is to be put at 7 o'clock and I have spoken less in this debate than anybody else.
As it is now 7 o'clock, in accordance with an order of the House made this morning, I must put the following question: "That the amendments set down by the Minister for the Environment and not disposed of are hereby made to the Bill, that the Bill, as amended, is hereby agreed to in Committee and, as amended, is reported to the House, that Fourth Stage is hereby completed and the Bill is hereby passed".
When does the Minister intend to introduce it in the Seanad and how much time will the Seanad have to debate it?
That does not arise.
This has been a sad day for democracy.
It has been a sad day for you.
Deputy O'Kennedy, please.
You could not organise yourselves to scratch yourselves.
