Dáil Éireann debate -
Tuesday, 6 May 1986

Vol. 365 No. 14

Estimates, 1986. - Vote 19: Farm Classification Office.

Minister for Finance (Mr. J. Bruton)

I move:

That a sum not exceeding £6,012,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1986, for the salaries and expenses of the Farm Classification Office.

In the national plan Building on Reality 1985-1987 published in October 1984 the Government announced their intention to introduce a farm tax based on “adjusted acreage”. Under this proposal all farm holdings of 20 adjusted acres and over will be liable for the tax. Farmers with holdings below 80 adjusted acres will be exempt from income tax when the tax is fully in operation and farmers with holdings of 80 adjusted acres and over will continue to be liable for both the farm tax and income tax.

The main features of the farm tax as provided for in the Act are that it will be determined on the basis of the number of adjusted acres in each farm. An adjusted acre is the area of land having the equivalent productive potential of one acre of the best land in the country in ideal growing conditions. The rate of tax will be uniform for all local authority areas. The tax will be levied and collected by the local authority in each area.

The Farm Classification Office comprises the two institutions established by the Farm Tax Act, 1985, the Office of the Farm Tax Commissioner and the Farm Tax Tribunal. The functions of the commissioner are to compile classification lists of farm holdings according to their adjusted acreage and transmit them to local authorities to enable them to levy and collect the farm tax. He will also determine appeals, compile revision lists and send copies to local authorities. The functions of the Farm Tax Tribunal are to hear and determine appeals against determinations of the commissioner. The commissioner is obliged to amend the appropriate classification list if the tribunal so decide.

The Farm Tax Commissioner was appointed on 26 August 1985 and the staff of the Farm Classification Office began the field work on inspecting holdings on 27 September 1985. The field staff of the office consists of 91 inspectors and 97 temporary assessors, mainly recent graduates in agricultural science. The tribunal will be established shortly.

The commissioner, in settling the valuations, must have regard to certain criteria which are set out in detail in the Act and which have been deleted here. These factors include the quality of the soil, the prevailing climate, aspect, shelter and so on. The Act provides for the Farm Tax Commissioner to be independent in the performance of his functions.

The Farm Tax Commissioner will produce the first classification lists in September next. They will be distributed to local authorities who will put them on view and any farmer who feels he has a grievance as to how his land has been classified will have the right to appeal initially to the commissioner and subsequently, if he so wishes, to the Farm Tax Tribunal. I shall be prescribing in due course the level of adjusted acreage which will be liable for tax in 1986 but the figure to be selected will depend on the rate of progress being made by the commissioner and his staff. To date, about 2,000 holdings, comprising some 600,000 statute acres, have been inspected by the commissioner's staff and we expect that by October about one million acres will have been inspected. It is estimated that nine million statute acres remain to be inspected before the statutory target of classifying all holdings of 20 adjusted acres and over is reached. The objective is to complete the classification process by the end of 1991. The residual functions of the Farm Tax Commissioner will then be incorporated in the Valuation Office.

The commissioner has started with the largest holdings and is working his way down, as is provided for in the Act. The income tax system will continue to apply to all farmers for the income tax year 1986-87 and the Finance Bill provides that farm tax paid will be allowed as an income tax credit in respect of farming income.

The Estimate of £6,012,000 covers expenditure for the first full year's operation of the Farm Classification Office, which embodies for Vote accounting purposes both the Office of the Farm Tax Commissioner and the Farm Tax Tribunal.

I know that farm tax has been a matter of some controversy among many people. The fact is that farmers have been paying rates on land almost since taxation was invented. It was only in 1980 or 1981 that rates were abolished. While farm tax has a new name, in many ways it is not very different from rates except that it is a less onerous tax in the amount being collected. Whereas for most of the period that rates and income tax applied to farmers the rates were only allowed as an expense, at present farm tax is allowed not just as an expense but as a credit against the tax.

I know the case will be made that rates were deemed unconstitutional and to introduce farm tax to replace them is represented by some people as contrary to that decision. That is not the case. The reason rates were determined to be unconstitutional was simply that there was not a proper system for revising valuations or appealing valuations. It was not that the idea of levying a tax on land was unconstitutional; it was simply that if there was to be a tax on land it should be on the basis of a valuation that could be subject to revision or appeal.

The farm tax in the form now in place does not have the defects of the previous rating system in that it has a system of appeal. In a way, what we are doing is rectifying the deficiencies that existed in the law prior to the Supreme Court action which led to rates being struck down. In ways I do not think it is a particularly radical measure. It is a subject which has evoked a high degree of emotion and objection as if it were something radical, but in fact it is not. Against the background that we have had rates on land almost since time immemorial, this replacement is really only a rationalisation of the situation in the light of the Supreme Court decision. When fully operational it will mean that farmers who are below 80 adjusted acres will not have the necessity of keeping accounts for the purpose of income tax and the only tax payment they will be making will be the farm tax payment. That will represent a considerable relief for the farmers concerned.

I commend the Estimate to the House.

Mr. Noonan

(Limerick West): Listening to the Minister, one could be forgiven for thinking that his heart is not in this Estimate. He does not believe in what he is saying or in what is being introduced. I know he has to go along with this system of taxation which is totally against his principles.

The Minister had a say in the drawing up of the Programme for Government. At one stage he was his party's spokesman on agriculture. That document stated:

The Poor Law Valuation System currently used as a basis for assessing many farmers' eligibility for certain benefits and liability for certain contributions must be replaced. It will be replaced by a system based on standard results per enterprise and per region, taken from the Farm Management surveys carried out by An Foras Talúntais. These gross results would be adjusted to take account of capital depreciation, interest payments and other factors, in order to calculate taxable income.

The system then promised had certain merit and the key words were enterprise, region, capital depreciation, interest payments and other factors. I am sure the Minister will agree that no such built-in safeguards were contained in the farm tax Bill which came before the Dáil in June last year. What the Minister has just said runs totally counter to what was being proposed in his party's Programme for Government in October-November 1982. This tax sets the clock back. I agreed with that part of the Programme for Government but the tax subsequently introduced, which I know the Minister is totally against, has no regard for the points raised. There is no regard for enterprise or for quotas, which have now become part of a farmer's way of life. It has no regard for personal circumstances or ability to pay and no regard for young farmers and new entrants to farming. It takes no account of the state of development in farming.

The constitutional aspect of this system of taxation is questionable. If it is introduced — and I have my doubts about that — it will be tested in the courts and will be found to be unconstitutional for the reasons I have outlined, which were also outlined by the Minister's party when in Opposition. This tax amounts to rates under a different name.

On the question of adjusting acreages throughout the country, an expert said recently that this task will not be completed for at least 20 years. The sum of £6 million is now being sought but no yield whatsoever has accrued to the Exchequer from this system. The Minister has recruited a number of agricultural graduates and others who were employed in positive and progressive work in the Land Commission, ensuring that the land was going into the hands of farmers. Now they are involved in a work which has no future. This measure is being introduced in order to keep the two parties in Government together. It will keep them going until some other crisis arises and some other diversionary tactic is introduced. The cost this year of setting up this office will be £6 million but we realise that next year, if such an office exists, the amount will be increased.

What is the purpose of all this? It is a sop to the Labour Party to support the Government in office. Instead of liability being based on taxable income, this tax on land will be at a flat rate regardless of individual circumstances. The new system is to be based on the adjusted acreage as determined by the Land Commission. When this legislation was going through the Dáil, nobody was in a position to attempt to define on a scientific basis the Land Commission's formula for converting land areas to adjusted acres. Even now we do not have any formula by which this will be done. I doubt very much if such a formula based on scientific information exists. If it does, the Minister has an obligation to tell the House.

We are told that the legislation will provide for a right of appeal against the adjusted acreage. The Minister can rest assured that there will be many such appeals. He will find that instead of abolishing the Land Commission he will have to double the staff to deal with appeals. This party are opposed to this Vote and to the principle of the land tax. The only fair way is to tax incomes, taking into account family circumstances, family expenses, farm expenses, depreciation and so on, as in the case of the rest of the community. Why should farmers be taxed differently to other sections of the community? If one system is fair for certain sectors, why should the same system not be so for farmers?

Land tax is inequitable, even as between one farmer and another. I know the Minister agrees with me on this point. Income per acre can vary widely between different farming enterprises and in different regions of the country. It can also vary considerably because of the influence of the weather. The proposed land tax will ignore all these variations. In the Government's programme Building on Reality, the introduction and purpose of the land tax is outlined farily clearly. It is to draw from the farming sector twice the amount of money currently taken. We are not talking about equity or the ability of a person to pay. The Government have decided that they must double the take of income tax from farmers and that is outlined in their programme. I question the wisdom of having this tax introduced without taking into consideration the ability of individual farmers to pay and without taking into consideration the inclement weather conditions we had in the summer of 1985 and the disastrous situation prevailing in the agricultural sector. Yet the Minister is prepared to go ahead with this mad approach to withdraw from the farming community twice the amount of money being taken at present. At a time when farm incomes can just keep pace with inflation such a withdrawal will leave little or no capacity for investment. Not alone will the standard of living of the farm family decline, but agricultural development will just not be possible. This puts the targeted increase in output very much at risk, and we need this increase badly for the development of the nation. The weather conditions over the past 12 months clearly confirm what I have just stated. That is why we are opposing this penal tax.

When we joined the EC in 1973 agriculture had a bright future. This was a big thing, because we suffered badly in the industrial sphere when our products became open to competition. We were hoping to gain from agricultural production in a wider market. Now we have a situation, for which the Government are not all together blameless, where we have quotas in the main areas of farm production and are going to continue to have quotas.

An Leas-Cheann Comhairle

I appreciate what the Deputy is doing but I would be very grateful if he could come back to the Estimate. A general debate on EC quotas is not relevant to the Estimate.

Mr. Noonan

(Limerick West): Thank you, a Leas-Cheann Comhairle, for your advice. I am always glad of it. I was just making a passing reference to the quotas that have now been imposed by the EC. This will put the farming community in a situation where they cannot increase their production to meet increased costs of farm inputs and this farm taxation. Because of the imposition of quotas the farmers have less opportunity to increase their production, and thus increase their income to enable them to pay this unjust tax, which is inequitable because it does not take into consideration the ability of the producer to pay. I just wanted to give that example to the Minister to point out to him how unjust this tax is. This plan and the legislation that was put through the House last year makes it quite clear that there will be future adjustments to the rate of tax. In other words, the door is open; and I want to warn the farming community that a decision can be taken by any Minister for Finance to increase the amount per acre, say, to £10, £15, £20, £25 or even £30 without taking into consideration the ability of the farmer to pay. I am not saying the present Minister would do so because I do not think he would, but he will not always be in that seat. The temptation is always there for any Minister for Finance to increase——

Mr. Farrelly

Deputy Noonan might be sitting there.

Mr. Noonan

(Limerick West): Or even Deputy Farrelly. I do not believe the tax will ever be introduced, therefore, we need not worry about it.

We must have a system of taxation for agriculture where people are rewarded for working and for effort rather than for being idle. We should take another look at this system now that we have a Deputy of Minister Bruton's calibre in that Department. He knows what agriculture means to the economy and I am sure he abhors this system. He has carried out reforms in other areas and perhaps he might take a look at this legislation and repeal it before he leaves office. Otherwise, Fianna Fáil will repeal it.

The Land Commission has been abolished and the majority of the employees of that office are now employed in this so-called acreage adjustment, whatever that means. The Land Commission were involved in land mobility and ensured that there was control on the sale of agricultural land. As a result of the winding up of the Land Commission this is no longer happening. It is a pity the personnel of that office are involved in frustrating work, work without any future.

Many things have been written about this land tax by agricultural journalists, most of whom are against it. I will not bore the House by repeating what I said on the Second Stage debate last June. Suffice it to say that the farmers can and will pay their fair share of taxation related to their ability to pay, as applies to other sections of the community. Perhaps the Minister would tell me why people engaged in agriculture should have a different system of taxation from the rest of the community. We all know administrative delays and difficulties are preventing existing tax from being collected from a small section of farmers. This should be rectified because it is not the fault of the general body of farmers only this should not be used as an excuse for the introduction of this tax which, as I have already said, is impracticable, inequitable and cannot be implemented because the information which must be provided does not exist at present and the ability of the farmer to pay is not taken into account.

Neither Fine Gael nor Labour have any mandate for the introduction of a land tax. Earlier this evening I quoted from the Fine Gael Programme for Government. The Labour Party's policy on farmer taxation was that all farmers with a taxable income would pay tax and health contributions. This clearly implies that those without any income should not have to pay tax. At this stage we should not take any action which would drive a significant number of farmers out of farming, thereby lengthening the dole queues and which is certain to result from the imposition of a land tax.

Can we devise a taxation policy under this legislation, because that has been questioned, which will encourage rather than penalise farm development? Can a new land policy ensure that the land of Ireland makes the maximum contribution to national economic development? I doubt that this land tax will do that.

I look forward to the day when as many farmers as possible will have an income which will be sufficiently high to bring them into the income tax net. I would also like to see a proper taxation system, not a taxation system suited to their individual needs but a taxation system similar to that which applies to the rest of the community. We have not reached that stage and from what we can see we will not reach it under this régime. It is a sad reflection on Fine Gael that they introduced this tax which, as I said, is impracticable and inequitable. Nevertheless, I am afraid they are just going along with the system. Many organisations have come out against this system as being inappropriate and having no regard whatever for ability to pay. The continuation of this penal levy is both demoralising and discouraging, particularly to young farmers and young people who want to go into farming for the first time. It is a very heavy penalty to pay for the continuance of Labour in Government.

I reiterate our opposition to this tax because of what has transpired, particularly this spring, which should be significant enough to prompt the Minister to do something about this legislation, and I hope he will. This Minister is forward looking, progressive and a man who intends to carry out his own ideas and policies. It is important that at this time he should stand up and be counted and he will have the thanks of the farming community in County Meath, many of whom I know very well. They are looking forward to direction and guidance from the Minister and I hope he will not be found wanting there.

An Leas-Cheann Comhairle

Deputy Farrelly has 20 minutes.

Mr. Farrelly

I will not take so long. I welcome the opportunity to say a few words on this Estimate. First, on the concept of the proposed land tax, surely all of us who are involved in the farming community would like to think we will never be in a situation where no tax would ever be imposed on anybody. That would be regarded as OK in constituencies where there are a great many farmers, but we must take into consideration the overall position and how we arrived at this proposal. Were it not for a case brought by a number of farmers in the High Court which found the PLV system unconstitutional we would not be talking about a land tax and we would still have rates.

We all realise the contribution farmers have made to our local county councils for a long number of years through substantial income in the form of rates. Suddenly overnight county councils throughout the country were short £X million, and individual county councils have not recovered from that or from the abolition of rates on dwellings. Our Government in the mid-seventies played a small part in starting the removal of rates and in 1977 came the famous abolition of domestic rates which left overall income to local authorities at a standstill Now members of the Opposition claim that no new proposals should be made to improve the overall income of local authorities. That is evident from the way those Deputies have opposed domestic water charges and the refuse collection charges.

All of us who are members of local authorities would like to see more power given to local authorities but we do not want the power to implement charges of any kind. The collecting of the proposed land tax will be the duty of the local authority as was the collection of rates, including farm rates. It is interesting to note that a few years ago the reappointed Opposition spokesman on Agriculture — I am delighted that he was reappointed last week when changes were made which we were not told about — told in a press release that he was interested in ensuring that a land tax would be introduced, that it was the way forward, a simple way for people on very small farms and, rather than having to pay accountants, it was an ideal way for them to make a contribution to the State. Lo and behold, then the present Leader of the Opposition said, "No, you must not speak out of turn; there is no way that we will have such a situation. We will wait until we are in Government". As a result the Deputy in question said he had made a mistake, that he did not mean that statement, he was thinking of the overall concept of another way of collecting extra revenue for farming.

When the same party were in Government, when we had not what was talked about here tonight, bad weather for a year, they decided that not enough income tax was being collected from farmers, and they introduced the 2 per cent levy and resource tax. It is very strange for members of that party to come into this House — maybe not so strange because it has been known to happen so often — and, depending on which side they are sitting, change their argument to suit the majority of the people out there who see no point or no need for extra revenue for any section. Listening to the Leader of that party, the Houdini of Irish politics, one would think we have here a land of milk and honey where no-one has to pay anything for anything because, if the weather improves and buds come on the bushes, there will be plenty of money for everything.

Mr. M. Brennan

Let the Deputy give his solution.

Mr. Farrelly

We did not make the proposals. We are here putting forward solutions for the problems caused by the Opposition.

Mr. N. Treacy

That is an old thing. That is played out.

Mr. Farrelly

We were having a lovely debate before Deputy Treacy came in to interrupt and he should sit now and listen for a few minutes.

Mr. M. Brennan

The Deputy is not a very good listener.

Mr. Farrelly

Has the Deputy's friend gone back to Brussels? We know what happened last week.

An Leas-Cheann Comhairle

You should stay on the Estimate.

Mr. Farrelly

These Deputies should not be interrupting me.

Mr. Noonan

(Limerick West): The Deputy is looking after his friend on the Front Bench.

Mr. Farrelly

He is in the Cabinet, not on the Front Bench. Deputies who are also members of local authorities realise that we have not been receiving money to do necessary repairs to the roads. As a result, there is a proposal for a land tax to be introduced and the farming organisations are in agreement, although one farming organisation are totally opposed to the measure. However, from speaking to individual farmers, I know there is a majority in favour of this tax because they see it as an opportunity to make a contribution to the local authority when the land is adjusted. They will not have to bother with keeping accounts or to keep track of different sales and purchases which require the services of an accountant.

It is interesting to note that when the budget was introduced this year the happiest people were the accountants because clients whom they thought they would lose as a result of the adjustment still required their services. Self asessment should be allowed for the majority of farmers who would probably be below 80 adjusted acres. I suggest self assessment because, as a result, county councils would have an income of X number of £s from individual farmers who adjusted themselves below the 80 acres. It could be agreed that if there was an overpayment or underpayment as a result of the adjustment the amount could be credited or debited as the case may be. The majority of the farmers to whom I refer will pay sums in the region of £300 to £500 to accountants in 1986. More often than not, they will pay the accountants so that they can prove that they are not liable for tax because of the bad weather.

As I said, the ICMSA and individual members of the IFA supported the proposal in regard to land tax because it is a positive approach to the whole question of tax. In my clinics over the past fortnight I have met a number of farmers, well under the adjusted acreage, who are trying to get their books ready for accountants. This would be a simple way to solve the problem and the Exchequer would benefit.

The Minister said that details of the tax assessment scheme would be sent to county councils in September or October and that the public could see them then. However, I hope that individual members will be notified of their assessment, as I do not think that the only notification in this regard should be sent to the county councils. That would not be acceptable. If land is inspected the individual to whom it belongs should be notified.

Of course it would be very nice not to have to implement a land tax but other taxpayers must be considered in this whole affair. When domestic and agricultural rates were done away with, the PAYE sector bore the whole brunt of taxation. When domestic and agricultural rates were coming into the county councils, there was no mention of water or refuse charges and the overall tax take from the PAYE sector was much less. Not until we get back to the situation where rates are payable will we be in a position to reduce taxation. The PAYE sector will benefit and there will be more money for repairing roads and so on. At present some people pay tax and others do not. Indeed, some politicians advocate not paying anything and they pretend that the same services can be provided without collecting any money. Irrespective of who is in power or how much we spend the same people will be asked to pay the piper.

When I spoke to representatives of the farming organisations recently they told me they would accept land tax if everybody else was paying a proportion of tax on a house or whatever. I hope the Minister will adopt the suggestions I put forward. If he does, he will be providing local authorities with the finance they badly need and will be relieving the many people who do not have any idea of how to keep books of the obligation of keeping accounts. Many of those people never kept a note of what they bought throughout the year and at harvest time paid their accounts. I accept that the Minister will do his utmost to alleviate the hardship in this area.

Farmers would welcome a system of self assessment. Listening to the Opposition one would think the Government were responsible for the bad weather. From the groans and grunts from those benches in the last two weeks one would think they had all the answers, even in regard to the weather. I must stress that, while it is necessary to keep expenditure as low as possible, we cannot do anything that will diminish the incomes of farmers. Self-assessment is the ideal system for farmers in 1986.

Mr. J. Walsh

I am opposed to this Estimate. The last speaker told us it is incumbent on us all to try to reduce expenditure and I accept that, but the measure before us is a classical example of expenditure without return. The Estimate for £6 million is to enable the Government to continue with this farce of a land or farm tax. It is a political measure introduced at the behest of the Labour Party to extract money from farmers whether they made a profit or not. In the famous publication, Building on Reality: 1985-87, under the heading, “Farm Tax” it was stated:

The new tax will apply with effect from early 1986 and ultimately all agricultural holdings with 20 adjusted acres will be liable for tax.

Of course, it will not apply from 1986. The publication continues:

Farmers with holdings of 80 adjusted acres and over will continue to be liable for income tax, but a credit will be given against income tax in respect of farm tax paid in the year. Full-time farmers with holdings below 80 adjusted acres will be exempted from income tax with effect from the 1986-87 tax year.

That will not be the case. Building on Reality continues:

The new arrangements will be designed to increase the yield from farm taxation in 1986 to about twice the level produced by the present system.

That amounts to a continuation of the farce. Not a single cent will accrue from this tax in 1986 or in 1987. If the Government were only partly interested in the farm tax as a method of producing revenue they would not have started at the upper end of the scale with large farmers but at the lower end. Then at least the small intensive farmer with over 20 adjusted acres would pay the farm tax. In the case of the big farmers the farm tax will go as a credit against any income tax liability. Even if the tax were introduced it would not produce any revenue because it would be set off against income tax by such farmers. Of course, in that area there is a degree of dishonesty because in section 12 of the Finance Bill under debate in the House farm tax is only allowed against profit for a particular year. If a farmer is unfortunate enough not to make a profit there will not be any set-off or continuation of the farm tax liability for a further year. If the Minister is serious about allowing farm tax as a credit against income tax he should amend that section so that any shortfall is carried forward and treated as farm tax paid in succeeding years of assessment. That is the least that should be done.

The farm tax represents political oportunism, a costly piece of opportunism. It is an area of public expenditure we could do without and is a classical example of spending taxpayers' money without getting a return for it. A well known political commentator in the Farmers Journal in the course of an article demonstrated how inequitable the farm tax is. After 12 months of operation 1,700 farmers have had their acreage adjusted. We must bear in mind that nationally there are 170,000 farmers and that gives some idea of the length of time it will take to finalise this programme of acreage adjustment. The estimate of 20 years may not be too far off the mark because ten million acres remain to be adjusted.

It is ironic that in this difficult year systems are being devised to extract twice the take from farming. There was a substantial reduction in farming profits and many cattle and sheep died of malnutrition. It is penal to suggest that finance should be extracted from farmers without taking into consideration their ability to pay when the farming community owe £1,500 million to financial institutions. There is not the kind of bonanza in taxation from farming those outside the industry think, but if there is some money to be got from the farming community there is only one equitable way of getting it, taxation based on ability to pay.

If a farmer makes a profit in a given year then he should pay his fair share of tax like everybody else. If he does not make a profit, then equally he should not have to pay tax. But farmers will be given no credit for paying tax under any other system than that applicable across the board, that being based on people's profit margins and ability to pay. There is no other equitable or workable system. The sooner this charade is discontinued the better.

It should be remembered that it will cost probably in the region of £100 million to set up this office for the number of years it will take to complete the acreage adjustment. Certainly the yield will not justify that expenditure. I want to ask the Minister — who is known as a no nonsense, progressive, reforming Minister — to take another look at this measure before too much of people's money is spent on another bout of empire-building.

Mr. N. Treacy

I rise to support our spokesman on agriculture on this Estimate. I concur with what my colleagues, Deputy Noonan and Deputy J. Walsh have said.

This is a cosmetic exercise on the part of this Government to appease the large group of disgruntled PAYE taxpayers, many of whom supported both parties in Government at the last general election in the belief that they would bring about lower taxation, economic stability and financial rectitude. In the now defunct Building on Reality they promised that farm taxation would make a contribution to the Exchequer from 1986 onwards. As my colleagues have said, this will not happen. Indeed it appears that it may not happen until the early nineties. The Government have engaged in this type of propaganda in order to appease the vast bulk of public opinion totally dissatisfied and disgruntled with the management of our economy.

This represents an attack on the entire agricultural industry, destroying any confidence farmers had until a couple of years ago. Yet they intend to extricate more finance from agriculture, further reducing the revenue base of our economy and adding to the misery of Irish agriculture at present. I cannot understand how the Government are prepared to expend £8 million in two years without any return to the Exchequer, particularly in view of the fact that the present Minister for Finance prides himself on his belief that the taxpayer should get value for money and that there should be seen to be vigilance in the expenditure of public moneys. Indeed the establishment of this office probably will cost up to £100 million before there would be any yield from farm tax.

I listened attentively to the Minister and to Deputy Farrelly. The common denominator in their contributions has been that farm tax really represents rates with a different name. There has been comparison drawn between agricultural and domestic rates. It is obvious that the primary purpose of this measure is to impose more rates on people, rate collectors having the job of collecting commercial rated, farm taxation and the now infamous revenue charges being imposed by this Government.

I have looked at the expenditure involved in this Vote. I could not but notice that the postal and telecommunications services will cost the Farm Classification Office some £230,000, a huge amount. The Minister for Finance should recognise the high level of charges for postal and telecommunications services generally, charges which have had a disastrous effect on our industrial base and economic growth. Indeed these charges infiltrate the service industries and manufacturing industries and affecting industrial output. We have seen the recent increased charges for telephone calls and the high cost of rentals, which are astronomical when compared with those obtaining in other countries. The time has come for the Government to direct both these semi-State bodies to create extra revenue by creating an opportunity for their staffs to become shareholders thereby creating funds which would help in their development and expansion and easing the pressure these high charges impose on people generally. That is highlighted when one notes the small number of staff that will be involved in the Farm Classification Office and the high level of postal and telecommunications charges.

We note that the Farm Classification Office will contribute in the region of £200,000 by way of employers' share of PRSI contributions. When one adds the employees' share and the PAYE contribution it becomes obvious that something needs to be done. I would appeal to the Minister to assertain what, if anything, can be done to reduce the burden that is depriving employers and industrialists of expanding their staff numbers or, in many cases, from maintaining their present levels. Indeed many lay-offs and redundancies are occasioned by the very high levels of taxation and PRSI contributions. It can be said that the PRSI contributions constitute the final straw breaking the camel's back with regard to economic generation.

The fact that the Minister came in to make an unscripted contribution clearly demonstrates that he is not in favour of this type of taxation. He was not Minister for Finance when this was proposed.

Mr. J. Bruton

The Deputy is making an unscripted speech. Are we supposed to infer that he should not be believed because it is unscripted?

Mr. N. Treacy

The normal thing is for a Minister, with the vast resources available to him, to come in here with a scripted speech on occasions like this — at least that has been the case with regard to all the Estimates I have seen and the Minister is longer in the House than I am. It is obvious that this represents a passive effort on the part of the present incumbent of that office to deal with this Farm Classification Office Vote, that the Minister, who lives in the lush lands of royal Meath, along with Deputy Farrelly, is not committed to that type of taxation. He knows it to be inequitable, discriminatory and does not make allowances for the family farm contribution, the vast amount of voluntary support given by members of a family farm unit. The Minister believes that the existing taxation system applicable to agriculture should prevail. However, he is a member of the Government who have brought about this situation and has no option but to proceed with it.

How slow the procedure is is shown by the fact that only 2,000 holdings and 600 acres have so far been inspected. It will probably take ten years before the entire country is classified for farm taxation. The Government have made many cutbacks and put many impositions on the State sector over the past few years and I wonder why they could not turn to another semi-State organisation, very reputable and with tremendous expertise in the field of agricultural development, An Foras Talúntais the Agricultural Institute. Why did they not ask that organisation, whose services are based in every province, to do this soil survey and evaluation for the Farm Taxation Office?

Mr. J. Bruton

They would now want to do it because of the nature of the relationship which they have with farmers as a research institute.

Mr. N. Treacy

With the staff which they have, their ability and expertise, they must have much of the information so badly needed. This information should be stored in the various research centres. If they had been asked to do this survey we should have saved £8 million in two years. A very professional survey would be done which would stand the test of time, would be available for many other facets of agriculture and would make a major contribution to agricultural development.

I should like to congratulate the new Farm Tax Commissioner, a good Galway man, Mr. Fahey. He comes from a very outstanding agricultural family and is a very reputable public servant. I wish him well in his new post. I am sure he will have a busy time dealing with many appeals. The Minister, Deputy Bruton, has to check if he has been appointed yet, but that has been confirmed.

Mr. J. Bruton

I am trying to find out his Galway connection.

Mr. N. Treacy

This Government measure is totally unconstitutional and takes no cognisance of a person's ability to pay, or of the large financial input from the industry and the high risk that it is today.

Deputy Farrelly said that the Government were almost being blamed for the bad weather. We do not blame the Government for that, but we certainly blame them for failing to take the proper measures to alleviate the serious constraints being placed on the agricultural community at present. The year 1985 was one of the most disastrous for agriculture in our history and vast opportunities and options were available to the Government to relieve the substantial pressures put on farmers, which have resulted in the farmers owing £1,500 million to financial institutions. There were major financial resources available in the European Community if this Government were prepared to match £ for £. This would have helped farmers out of their serious financial difficulties as a result of the inclement weather. The Government went ahead with some cosmetic exercises, with the Taoiseach going to the west with a cheque for £1 million, supposedly to help the farmers in the Shannon valley. We now know that only £500,000 of that was spent because a ceiling was put on the assistance to be made available to these farmers. The Government are not prepared to spend the other £500,000 to counter the serious flooding in the Shannon Valley. The Government do not see the need for immediate action in this regard and many small farmers will be crippled again. That is why we blame this Government for failing to deal adequately with the critical situation facing agriculture.

The co-operative managers and directors and the agricultural marketing outlets have taken stock of the serious financial situation of the farmers. They worry daily about their creditworthiness, their financial stability. That this is a very high risk financial business is due to the failure of the Government to avail of the financial resources of low interest loans in Europe which could have been made available. The Agricultural Credit Corporation recently availed of those low interest loans and they are lending that money, coming into the country at 5 per cent, to farmers at 12 to 14 per cent interest. That is unconstitutional and discriminatory. The Government should have seen that that did not happen. If the ACC find themselves in financial difficulties, proper management should get them out of that. The farmers who, through no fault of their own, find themselves in financial difficulty should have had the benefit of the Government negotiating in Europe and making money available under the guarantee of a return at the very minimal exchange rates.

The Government are asking the farmers through the farm tax to make a major contribution at a time when they are not able to do so. They expect that the tax rate from farmers in 1986 will be double that of last year. That is ludicrous. The farmers have not the resources to pay tax and are not taxable. One would think from listening to Deputy Farrelly that farmers pay no tax here. We must realise that farmers make the biggest contribution in indirect taxation of any consumer group. They contribute by way of VAT payments on general merchandise, agricultural products, farm machinery, fertilisers, steel and many other products. Their spending power and the revenue base they create ensure the protection of many jobs and a cycle of finance which would create some type of economic stability and opportunities, particularly in the PAYE sector, through agribusiness. This contribution has not been acknowledged.

We oppose farm classification because it will completely destroy the whole structure of the Land Commission. The staff of that commission have given tremendous service to agriculture and to land mobility in particular. There is consternation among them as a result of the abolition of the commission. The Government have failed to transfer some of these staff to the Department of Social Welfare and there is total despondency among them.

There is also no security for the small farmer. There is no protective mechanism by which he can be assured that when land becomes available some will be allocated to him through the State agency responsible. The fact that no Bill has been brought before the House to wind up the Land Commission and change their statutory functions means that the commission still have statutory control vis-à-vis land sales and land mobility. All the commission are short of is the capital allocation, of which they have been deprived since 1983 when the Government decided that no more money would be made available for land acquisition. In my own county in the west there are only two staff members of the Land Commission office dealing with land allocation. The remainder have been put to work on farm taxation and there are thousands of acres still to be allocated to those small farmers in the west who badly need them. This land is laying fallow in many cases and deteriorating for want of investment and proper management.

The future for the small farmers of the west looks very bleak. Because of the abolition of the Land Commission only those with financial resources will have an opportunity to get land in future. I cannot understand how the present taxation system has not been utilised to ensure that farmers, along with the other sectors, are given the same opportunities as the PAYE people, the employers, industrialists and others to make their contribution using the same accountancy system prevailing for all others.

Last year the Comptroller and Auditor General said that sufficient staff was not available to the Revenue Commissioners to deal with the vast amount of accounts which have gathered over the years. Why have extra staff not been put in there and why has the same accountancy and taxation system which applies to other sectors not been left to farmers? This is obvious discrimination and it is obvious that the Government want to get a quick take from agriculture and from farmers as they have done in this year's budget through the direct interest retention tax. This tax is totally discriminatory and will help to fill a few holes for the Exchequer which is under serious pressure at this time as a result of the economic mismanagement the country has been subject to for the past three and a half years.

We are totally opposed to this system and to this Vote because it is only a cosmetic exercise by the Government to try to persuade the taxpayers that some effort is being made to extricate more money from agriculture and from farmers who are already over burdened and not in a position to make any further contribution to the Exchequer than they are making until there are some Government measures created for them which will take them out of the serious economic and financial situation they find themselves in at this time.

Mr. Carey

I have listened with interest to the speakers on the opposite side taking the Minister to task for the way in which this aspect of farm taxation has been handled. They want the benefit of every world. They criticise the Estimate because there is a charge for PRSI. They say the PRSI charge is too high and that farm taxation will be too high. I wonder where the funds are going to come from to run the State. This proposal affects farmers differently. It was, as Deputy Farrelly said, supported very strongly by the ICMSA and opposed by the IFA. In my county which is slightly south of where Deputy Treacy represents all the small farmers have asked me to persuade the Minister to have self assessment. They would gladly pay the money because the roads are in bad repair. They would like to see the county council have funds available.

On the other hand, there are large farmers who are opposing it because they see in this an inequitable charge. I have some sympathy with them, especially with commercial farmers who, as Deputy Walsh pointed out, hit a bad year. They are not charged on their profits. Nevertheless, the Government were faced with a very difficult task. I do not think they have been unduly harsh in the regime they have produced. For the people opposite to say that the Government are trying to bleed the farmers and that the farmers themselves are not interested in the system is totally misleading. It is wrong to say in this House that small farmers in east Galway would not welcome self assessment in the farm taxation area. I believe they would find that better than paying £400 to £500 to accountants in some of the towns in County Galway.

Mr. N. Treacy

This is not self assessment. The Government have no interest in east Galway.

Mr. Carey

So far as this Estimate is concerned, the long term view is to get adjusted acres for the entire agricultural holdings in the country. That is going to take some time.

Mr. N. Treacy

In about 50 year's time.

An Leas-Cheann Comhairle

Deputy Carey, without interruption.

Mr. Carey

I would like Deputy Treacy to say to farmers in east Galway that he is totally opposed to the farm tax proposals and that he wants them to pay £400 to £500 to accountants when they might not in some cases be liable to tax at all. I do not understand the economics of that if he is really interested in small farmers. So far as I can see, he is trying to add confusion to the system as it stands because very few people especially in the cities, understand the plight of the small farmer. During the past year they have had a very difficult time. The Minister for Agriculture made a gesture and brought out a fodder scheme which was intended to supplement their income and to save them from complete disaster. It was only a gesture. Yet it has been ridiculed on the far side. Taxpayers' money was handed out to the tune of almost £20 million. The Opposition object to this assistance. I find this very difficult to understand.

I am in a neighbouring constituency to Galway. The adjusted acreage in County Clare is likely to be 3:1 or 4:1. The same type of land exists in east Galway, so the adjusted acreage should also be 4:1 there. I find it very hard to believe that farmers in east Galway would object to farm tax but I understand that there are farmers who have 300 to 400 acres in my area who are worried about it.

Mr. E. O'Keeffe

They are supporters of the Deputy and he is going to lose them.

Mr. Carey

They have indicated to me that they are worried about this. I also accept that there has to be some equity in the system and that this adjusted acreage, no matter what it does and whether the farm tax is ever brought in——

Mr. E. O'Keeffe

Con job.

Mr. Carey

——will finally lay the lie about the value of land and that we will have an up-to-date modern assessment of the value of land. Nobody wants to see whether it is going to be of real value. We want to continue with this con but there are many farmers who do not like living a lie. There may be many fly by night farmers who turfed out Deputy O'Keeffe when he was a director of Mitchelstown when he put charges on milk in east Cork. That is why he was turned out and he insists on interrupting me while I am making a case for the honest farmer. There are many honest farmers who do their duty for this State and who have been blackguarded by those on the opposite side of the House who are saying that this Government are trying to screw them. Let the question be examined fairly.

The only people who will lose as a result of farm taxation will be the accountants. I have many accountant friends also. They are the people who are asked to do the impossible. I know of many cases of small farmers who are driven bananas from assessments they are receiving from the Revenue Commissioners. They have been receiving £13,000 to £14,000 assessments when, in fact, they do not owe any money or at most £1,000 to £3,000. This goes on for four to five years. Yet Deputy Walsh is advocating the accounts system. The union officials say that farmers are not paying their fair share. When the assessment is agreed between the Revenue Commissioners, the accountant and the farmer it is found to be 14 to 15 times lower than the original estimate. Irrespective of whether this Minister for Finance or the next Minister for Finance, even if he is from the other side——

Mr. N. Treacy

Thank you.

Mr. Carey

——ever collect one shilling from this tax, I believe that the fact that the assessment will have been undertaken will be of tremendous value to this State. It will remove all of the criticisms we had of the old system of valuation.

In the Burren where very little grass grows there are acres of stone valued at £1 and £1.25 an acre under the old poor law system. It was a real joke but the Deputies opposite do not want any value put on land. They want it to be a free ride all round. They are badly misjudging the PAYE people who are continuously complaining about being screwed. Deputy Treacy tried to protect those on PAYE. The information that will be available as a result of this adjusted acreage will be of more value in the long run to people on PAYE than Deputy Treacy estimates.

I am concerned about the future. I would like the Minister to turn his mind to self assessment. I support the plea made by Deputy Farrelly. This income would be of great value in repairing the county roads which have been rooted up by lorries. Clare County Council need the assistance which self assessment would generate. Big farmers do not find themselves in a truly equitable position. The Government had little choice and they took what was in my view a reasonable course. The charges which they propose in the adjusted acreage system are not beyond the capacity of those people to pay.

Mr. E. O'Keeffe

I am glad to have an opportunity to speak on this very important motion. I am quite sure that after the next election Deputy Carey will get a job as a land tax assessor so he need not have any fears of being unemployed. I also recommend him to get the Irish Farmers Journal of 3 May which reveals the new land tax classification system. It explains the inequity of the system, the appalling method of assessment and the reasons why it is not acceptable.

If I were in Deputy Carey's position I would resign from the party. He is convinced that his party are not going in the right direction. The decision to have a land tax as proposed by the Government is proof of the insane way in which they continue to run the country. It is an inequitable form of tax coming at a time when the Irish agricultural industry has been robbed of many millions of pounds by the Government. It is estimated that the cost of setting up the land tax authority is in the region of £6 million. In an eight year period that will cost in excess of £50 million. That is a failure before it commences. To date, there are only 2,000 farmers classified.

It was stated in Building on Reality that the land tax would operate at 120 adjusted acres. That has been changed and now operates at over 150 adjusted acres. That is further proof of the contradiction of many of this Government's policies. The Government are anti-family. Every piece of legislation proposed since this Government took office has been practically anti-family. They are now making a further attack on the backbone of rural Ireland — the family farm. The tax does not take into account the individual's ability to pay. It does not take into account the different crops, their related costs and their profitability. That makes it a most unfair and inequitable tax.

We are all aware of the difficulties in the agricultural industry. I am not blaming the Government for everything. There can be failures in family farms and in agriculture generally. In a year when there is a failure the man with a low income will still be expected to pay his land tax. There is no provision for deferment or any method of protecting the individual concerned. I ask the Minister who comes from a farming background and who has a great interest in agriculture to take note of this and to introduce some amendment to alleviate what could be a very serious problem.

It has come to my notice that we have an army of highly paid inspectors. The method being adopted is unscientific. That has been stated by the teaching staff of University College, Dublin. Because of this the system is likely to get bogged down in appeals. There may not be any problem in regard to land tax until the year 2000. Farmers have to pay very high prices. Fertilizer prices are 25 per cent above those in the UK. There is little point in talking about reducing inflation when farmers are burdened with excess costs at every level of production: fertilizers, feed costs, energy and diesel oil. The costs of capital is in the region of 16 per cent to 18 per cent. It is at an all time high. Government Ministers boast openly about our low rates of inflation. We were always led to believe that inflation and interest rates worked side by side. That is far from true. It is obvious that this economy is not working properly. It is a grave contradiction to have interest rates at such a high rate and inflation rates so low.

Mr. J. Bruton

I do not wish to interrupt, but the Deputy mentioned UCD. Is there a particular person in UCD who made that statement?

Mr. E. O'Keeffe

I did not quote a particular person.

Mr. J. Bruton

I am a little sceptical unless a particular person is prepared to put his name to a statement.

Mr. E. O'Keeffe

I quote from an article in the Irish Farmers Journal dated 3 May 1986:

The procedures being used by the land tax assessors to value farms on the basis of soil quality have been slammed as being completely unscientific by the soil scientists teaching in UCD.

Mr. J. Bruton

Has the person in question put his name to the statement?

Mr. E. O'Keeffe

There are a number of them. We have a cock-up of a Government who boast openly about inflation. They forgot to tell the Irish farmers about the exorbitant rates of interest which they are paying. Nearly every other farmer in the country is in trouble, facing liquidation or the threat of it, but the Government have failed to take cognisance of it. Irish farming is being strangled.

The Minister for Agriculture said at Baldonnell that he was bringing home £200 million for Irish farmers. In the Dáil last week he said it had been reduced to £70 million, but from the way things are turning out and the changes I have been talking about, I estimate that the final package for Irish farmers will mean an increase of a mere £30 million, and I challenge anyone to contradict that. Since the Government came to office, Irish farmers have been worse off by £200 million. Every budget introduced had more and more cutbacks, and the Minister now in office will go down in history as the Minister for retreats and cutbacks. He is more concerned with running divorce clinics in his constituency of Waterford than in Irish agriculture.

The Land Tax Office being set up will definitely fail. The Minister, when he goes around doing his constituency work at the clinics, agrees that the serious problems of Waterford farmers are depressing. The chairman or the secretary of the IFA there resigned recently.

Mr. J. Bruton

If one could hear what the Deputy is saying one would find that he is probably out of order.

Mr. E. O'Keeffe

Does the Minister want me to shout? Farming is in deep depression and we have been presented with another white elephant in the Land Tax Office, like the one on which the Minister for Finance allowed himself to be sold out, the National Development Corporation. The setting up of that was totally against the Minister's better judgment, but he had to compromise and I am convinced he is well aware that he is setting up another white elephant in the Land Tax Office. Judging by the recent remarks of the farm tax commissioner, Gerry Fahey, on RTE recently, this tax will be like the residential property tax which will cost hundreds of millions more to administer than will be taken in revenue.

Six years is a long time and that is the period it will take to classify all farms in the country. If the present trend in our agriculture continues there will be only about 75,000 farmers on the land of Ireland by then because of present EC policies. We now have 140,000 full time and 40,000 part-time farmers. There will be a massive exodus of farmers from the land because of EC policies and because of the failure of the Government to make a special case for Irish farmers. Our agriculture is 50 years behind England. There is a special case to be made for us in Europe, we do not owe any apologies to the people of Europe and we should be there arguing our case for agriculture openly and ably. It is very evident from Government policy that they want to relegate Irish farmers to the status of Red Indians. We on this side will not stand idly by and let that happen.

The Government told us that farmers with 80 or more adjusted acres would have to pay land tax and that all farmers below that would be exempted. In the budget, all farmers are still required to pay income tax. I am convinced that in a general election the farmers of Ireland will not be conned as in the past. We have had too many broken promises. I am amazed that the Government saw fit in this most difficult year for farmers to introduce legislation to provide the funds for the setting up of this body.

Mr. M. Ahern

The land tax legislation was brought forward because of pressure by the Labour Party. That is plain to everybody. Strangely, no Members of that party are here this evening. The implementation of the land tax will continue to fail as it did this year mainly because of problems related to classification. There are problems because of the numbers to be classified and the time it will take to classify the entire country.

As Deputy Carey said earlier, classification of land is badly needed. If it is done properly it will benefit the country as a whole, but until classification has been completed it will not be practicable to bring in land tax. When the appeals begin to come in it will be seen that there are many problems in regard to land tax. We saw proof of this earlier this year when we were told that income tax for farmers would be done away with. This has not happened. I agree everyone should be taxed equitably but this land tax is a form of rates introduced by the back door. On this side we do not intend to pursue that policy. Ability to pay should be taken into account and it is clear from last year's accounts that returns were quite poor and they will continue to be so because many farmers are being put to the pin of their collars to continue in existence, not to talk about paying income tax or land tax. That is why I am strongly in favour of retaining the present system.

The new system would suit milk farmers in particular because a farm of 80 adjusted acres can produce a high income for dairy farmers. Substantial sums of tax will be lost to the Exchequer because of the exemption of milk farmers from the income tax system under the new system of land tax. If figures are properly correlated it will be seen that the gains accruing from land tax would only be equal to those from the income tax which farmers were being caught for from 1983 onwards. For about five years before 1983 there were large investments in cattle and buildings but the capital allowances for many farmers meant that the income tax payable by those farmers was quite low. However, the capital allowances that followed on that investment ran out in the majority of cases in the 1983-84 tax year and there was a substantial take by way of income tax on farmers from that year onwards. The reason for introducing land tax was to hoodwink the public living in urban areas and those who were not involved in farming. The Exchequer will lose out by the imposition of land tax.

It is estimated that a sum of £4 million will be spent in 1986 in setting up this office. If that money had been spent by the Revenue Commissioners in the employment of more field staff the return would be greater than what will be obtained from the land tax. The Minister should re-examine the whole policy. He should use his common sense, scrap what is proposed and go back to the fair system of taxing a person on his ability to pay.

Mr. M. Brennan

I am concerned about the issue of adjusted acres. The farmers whom I represent will not pay much tax in any event. I wonder how many acres in my part of the country could be compared with one acre in County Meath? The Minister represents that part of the country; he has land in County Meath and he is aware of the true facts. If one leaves Sligo airport on a flight to Dublin one can see that vast difference in the land in County Meath as compared with that in Cavan, Sligo or Leitrim. Perhaps the farm tax suits farmers in County Meath and in the southern part of the country but it does not suit farmers whom I represent in the west of Ireland. I am deeply concerned about the whole matter of adjusted acres. We are all aware that the accounts system was a more fair system.

Inspectors employed by the Land Commission are now assessing farmers for tax. The Land Commission did a good job but perhaps they had come to the end of the road. I would not like to see people coming into this country and buying up large farms of land when our own people would have been entitled to that land if the Land Commission had divided up the estates.

Mr. J. Bruton

What has that to do with the matter before the House?

Mr. M. Brennan

The Government abolished the Land Commission.

Mr. J. Bruton

That was a separate decision.

Mr. M. Brennan

The people once employed in the Land Commission are now doing work in connection with farm taxation. The Dixon estate in County Leitrim was taken over by a Fianna Fáil Government but when this Government abolished the Land Commission they gave the land back to the owner who happened to be a German. This was done at a time when the small congested farmers in counties Leitrim and Sligo could have benefited by an increase in their holdings. Unfortunately, now the farmers and their sons are emigrating from the west and are going to England and America because they have not enough land to work. A motorist driving from Sligo to Dublin will meet a continuous convoy of lorries carrying hay for cattle in the west of Ireland. Yet, the Government are taxing farmers in the west at this time.

Farmers in the western counties have been continually reclaiming land and now they will be liable for tax as a result of their hard work. A careful examination should be carried out to see how many acres in the west of Ireland compare with one acre in County Meath, Limerick, or in any other county that has good land.

A speaker on the Government side said earlier that if we had land tax the local authorities would have more money. We know local authorities are starved of funds but that is not because the farmers are not taxed. It is because they have not got funds from the Government. I must stress my concern regarding the matter of adjusted acres and the matter of how many acres in the west will be compared with one acre of good land in Meath.

Minister for Finance (Mr. J. Bruton)

I will not go back over the debate because it has been merely a rehash of the Second Stage debate on the Bill dealing with farm tax. All the arguments put forward by the other side of the House were dealt with then and the House took a decision. If we are to have a re-run of that Bill every time the Estimates come before the House, we will not use our time in the best way.

I thank the Deputies, in particular Deputy Noonan, for the very kind references they made to me personally which I appreciate. While I did not agree with the points made by the other side of the House, at least they were made in an unemotional and responsible way.

I will refer as quickly as possible to Deputy Noonan's points. Under section 9 (4) of the Act the changes in the rate of tax will be directly related to changes in farm income. Therefore there is no question of arbitrary increases, a fear expressed by the Deputy. Section 11 (8) of the Act also empowers a local authority to suspend payment in the event of hardship. The Deputy quoted figures contained in Building On Reality concerning the yield of the tax. Those figures relate to the tax when fully in operation, not to this year. As far as the actual cost relative to the revenue from the tax is concerned, this year the revenue will probably be about £6 million, which is about the same as the cost of the classification. Next year, however, the revenue will rise to about £14 million or possibly even £20 million, depending on how far we get with the valuation and whether we get down as far as 80 adjusted acres or 60 adjusted acres. The latter is the desirable target. In that event we will be getting a much larger yield than the cost of the valuation.

Deputy Treacy referred to the soil survey, as did Deputy O'Keeffe. There were criticisms attributed to some unnamed person in the department of soil science in UCD. It is important to recognise that this is not a soil survey solely. It is based on a list of considerations, one of which is soil quality, given in the Act. To criticise it as being unscientific, if that is the criticism, on the basis that it is not solely based on soil type would not be correct because the Act requires that a number of criteria should be weighed up and balanced against each other. To some extent it has to be accepted that there will be an element of judgment involved. It is not simply a question of using some piece of soil chemistry equipment and coming to a decision. A number of considerations must be weighed up. There will ultimately be a judgment and if there is an appeal that judgment will fall to the tribunal to decide.

Deputy Joe Walsh asked if the farm tax credit could be carried forward into subsequent years. That is really a matter for the Finance Bill but if that were done it would give rise to considerable complaints from business people paying rates. Not only are their rates not allowed as a credit, they are only allowed as expenses. They certainly cannot be carried forward as a credit into subsequent years.

Deputy Farrelly asked about self assessment. There are a number of serious objections to introducing self assessment. I will give one of them for illustrative purposes. Let us take the case of a farmer who quite honestly valued his land at 78 adjusted acres and that was accepted for, say, three years until they eventually got around to cross-checking these provisional evaluations. If on the basis of the final assessment he was deemed to have 82 adjusted acres, which would not be a big difference, the farmer would find that not only would he have to pay land tax on an extra four acres but he would also have retrospective income tax liability because he would have been liable to income tax in the intervening period on the basis of the defined valuation. If he had not been keeping accounts, he could be in quite a difficult situation. That is one difficulty with self assessment. Another difficulty is that it would require substantial recasting of the legislation which is rather difficult to contemplate when we are already well advanced with the valuation of the land.

Many Deputies will be aware that one farming organisation are pressing rather hard for a system akin to self assessment or a form of provisional valuation to allow farmers to get into the farm tax and out of income tax earlier than would occur in the normal course of events. I am interested in this, notwithstanding the difficulties I have identified, and I am hoping to have discussions with that organisation to see if they have any answers to offer to the problems which are raised with their proposal, in particular the problem I have just mentioned.

I was not listening as closely as I should at one point in Deputy O'Keeffe's speech. He made some statement to the effect that the farm tax commissioner had said on radio that that the assessment of the land cost £100 million. I am advised that the farm tax commissioner said no such thing. The tape of the interview is available in my Department and has been listened to. He did not say that. It is appropriate since the statement was made that I should refer to it.

A recurrent theme throughout the speeches on the other side of the House was that it is a waste of time to be valuing all this land. A system of revaluation of land was necessary anyway once the decision had been taken by the Supreme Court which struck down the existing system of valuation, unless we were to abandon all prospect of ever having any system of tax on property.

Mr. E. O'Keeffe

On a point of order, I did not say anything about £100 million. It was said on RTE that this tax will be like the residential property tax and that it will take hundreds of times more in terms of money to administer than it will take in terms of revenue. That is the inference I got from the programme. The farm tax commissioner has admitted——

An Leas-Cheann Comhairle

Would you allow the Minister to conclude? You have made your point.

Mr. E. O'Keeffe

He asked me to reply and I had the courtesy to do so.

An Leas-Cheann Comhairle

He did not ask you to reply.

Mr. J. Bruton

I did not hear the programme but I am advised that Deputy O'Keeffe is wrong again, that the farm tax commissioner did not say that either.

(Interruptions.)

Mr. J. Bruton

Nobody can be responsible for the inferences that Deputy Ned O'Keeffe picks up from anything he hears, no more than anyone else. We will leave it at that. The case is closed. I would have thought that it would have been prudent anyway to do a revaluation of our land, given that the Supreme Court struck down the existing Griffith system. We must remember that land is valued for tax purposes and tax is applied to land in practically every country in Western Europe and in North America. Practically all these countries have a system of land valuation and land taxation. There is nothing strange, revolutionary or unusual about it. Obviously it has to be based on the reasonably up-to-date and adjustable system of valuation. The Griffith valuation which applied for the past century was struck down because it was not up-to-date and adjustable. This new system of valuation will be up to date and adjustable and is therefore a necessary exercise to be conducted anyway. Deputies on either side of the House can argue about what particular uses they are going to make of the valuation once it is done. We believe it should be the basis for a modest farm tax.

Mr. Noonan

(Limerick West): The Minister has misinterpreted out point.

Mr. J. Bruton

Other Deputies might have some cases to make that one can use the valuation for some other taxation purpose. But to my mind there is no doubt, given the financial problems that this country has and is likely to have for the next ten or 15 years, that any Government in office will want to have some basis upon which property can be taxed on a reasonable and accurate basis. I do not see anything strange about that. We have had taxes of that kind for the past 150 years. They have been the basis of local government and the sooner we get back to a system similar to that which obtained prior to the start, by all parties on all sides of the House, of doing away with the very fundamental basis of local government which was rates, the better. We need to have some universal system which gives a basis for providing revenue on a regular basis to sustain local government as is the case in practically every other civilised country in western Europe and North America. The valuation of our land is simply part of a contribution towards achieving that in the long term.

That is a reasonable objective. Nobody should object to our land being revalued on that basis. If we are to have a situation where we have the Griffith valuation struck down and nothing in its place and no basis for assessing the value of land for any purpose, we will be living in a vacuum in our tax code and in assessing what our country is worth. It should not be left there. For that reason I think the conducting of a revaluation of our land, whether it is used for farm tax or some other type of taxation or some other purpose altogether, is a prudent and sensible and necessary thing, given the decision by the Supreme Court in the case brought there by the Wexford farmers.

Question put, and a Division being demanded, it was postponed in accordance with Standing Order of the Dáil No. 123 as modified by order of the House, until 8.30 p.m. on the next day on which the Dáil sits.

The Dáil adjourned at 11 p.m. until 12 noon on Wednesday, 7 May 1986.