asked the Minister for Finance the total amount of farm income in Ireland; the proportion of that amount which is considered to be taxable.
Ceisteanna—Questions. Oral Answers. - Farm Income.
5.
Farm income for 1986 is estimated by the Central Statistics Office at £1,125 million. It is not possible to say what proportion of this represents taxable income.
In computing the figure of farm income no account is taken of the many legitimate personal and business allowances which farmeres may use in calculating their taxable incomes. The figure also includes the incomes of a substantial number of full-time farmers — perhaps as many as 70,000 — who have not yet been assessed for income tax. These latter farmers will be brought into the effective income tax system progressively over the next few years by means of the farm profile system.
At this stage of the finance year is the Minister in a position to say whether the income tax received from farmers in 1987 will show an increase or decrease on the 1986 figure?
Last year the estimated amount for tax was £36 million. I do not have the up to date figure for this year but it will be above that. In addition, as the Deputy will be aware, in the Finance Bill which is going through the House there is a provision for a reduction in the VAT refund payable to farmers from 2.4 per cent to 1.7 per cent which will bring in an additional £9 million. That fact is lost sight of in the debate and argument on the abolition of the farm tax. Last year it was supposed to have brought in £6 million and roughly the same figure was expected this year but only £250,000 was collected last year. This year we do not have to wait for the collection mechanisms to work in regard to £9 million.
(Limerick East): Will the Minister give the House a progress report of the issuing and return of the farm income profile forms since the last budget?
As the Deputy will be aware from his time in Government there was a dispute in the Revenue Commissioners in regard to the issuing of these forms some years ago and that delayed the issuing of them. It is no harm to remind the House that up to a few years ago farms with a certain valuation were not liable for tax. We are moving in the right direction in an area that has been a bone of contention with the PAYE sector. We are progressing and issuing additional profiles to farmers. Some minor adjustment have been made on the profile form first used. The adjustments have been clarified and we will be issuing forms to another 10,000 to 20,000.
(Limerick East): Is it not correct to say that since the Minister announced the abolition of the land tax and its replacement by income tax through the method of the farm income profile form that no form has been issued to any farmer by the Revenue Commissioners to date? When is it proposed to issue the forms?
I told the Deputy that some minor adjustments had to be made to the form. The Deputy may be correct in saying that no forms have gone out but we must take into account what has happened in regard to the VAT refund which will bring in an additional £9 million from farming. We must remember that many farmers are on an income that is much lower than many of those already in the net.
Is the Minister suggesting that the VAT adjustment constitutes money coming in from farmers? Surely it is properly described as a reduction in moneys going out to farmers?
It will have the same result.
I will not. Farm income, as described by the Minister, is taxed in terms of personal taxation to the extent of less than 3½ per cent. Has the Minister any target to establish over the next five to ten years a different return from farm income? Has he a target of 5 per cent or 10 per cent? Has he any view on what percentage of farm income should be the subject matter of personal and/or corporate taxation? How does he propose to reach those targets?
Obviously the Deputy did not listen to the reply or else he does not know much about how income tax is computed. I said quite clearly that in computing the figure for farm income no account was taken of the many legitimate personal and business allowances which farmers may use in calculating their tax bills. That is the position in regard to any taxpayer. It is my intention and that of the Government to ensure that everybody in the community will pay tax according to their incomes, and that includes farmers.
The Minister said it is possible for farmers to deduct substantial business expenses. Supposing even half of the farmers' incomes, £500 million, was taxable as against the return of 7 per cent, which is ludicrous, is there not a suggestion that the Minister is hiding behind a difficulty in computation? Is not the reality that only between 3 per cent and 5 per cent of farm incomes are being taxed at the moment——
This is repetition.
I wish to add something I had intended to say in reply to the Deputy's first supplementary. As many as 70,000 farmers are not taxable at present. That is something that successive Governments in the past 10 to 12 years have failed to take action on. We are now working towards that. I do not think any Deputy would contradict the wish of the Government to ensure that everybody will pay tax according to their incomes.
Will the Minister confirm that as a marked contrast to the previous Government, discussions have taken place at the highest level between the Government and the farming organisations and that the latter have now ensured that the existing outstanding land tax due is in the process of being paid together with greater co-operation in the payment of health contributions?
I can confirm what the Deputy is saying but I do so with caution. I would ask farmers to increase their payments of land tax and health contribution arrears. Already there has been an improvement. They should make every effort, like every other sector, particularly those PAYE taxpayers, to pay their health contributions and employment levy. I refer, too, to the self-employed who probably have more tax outstanding than the farming community.
In order to be of assistance to the Minister in replying to the question I would ask if the aggregate data in regard to the farm classification survey could be made available to the CSO.
I do not know if the question is relevant.
I am asking about the aggregate.
The aggregate covers only a small proportion of the entire country.
Could the Minister tell the House the total number of farm units referred to in his reply? Could he give an estimate of the assessed average income per farm unit and the acreage in which there is the greatest liability for tax — is it from between 20 and 100 acres or 100 acres upwards?
The Deputy has asked four questions in respect of all of which I would have to have notice. In reply to the original question I spoke about 70,00 farmers who were left out of the net and I understand the total number of full-time farmers is about 120,000, including the 70,000.