Dáil Éireann debate -
Thursday, 23 Jun 1994

Vol. 444 No. 3

Ceisteanna-Questions. Oral Answers. - Farmers' Tax Clearance Requirements.

John Connor

Question:

10 Mr. Connor asked the Minister for Agriculture, Food and Forestry if the EU is currently invoking infringement procedures under Article 169 of the Treaty of Rome against his Department in relation to the PRSI and tax clearance requirements insisted upon by his Department for farmers who apply for the various EU headage and premia schemes; and if the office of the Director General for Agriculture with responsibility for the supervision of EU agricultural legislation has advised his Department that he considers the measures insisted upon by the Irish Department of Agriculture to be incompatible with EU legislation.

Mr. O'Shea

From 1 January 1994 farmers applying for disadvantaged areas headage payments are subject to the same tax clearance procedures as already applied to all persons applying for grants or subsidies of more than £500 from Government Departments or public bodies. At present however the tax clearance requirements do not apply to premium payments under the guarantee section of FEOGA. The extension of tax clearance to EU assisted schemes took place following consultation with the Commission.

The EU is not currently invoking infringement procedures under Article 169 of the Treaty of Rome against Ireland on this matter. The position is that the Commission's Director General for Agriculture has written to our permanent representation in Brussels expressing his view that our tax clearance procedures are not in keeping with Community law and has requested our observations on the points he has raised. The issues raised are being examined by my Department in association with the Department of Finance and the office of the Attorney General.

Mr. Connor

I congratulate the Director General for Agriculture on his comments to the Department and I am glad the Minister of State has admitted that today. Does the Minister not agree that it is ridiculous to insist on a farmer having a tax record with the tax office, which may cost him up to £300, in order to collect £500 in premia from the Department when his only income is from social welfare? Surely that should be waived. Instead of £500, the ceiling should be at a minimum of £3,000.

Mr. O'Shea

Clarification is necessary in this regard. The tax clearance procedure does not apply to premia payments as they are funded solely by the EU. Headage payments involved an element of national funding. Tax clearance for headage payments was introduced this year on the basis that such payments are funded partly by the EU and partly by the Irish taxpayer. That procedure has been in operation since 1988 for other publicly funded grants following the Minister for Finance's budget speech in 1987. The position is that to receive grants of between £500 and £5,000 applicants must state the tax district dealing with their tax affairs, furnish their tax reference number and indicate that, to the best of their knowledge, their tax affairs are in order. For grants of more than £5,000 applicants must produce a current tax clearance certificate from the Revenue Commissioners before the grant is paid. The basic principle is that a tax defaulter or evader should not be allowed benefit from publicly funded grants. There is no equitable argument against that. There is no requirement to produce a tax clearance certificate for grants of less than £500. I am surprised the principle of this causes concern.

Mr. Connor

Is the Minister aware that approximately 30 per cent of farmers whose land had poor law valuations of £20 or less have not yet been written to by the tax inspector? It is clear that such farmers could not have a taxable income as they are at the lowest end of farm income. I am sure the Minister will agree with that. Is it not ridiculous that the Minister should insist on such farmers, who will never be in the tax net, getting a tax number from the tax office which usually involves employing an accountant to do his accounts at a cost of up to £300? Those farmers must go through that costly procedure to receive a grant of no more than £500 from the Minister's Department. Does the Minister not agree that the ceiling should be £3,000 instead of £500?

Mr. O'Shea

I am sure the Deputy would agree that the measure proposed is aimed at tax defaulters and evaders.

Mr. Connor

There are no tax defaulters in the category of farmers to which I referred.

Mr. O'Shea

Everything is a matter of opinion. All persons earning income should be known to the Revenue Commissioners. I am aware of a report which illustrates that when special attention was paid to certain areas much more money was forthcoming. If a person's income is very low there should be no need for him or her to employ an accountant. We are not talking about filling out a complicated tax form. If the income of a holding arises from headage payments and disposal of animals I would have thought it would not be too difficult to convey information about factory receipts and headage payments and I do not understand why it should cost £300.

Mr. Connor

That arises from the complicated forms required by Revenue.

Mr. Leonard

There are profiles which cover these forms.

Mr. Crawford

Is the Minister aware of the unnecessary anxiety this procedure is causing farmers? A small farmer told me he had decided to apply for headage payments for six of his eight cows so that he would not have to complete tax forms. The completion of such forms is causing unnecessary anxiety and it is interesting that the Commission is questioning this matter. The Government's use of this mechanism to force people who are not liable to tax into the tax net will be proved wrong. I fully appreciate Deputy Leonard's comment that profiles are available and are suitable for some people, but this matter is causing unnecessary anxiety.

Mr. O'Shea

It is not anybody's intention that people on a very low income should become the victims of anxiety to the extent——

Mrs. Doyle

They are. The wrong people are being targeted.

Mr. O'Shea

As responsible public representatives, it is incumbent on us to present the case as it is and to advise people of the position. Regardless of what sector we come from, we can exaggerate the position and instil fear and concern in people where it is not appropriate.

Mr. Crawford

We are merely stating the views of farmers who come to see us.

An Leas-Cheann Comhairle

Deputy, please allow the Minister to respond.

Mr. O'Shea

There is an equity issue in relation to income. We all have a responsibility to stand behind that principle and to assist people who have difficulties such as those outlined by Deputy Crawford. The advice emanating from the farm organisations could also be helpful. If the principle of income being paid only in cases where people have demonstrated they are not tax defaulters or evaders applies to one sector it should apply to all.

Mr. McCormack

I have difficulty with the Minister's view of equity in this case. I do not see why the limit cannot be raised to a reasonable tax free allowance. The same equity that applies to farmers should have applied to people who participated in the beef tribunal; consultants did not have to produce their tax free certificates to earn hundreds of thousands of pounts. PR consultants were employed who earned £500,000 in one case and £380,000 in another. The company which supplied the beautiful carpet in this Chamber did not have to supply a tax free certificate, yet it closed down owing the State £450,000 in revenue. The rules of equity which apply to farmers should apply to everybody else. I sympathise with the Minister who comes from a non-farming background as he does not seem to grasp——

An Leas-Cheann Comhairle

Deputy, that should be adequate.

Mr. McCormack

I withdraw that remark.

Mr. Leonard

He has grasped the position today and has demonstrated he is on top of the job by the manner in which he dealt with these questions.

Mr. McCormack

I acknowledge the Minister is very competent and genuine but if he was dealing with the farming community, as we are, he would be aware of the anxiety this anomaly is causing.

Mr. O'Shea

If people come to me in a state of anxiety based on misconceptions or misunderstanding it is my duty as a public representative to explain the true position and to assist them to comply with the regulations, which I believe are fair and equitable in the context of all taxpayers.