Dáil Éireann debate -
Wednesday, 24 May 1995

Vol. 453 No. 4

Written Answers. - Farmer Taxation.

Eric J. Byrne

Question:

35 Mr. E. Byrne asked the Minister for Finance the amount of tax paid by farmers in each of the years 1990 to 1994; if he will give a percentage of the total tax take; the number of random audits carried out on farmers in each of those years; the amount yielded from those audits; and if he will make a statement on the matter. [9432/95]

Minister for Finance (Mr. Quinn)

The amounts of income tax paid on farming profits, and their percentage of all income tax receipts, from 1990 to 1994 are estimated as follows: £45 million in 1990, or 1.6 per cent of all income tax receipts, £36 million in 1991 or 1.2 per cent of all income tax receipts, £48 million in 1992 or 1.5 per cent of all income tax receipts, £55 million in 1993 or 1.6 per cent of all income tax receipts, and £66.5 million in 1994 or 1.8 per cent of all income tax receipts.

These figures do not include any yields in 1993 and 1994 under the 1993 tax amnesty. Also excluded from the calculations are tax receipts from deposit interest retention tax because it is not possible to apportion that tax between particular classes of taxpayers.

These figures reflect the tax take in respect of farming profits. They do not include PAYE tax paid on employment income earned by farmers or their spouses. Such tax is included in the overall collection of PAYE and is not distinguishable until after the income tax returns submitted by farmers have been analysed. An analysis of the returns for the income tax year 1991-92, the latest available, indicates that some £43 million in tax was paid by farmers, including trader-farmers, or their spouses, under the PAYE system for that year.

The reduction in income tax yield on farming profits in 1991 is mainly attributable to a fall in farm incomes in two years in succession, 1990 and 1991. A recovery in farm profits only became evident in 1992. The income tax yield of £36 million in 1991 also reflected a fall of approximately £5 million due to the deferral of the balances of 1990-91 tax from 1991 to 1992 as a transitional effect of introducing the current year basis of assessment for self-employed persons in 1990. This amount was included in the yield of £48 million in 1992.

Random audits on farmers have produced a yield of just over £101,000 in respect of 42 completed audits initiated in 1992 when the random audit programme began. No new random cases were selected in 1993 for audit due to concentration of resources on work related to the tax amnesty and major restructuring of the audit programme. I am informed that in the 1994 audit plan about 2 per cent of audit cases were selected randomly. The results of the 1994 programme are at present being analysed.

The purpose of the random audit programme is to demonstrate the risk of audit to every self-assessing taxpayer and the Revenue Commissioners consider that the current selection procedure serves this purpose well and is a useful element in the overall audit programme.

In common with other self-employed taxpayers, farmers are subject to the various compliance and audit arrangements which apply under the self-assessment system. I am informed by the Revenue Commissioners that the evidence currently available from self-employed audits indicates that the compliance levels of farmers are comparable to those of other self-employed taxpayers.