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Seanad Éireann debate -
Wednesday, 17 May 1978

Vol. 89 No. 2

Rates on Agricultural Land (Relief) Bill, 1978: Second Stage.

Question proposed: "That the Bill be now a Second Time."

The agricultural grant is paid by the Exchequer to the local authorities so that they can give relief of rates to land holders. The Rates on Agricultural Land (Relief) Act, 1976, expired at the end of last year. This Bill is necessary in order to continue to give certain rates relief to farmers and other occupiers of agricultural land.

The Bill provides for a scale of reliefs for landholders which depends on the valuation of the land. Land valuations of £20 or less will benefit from the relief of 100 per cent of the general rate in the £. This continues the effective derating of these holdings which was introduced in 1967. Land valuations over £20 but not greater than £33 receive relief of 100 per cent of the general rate in the £ on the first £20 of the valuation. This continues the position whereby this category of landholders pays rates on the balance of the valuation only. The next groups of landowners are those with valuations over £33 but less than the income tax threshold for full-time farmers which prevailed on 1 January of the relevant local financial year. This was £75 on 1 January 1978. These valuations benefit from 80 per cent relief of the general rate in the £ on the first £20 of the valuation and 30 per cent relief on the balance of the valuation. The reduction of the threshold for income tax purposes to £60 from 1 January 1979 was announced in the budget.

The Bill changes the position of landholders with valuations equal to or greater than the income tax threshold. This category will no longer benefit from the relief of rates on land. The change affects about 3 per cent of landowners. This year's Finance Bill provides that full-time farmers can set off their preceding year's rates against their income tax bill. This is in accordance with the manifesto commitment and the budget statement of the Minister for Finance. Farmers, like other householders, will also benefit from the abolition of rates on domestic dwellings. In addition, full rates relief is being given from this year onwards in respect of those farm out-buildings which are not already derated.

Up to now, a county council only took into account a ratepayer's total land valuations within their own rating area. The Bill introduces a change in this respect to bring it into line with income tax law. The Bill provides that in determining whether a farmer is eligible for rates relief on his lands, the valuation of all his holdings in the country will be aggregated.

The administrative implications of this form of aggregation are still under consideration and it appears that it would not be practical to introduce nationwide aggregation in relation to the current year.

Section 1 (3) enables the Minister to make an order keeping the existing form of aggregation in relation to a particular year. It is intended to make such an order in respect of 1978. The effect will be that under the order the less widespread form of aggregation will operate in 1978 in place of the national type of aggregation provided for in section 1 (2) of the Bill.

I commend this short Bill to the House.

I realise it is not a very pleasant task for any Minister to have the job of introducing legislation such as that introduced here today. In support of what I say no script of the Minister's speech has been circulated which may indicate the amount of embarrassment felt by the Government about this legislation. From the start I believe a dishonest approach has been adopted to what we and all farmers must see as yet another addition to all the burdens that have been laid upon the agricultural community in recent years. Apparently even the Government have been convinced by the propaganda that the agricultural community, by some means or other, have become very rich recently, that farmers are rolling in wealth, and that every opportunity should be taken and every conceivable idea thought up to deprive them of some of their hard earned income. This Bill is entitled "Rates on Agricultural Land (Relief) Bill"— a most misleading title to a Bill which is not, in fact, intended to bring any relief but rather to impose more new taxation. I realise what the situation was in the past and I appreciate legislation is necessary but as a result of this Bill farmers will actually be forced to pay more. It should not be beyond the ability of parliamentary draftsmen to draw up a Bill clearly indicating what the Bill is intended to do. Some years ago the idea was that farmers of £60 plus valuation were wealthy people, enjoying a very high standard of living, not needing to be protected or benefited in any way. That idea is now entirely out of date.

We have all had experience in recent years of farmers with this sort of valuation, and higher, making application for classification under the farm modernisation scheme and failing to be fitted into the development category which would bring them up to the comparable income for the region in which they live. In some parts it is less than £50 a week; in other parts the national average for the comparable income is around £70 a week. Many farmers who are to be penalised by the introduction of this Bill will actually find themselves categorised or classified as transitional farmers, farmers who cannot after three years of planning, with the best advice available to them, reach that sort of income target. The sort of tax levied on them here is a penal imposition having regard to the different systems of farming, the changes and the differences in weather conditions and the different rates of valuation.

We all know that, if we are to devise any new system of taking money out of the agricultural industry, the one way that any sensible legislator would say we ought not to operate is on the basis of valuation. We all have experience, even within the same parish but particularly from county to county, of the different sizes of holdings, the different sorts of incomes, the different climates and all the other factors that go into making up the potential income. Many different things go into the viability of a farm, things which are not related at all to the rateable valuation.

Politicians have been unanimous, or practically unanimous, in agreeing that the valuations levied on agricultural land more than 100 years ago are not now a just basis on which to tax farmers. If the Government had been honest in their approach, if it was felt desirable that farmers should be asked to make more of a contribution, then it should have been made on the basis of actual income excess calculated by some rational means instead of by legislation superimposed on a system that had become out-dated 50 years ago. The argument is being made that farmers who are liable to pay income tax will be able to claim relief under this Bill and the extra rates can be written off against their tax bill. It must be remembered that only a small percentage of farmers whose valuation is as low as £75 will find themselves in the position of having to pay income tax. There are particularly the farmers with large families, young married men with a high tax free allowance who have started up in farming in recent years and whose borrowings are very heavy because they have had to develop the farm, provide new buildings and purchase livestock. Some farmers have actually crippling debts incurred to their banks and to the Agricultural Credit Corporation. Under no circumstances in the foreseeable future could anybody see a majority of them being in a position to pay income tax but these will be penalised by the imposition of this new levy. If the Government wishes to pursue a policy of taking money out of the agricultural industry all I can say is it is a very foolish policy because we have only to look at the whole of agricultural industry and at the contribution it is making to the economy and consider the potential of the industry. Farmers should be given the opportunity and the incentives to make progress and to develop. It is very shortsighted and a very foolish policy to think of extracting money from this industry. It has become popular for people to believe that farmers, because of increased prices, have become rich. We do not hear anything about the rapid increase in costs that farmers have had to meet over the past few years like every other section.

Because of the recent increase in farm prices it may sound an acceptable idea to impose new taxation on the agricultural community but, on reflection, it is very shortsighted. It is a retrograde economic policy to take money out of one industry which has the potential to solve our economic problems and our unemployment problems. It is the only industry we could put a safe bet on. It is the one industry in regard to which we would be safe in putting at its disposal the resources of the country because we could be assured that our investment would be well justified.

The final paragraph in the Minister's statement, where he said he intends to change the existing form of aggregations, is just another indication of how this Government have sought by every means, of how they must have consulted every adviser, and sought every opinion in order to get another shilling out of the agricultural industry. We did have the system of aggregation within the one county. I take it that the number of farmers involved with farms within the area of different local authorities would be very small. The Government have gone to extremes in seeking to gather up the few farmers with holdings in different areas who would in fact, fit into this category. It is regrettable that this legislation is being introduced. It is regrettable that not only are farmers being asked to pay but it is even more regrettable that the Bill does nothing to right the injustice done to local authorities at the start of this year when rates on private houses were abolished, when the whole financing system of local authorities was changed and a limit was put on the amount of money available to give the services they had given or develop whatever amenities or schemes they wanted to develop in their areas. This money will not go to local authorities. It will go directly to the Exchequer. That will not improve the finances of local authorities. It will not do anything to restore to local authorities the right they had to levy rates. In counties like mine where a positive limit has been put on the amount of rates which can be raised by the local authority we find we have not enough money to carry on the services we gave last year. This legislation does not provide any local authorities with an extra shilling. It does not restore to them any part of the independence they enjoyed in the past. That is regrettable.

Farmers are, in fact being asked to pick up the bill for all the wealthy householders around the country. As we travel around the country we see many very expensive, beautiful homes erected by people who are obviously wealthy. It is heartening to see this but people who can enjoy such an obvious standard of wealth have been given complete freedom from the burden of rates on their homes while, at the same time, the agricultural community, without the slightest reference to the standard of living they enjoy, the income they are capable of making, the quality of their land, or the adaptability of their particular holding to present day agricultural requirements are being asked to pay a further £6 or £7 a week at a minimum to subsidise the homes of very wealthy sections of our community which have been given relief.

It is regrettable that this Bill should be introduced at this time. It is regrettable remembering all the promises the Government made. The last election was fought in rural Ireland on the basis that the outgoing Government were trying to tax the farmers out of existence and, if the agricultural community wanted to protect themselves against the exploitation of a greedy Government who wanted to take from them every shilling of the price increases they had enjoyed, then the answer was to return a new Government to office. Now that that new Government have sought to introduce legislation, misnamed in the hope that farmers will not be conscious of what is actually happening, the farming community should take notice of this. I think they will take notice of it. The Government are being dishonest with the farmers. Above all this Bill is not good economic policy. It seeks to penalised the one section of our community who have the potential to solve our economic problems. I cannot see anything in this legislation that one could welcome. I cannot see that there is a line of this Bill justified at the present time.

The Senator referred to this tax as an unfair tax. He made sweeping political statements in relation to the Bill and, of course, for obvious political reasons he refused to recognise the important financial implications in the Bill designed to protect the farming community. This is an important Bill in that it gives relief to the extent of £38.5 million to the farming community in 1978. Regardless of what Senators on the other side of the House may say this is the reality of the situation. This is the amount of money being provided by the Government for rates relief to the agricultural community.

As a farmer and as a member of a local authority for 12 years I am very conscious of the heavy burden rates can be. I am aware of the impact they have had in the past on the agricultural community. I can recall the strong campaign a number of years ago to have rates removed from agricultural holdings. It was a very live issue discussed by all the political parties. Various statements were made in relation to derating and speakers on the other side of the House, when they were in Government, had the opportunity the present Government now have of doing something to relieve the heavy burden of rates on farmers. Yet, it was the Fianna Fáil Government who in 1967 for the first time, brought in rates relief by completely derating small farmers and which resulted in the derating of all agricultural holdings under £20 valuation and removed on a sliding scale, rates on farms up to £33 in valuation.

It is unfair of any Senator to suggest that we are not very conscious of the needs of the agricultural community in relation to taxation. We removed rates completely on small holdings and that enabled these farmers to develop their holdings and reduced the amount of any possible tax demand. While there are many anomalies in the valuation system it can be generally accepted that the man with a small valuation also has a correspondingly small income. There may be slight variations. It is only fair, of course, that any Government should take a serious look at a tax situation which might unfairly hit the lower income sections of the community. Without wishing to introduce politics, it was a Fianna Fáil Government who first recognised this problem as far as the agricultural community is concerned and completely derated for the first time a very large section of the agricultural community. In fact, 97 per cent of all the farmers will benefit on a sliding scale from this Bill which is now being criticised on the other side of the House and which was severely criticised in the Dáil over the past few weeks.

We are left then, with 3 per cent of the farming community. We all recognise the shortcomings of the valuation system. There are some farmers who are very highly valued. There are areas, even within parish boundaries, where the valuation system tends to lean unfairly on farmers. It is generally recognised that the system of land valuation, which has been in operation for a long number of years, does not reflect accurately the true value or the potential of ordinary small holdings. The system of rates based on valuation which Senator McCartin, very justifiably, to my mind, criticised is not always a fair farm tax. But we are left with the situation that the valuations are there. The Minister can do very little about them, whatever, about tackling the matter in the future.

I agree with Senator McCartin that land valuation very often unfairly discriminates against some farmers because it does not always reflect the true value and the true potential of holdings. We have 3 per cent of farmers who would seem to have to bear the cost of this particular section in the Bill. Many of these farmers will, as the Minister rightly pointed out, be in the income tax net and, because they are in the income tax net, they will be entitled to charge the full rating bill against their income tax bill and they will thereby get their full remission of rates through a different system.

It is unfair to misrepresent what is in the Bill. It is unfair to say that it has been maliciously brought in by the Government to penalise agriculture. I do not think, judging by the Fianna Fáil election manifesto, judging by the statements in the recent Fianna Fáil White Paper in relation to the development of the economy, judging by the recent very successful negotiations of our Minister for Agriculture in Brussels, that anybody can fairly point a finger at this side of the House and say that we are discriminating unfairly against the agricultural section of the community. We regonnise that agriculture is the main industry and that it is in our long-term as well as our short-term interest to legislate to enable it to develop and expand to its maximum potential.

As I pointed out earlier, because we are tied to a valuation system it may be that a section of farmers will find themselves paying rates when in fact if they were in the tax net, they would not actually have to pay tax. That may be the evolution when the threshold is reduced from £75 to £60. I would respectfully suggest, and I know the Minister will not dispute it, that if that situation arises and if the Government see that any section of the Bill is unfairly discriminating against a minority of farmers, then based on past records I have no doubt the Minister and the Government will look at that anomaly and take whatever steps may be necessary to correct the situation. I would point out that only a very small section may be caught in this kind of a situation. For the majority of the 3 per cent, and it is only 3 per cent, their full rates can be offset against their tax bill and they will thereby get the maximum relief from rates.

I welcome the Minister to the House. I would urge him to consider that in the long-term it may be necessary to look at the valuation system as applied to the derating system. No doubt he and the Government will ensure that, if small sections are being victimised in any way, they will carefully consider the situation and, if necessary, bring in legislation to remove anomalies.

May I take this opportunity to extend a hearty welcome to my county colleague, the Minister of State? It is the first occasion I have seen him in the Seanad and I wish him well here. In regard to this legislation, its introduction means elimination of a traditional system of relief for agricultural holdings at a very ill-timed period. Over a number of years it has been accepted that the valuation system is not the ideal system for taxation collection.

The previous speaker has said that no relief has beens given in relation to valuation by the previous Government. One of the first major steps of the National Coalition was to take health and housing charges off rates and valuations because they felt that a continuation of the expenditure involved in providing these services would paralyse those responsible for paying taxation through the valuation system. On that basis, it is ill timed to go back for an increased volume of taxation from the valuation system.

It has been admitted by both sides of this House that the valuation system on land, because of its antiquated nature — it was determined more than 100 years ago — is quite unrealistic as a means of determining the viability of many farmers. I oppose this measure because through it many farmers who will be brought within the extra rates net will be the subject of increased taxation because it cannot be assumed that even though there is provision for the setting up of this extra rating against income tax, all farmers in the category concerned will be concerned in income tax.

Therefore, the Minister should have a full and hard look again at this because the Department of the Environment are reverting to a basis of collection of taxation that is outdated. Besides, the whole intention behind the removal of health and housing charges from local authorities was to go to the Exchequer as a basis for a fairer means of collection of taxation. Farmers are liable for income tax. Let them pay income tax, but there should not be this double-edged weapon. We are withdrawing certain facilities in rates relief. I believe this is wrong legislation. The farmers can meet, and I am sure will meet, their responsibility as regards income tax, but going back to demand further revenue from the valuation system is wrong and undoubtedly will inflict hardship on a segment of the agricultural population.

The first point I would make is that there is relief of rates on agricultural land in this Bill. This seems to have been overlooked by those who have criticised it. As the Minister of State pointed out, land valuations of £20 but not greater than £33 receive relief of 100 per cent of the general rate on the first £20. Much play has been made of the Title of this Bill, that there is not any relief in it at all, and certainly if I were a big farmer I would feel unhappy about not getting relief from rates. As Senator Hyland pointed out, the relief that is there is for the smaller farmers and if a certain farmer is in the income tax bracket he has an allowance against his income tax for the rates he has paid.

We cannot include everything in a Bill that will please everybody and this can be said of this Bill. It has been reintroduced year after year. In 1976 the employment allowance for farmers with valuations of more than £20 was withdrawn. That was discussed at great length but the Minister at the time did not reconsider it. The withdrawal of that relief affected a lot of small farmers who had members of their families working and getting that allowance for them. Two years ago the former Minister for Finance was talking about doing away with agricultural rates relief altogether, so I make no apologies about welcoming the reliefs in this Bill for the categories I have mentioned.

The unemployment assistance for smaller farmers in rural areas has been reduced in the last few years: first of all, those with valuations of more than £20 had the unemployment assistance removed; then it was those with valuations of more than £15. It would be very sad if that allowance which has been put to good use were to be discontinued. I know this is not directly related to the Bill but it is an aspect of how the smaller farmers have been affected in recent years.

I agree with everything that has been said about the valuation system, that is an unfair method of determining who should get rates relief, who should get benefit, but I would point out that farmers with low valuations are the small farmers and in regard to this Bill it is they who will be getting relief from rates. There seems to be very little protest or outcry from the farming organisations with regard to this Bill. In fact the only protest we have heard has come from the members of the Fine Gael and Labour Parties. By and large the farming organisations have made very little protest about the fact that some farmers do not benefit from this rates relief measure, but as I said at the outset, there is relief of £38½ million in this Bill and I will welcome the further relief that it gives especially to the smaller farmers.

I do not welcome this Bill. Indeed, I will speak very strongly against the Bill, especially because of the Title of the Bill, Rates on Agricultural Land (Relief) Bill, 1978. One would expect extra relief from such a Bill. Such Bills in previous years gave relief, much more relief than has been spoken of by Senators on the other side of the House, but this Bill gives no extra relief but, as I said, a reduction in relief to the farmers. The Bill is a demand by the Government for more revenue through the rating system, a system that we all believe to be an unfair one. It has been said by Senators on the other side of the House "We accept that this system is an unfair system because it is based on valuation of land".

The farmers in my constituency are very disappointed if those in the west are not. In the near future they will be disappointed there too because there will be a reduction in the qualifying valuation. The prospects of the financial assistance promised by the Government during the last election are now diminishing. Today, because of this Bill, instead of assistance they are receiving a demand by the Government for more revenue from the rating system. We all, and I include the Government, know that the collection of revenue through the rating system is an unfair way of collecting because it does not have regard to the income of the ratepayers or his capacity to pay it.

In 1978 a farmer with a rateable valuation of £75, before the introduction of this Bill, would receive relief of up to £320, assuming his rate demand was £10 in the £. A farmer with £100 valuation would receive more than £400. A man with a £75 valuation is not a farmer with a huge area of land. In my constituency it would be in the region of 75 statute acres. This Bill is unfair especially to a farmer who has purchased land or who has received land from the Land Commission to increase his holding to a rateable valuation of more than £60— I mention £60 because the Bill refers to £60 in the future. Large financial investments may be necessary to make that land viable because we all know that from time to time when the Land Commission take over land that land is rented out for a period of years and farmers who take it take the value from it without putting much back into it. Then the land becomes inferior.

A lot of investment would have to be put into that land to bring it up to such a standard that its productivity would be at its highest. Because of that investment a farmer would not make a profit in the years he was bringing the land up to the standard of productivity that he would like. He does not make a profit but he cannot get relief of rates because of the valuation qualification.

In 1978 those with holdings of valuations of £75 who cannot make a profit are to be penalised in this Bill. In 1979, the farmer with a valuation of £60 who suffered the same misfortune, through investment necessity, of not making a profit, will under this Bill have to pay substantially more in rates. It does not go directly to the Exchequer but eventually it is the Exchequer which will have to pay the moneys to the local authorities. One of the most extraordinary things about the Bill is that a married farmer with a young family who has a valuation of £60 plus, and who because of his commitment to his family must employ help to work the farm and probably negotiate a bank loan to develop the land, may find at the end of the rateable valuation fluctuation that a substantial rates demand awaits him. Nobody can say that that is fair.

Another example is a farmer who because of illness is unable to carry out his farming duties to the best of his ability. He is being penalised because of this Bill to the extent of £320 or more because of his illness. A man has to stay in bed and is not able to look after the farm and so on, and the crops may suffer and the cattle may suffer. Naturally if he makes a profit it would be very small. If he does not make a profit then he is taxed anyway because of the introduction of this Bill today. It is the first time that I have ever heard of illness being taxed as it is taxed by this Bill.

I will give another example. A farmer may go to a bank for an overdraft, a loan, to help the family. He may be ill and because of his illness and his commitments to his family, until he returns to full health the farm does not make a profit. The worry caused by this extra taxation may cause illness by itself. It may also have the effect of keeping some members of the family at home, away from proper education.

There is no doubt that farmers having examined this Bill will see to it that at least the farm must be made to pay, and the farmer must try to make a profit to pay for this burden being placed upon him. If he has to do that, he has to try to employ extra help or ask friends to help to work the farm. The 1978 provision is based on a £75 valuation. What about the poor man with a £60 valuation in 1979 who will come into the same circumstances? He will have to pay this substantial demand.

It is the wish of everybody, and I accept it is a wish of Senators on the other side, that the present rating system should be changed. If we accept that, we must agree that the introduction of this Bill based on this system must be wrong, and if it is wrong it is only right that it should be withdrawn. Instead of reducing the number of farmers paying rates this Bill will increase the number and the amount of money collected through this unfair system. We have heard from time to time of many Government Deputies and Senators, especially during the last general election, stating that the present rating system was wrong and that when they would be returned to Government they would try to put the system right. If this Bill is any proof of their intent, we will be waiting a long time for that change. They expect to increase their finances through this Bill. The Bill is wrong because the rating system is not based on the quality of the land. It is quality that rates should be based on.

The Agricultural Institute carried out surveys and did a survey on the quality of the land and rateable valuation of land some years ago. The Government should now take into consideration the findings of that survey and make it a point that they will change the rating system and the valuation of the land before this Bill becomes law. If this Bill is any indication of the change, we are not going forward. Those with high poor law valuations in respect of the quality of land will now have to pay a greater share of the tax burden through the rating system. We on this side of the House realise that and will vote against the Bill, and I know that some Senators on the other side, from speaking to them, will also like to vote against it because they will be meeting their electorate who will be caught because of this Bill and who have already met them and have told them in no uncertain manner that the introduction of this Bill is wrong and that they should vote against it. Some Senators are caught in that predicament and I have respect for them because they cannot vote against this Bill because of the Whip, and only because of this will the Bill be passed today. I am sure that was the position in the other House.

Farmers have not been shouting about the Bill, as has been said by Senator Hyland. They are beginning to talk about it and they are beginning to talk about the other taxes that have been introduced gradually by the Government. They are going to be as loud in their condemnation as they have been in the past. Everyone knows they have been loud in their condemnation for many, many years, and they have been heard.

The Bill means that farmers with valuations of £75 or more are being asked to pay extra money to the Exchequer. As mentioned in the Bill, the valuation limit will be reduced to £60 next year and I am sure the Government have in mind an ultimate threshold for income tax purposes of a £50 valuation. In the years to come that will be reduced still further and if that is so farmers caught in that bracket will be caught under this Bill because there is no doubt that if the threshold is reduced then this Bill will be reintroduced to catch the people who will not be making profit, and farmers who will not be paying through the taxation system will have to pay through the rating system, because extra revenue will be needed by the Government because of high borrowing.

There are many other reasons why extra revenue was needed by this Government, but the one reason that I feel strongly about is the high extra borrowing by the Government because it has to be paid back with interest. This extra money will be found through the people of this country and nobody else will be paying back that borrowing but the people of Ireland, and the farmers will have to pay their share. This Bill is being introduced to get money from the farming community in a backhanded way.

It is fair to assume that there will be an annual rates increase and this means that on average farmers will have their contributions increased by 11 per cent because of the increase in rates. Has the Minister any idea of the number of farmers who, because of this Bill, will be paying tax in one form or another, whether that form is in income tax or rates tax? Many extra farmers will be brought into the tax net because of this Bill.

Farmers with rateable valuations in 1978 of £75 and in 1979 of £60, who because they fail to make a profit will be included to allow for hardship cases. I would recommend that the Minister amend the Bill to ensure that all farmers liable for income tax to the amount exceeding the increase in the rates be included in the Bill.

I know a number of farmers who supported our policies in the last election but, because of the propaganda of the Fianna Fáil Party — and I am not against propaganda by any party if there is truth in it — were misled and voted for the present Government. I was invited to meetings a few nights before the election to explain a tax demand note based on an assessment of tax and in my presence photostat copies of the tax demand note were distributed by the Fianna Fáil canvassers. I am not against that either, if what was in it was correct. It was distributed to convince farmers that they were being taxed to that level, omitting that the demand was based on an assessment. When I tried to explain what an assessment was I was not allowed to be heard, so the lie was spread throughout the constituency and I am sure throughout the country as well. Farmers now not only realise their mistake but they are beginning to admit that mistake. They all know that the removal of subsidies from fertilisers had an effect on them. The removal of subsidies from cheese is having an effect also as the production of cheese had to be reduced because of the high cost. Farmers are beginning to examine Government policy and know that the accumulation of those taxes has become intolerable. Farmers with moderate means, or those who are, for one reason or another, unable to make a profit, are penalised by this Bill to the extent of more than £7 million in 1978. It is estimated that up to 15,000 farmers will pay that tax through the rates, averaging from £400 to £700 a year. Because of the reduction of the valuation threshold to £60, many more farmers will be included in the rates tax.

Farmers within the rateable valuation for this extra tax, because of their inability to make a profit for one reason or another, will now have to meet a rates bill of over £750, assuming that the valuation is £10 in the £, and I am not over-estimating that because in places it is up to £15 in the £. Those with a rateable valuation of £10 in the £ will now be caught for up to £750. It is almost certain that this demand will increase next year because the rate demand will be increased probably by another 11 per cent or more. The Government tied it to 11 per cent this year and they will probably have something like that in mind next year. If that is the case. the unfortunate farmer will be taxed by this Bill even if he is unable to make a profit and will have to meet a rates bill of £825. With a reduction from £75 to £60 next year he will be penalised to the extent of £660 — his total rates bill.

Where else is there a tax penalty for failing to make a profit? Nobody in the farming community or in the farming organisations disagrees with paying his fair share of tax, but this type of tax is going to be opposed. It has to be opposed not just by the Senators on this side of the House, not just by the Opposition in the other House, but by the people who will get their next rates bill. It is only then that they will realise what this Bill will do. Fianna Fáil when in Opposition suggested they would drastically change the tax code and that they would drastically change the farmers' tax code. They have lived up to that promise today and there is no way I could congratulate the Minister for doing that. They have taxed farmers by way of rates payments. It is a tax based on the most inequitable form imaginable — the rateable valuation. Everybody has admitted, as has been admitted here today by Senators on the other side of the House, that this is the most unfair system that any tax could be based on. It is unfair as a rating system.

A large portion of lands have a high rateable valuation and a high percentage of that land is poor. It is not only quality land that has a high rateable valuation. Therefore, it is not all high quality landowners in the £75 valuation range, or in the £60 valuation range in 1979, who are being taxed by this Bill. The owner of high quality land has not much to fear from the Bill, unless he runs into debt because of sickness or some other misfortune. Under normal circumstances he will make a fair profit from his holding. The unfortunate farmer with poor land and a high valuation is likely to find it more difficult in normal circumstances to make a profit. Nobody can deny that. If he runs into debt or has any farming troubles maybe because of the weather or for some other reason beyond his control, and he makes no profit, he is now taxed by this Bill up to £320 or £400, depending on the valuation of the land.

There are large areas throughout the country capable of high production and other areas capable of low production and they may have the same poor law valuation. This Bill makes no allowance for that. In fact, it penalises the owners of low productivity land. Because the farmer finds himself in trouble at the end of a financial year, not having made a profit he has to pay through the nose. He will have to pay extra rates because of this Bill.

The Bill penalises the farmer who has to work hardest to earn a living from the land — the farmer with the poorest land. He is the man who has to work hardest to develop productivity from that land, to get finances to help him to develop that land in future years and to make some kind of life for himself and his family. The Bill penalises him because the development of that poor land is out of his control. I do not know of any other group in this country who would stand for that. There should be an allowance for the amount of work a person puts in to develop his land or the amount of work he puts in at factory level and so on. Because of that amount of work he should be paid extra but in this case where the land is poor and the profit is low, or maybe there is no profit, that person is penalised.

The Bill might have something to recommend it if the land valuation system was a good one. It is accepted by both Government and Opposition Senators that the valuation system is wrong and must be changed. Let us do something about it. I would ask the Minister to withdraw the Bill and to reintroduce it in an amended form when the poor law valuation system is made a fair one. That is not asking very much. Make the poor law valuation system right and then reintroduce the Bill. I am sure that with some other amendments something like that could be introduced.

I would like to refer briefly to this Bill which helps to put in order something that has been difficult for both local authorities and the Department. This Bill may not be perfect, but it certainly goes a long way towards tidying up the rates on land. You can argue about the title or the description, but regardless of your conclusions, I think this Bill is an improvement and should be welcomed.

I could both listen to and understand the Opposition making a case, particularly Senator Butler. If what he and the Opposition said were true, farmers would actually be hammering at the gates outside. If it were true that the subsidies on fertilisers, cheese and everything else were being removed and extra rates would raise millions of pounds taxation, it would be a sorry plight for the farmers. But I cannot help thinking Senator Butler has read the notes for Deputy Richie Ryan's Bill. It was well known that the taxation of farmers, of co-ops and of all farm income was very much on the cards. Senator Butler may not personally have been in favour of that, but the pressures within the Coalition Government were obvious to everybody and the outcome was going to be massive taxation of farmers. They feel very safe under the present Government, and their lot has been improved greatly.

You cannot talk about this Bill in isolation. You may have to think of the overall picture and of the change that has taken place since the present Administration took office. Reference would have to be made to brucellosis eradication where £4,100,000 was provided in 1977 and £11,500,000 was provided in 1978. You would have to relate many figures. If you look at the Agricultural Estimate you will find that the massive improvement adds up to over £11.5 million and, at the end of the day, this Government will not be giving less than the increase promised in the Estimate—£11.5 million. It is very hard to take seriously criticism of the Bill which says that farmers' incomes will be eroded by millions of pounds, and all the other arguments being put forward.

I am satisfied that farmers are realistic and believe adjustments have to be made. I am equally satisfied that farmers in the west or in my own county very much welcome this Bill. It might not be perfect but it is absolutely essential and clear and I believe there is no outcry against it whatsoever. As I said, farmers are very realistic today and are aware of what is happening. They will look at the overall Government policy and attitude and will be satisfied that the Government are doing a great job and are working in their best interests. I am satisfied the outcry from the Opposition about this Bill is purely flying a kite and there are absolutely no grounds for the alarm they are trying to create.

I want to speak very briefly on this Bill—and in general terms as is proper to the Second Stage debate—which I understand will resist amendment in any form, even when we come to Committee and Report Stages. The general point I want to make about it is this: it is understandable that the farming interest finds a great deal to complain about in this Bill, knowing the situation literally on the ground, they can see how certain areas of the farming community probably will be disadvantaged by it.

It is a fact, and this arises out of what Senator McGowan said, that the farmers ultimately will have to be realistic in relation to both rating and taxing because there is a curious thing happening and has been happening within the national consciousness over the past five years. We hear daily, weekly or at least quarterly bulletins from the EEC Council of Ministers, particularly when the Agricultural Ministers meet, of the adjustments that follow their meetings of very advantageous conditions being bargained for and achieved in Brussels, both under the last Government and under this Government. The result of that has been an enormous rise in affluence among a large area of the farming community.

With regard to the most recent "triumph", when the Minister for Agriculture came back a couple of weeks ago, having achieved what was claimed by the Government to be one of the great bargaining victories in recent years, there was great jubilation among farmers but there was not great jubilation among consumers, or among people whose every cent is taxed. Senator Butler said that the farmer who has to work hardest is taxed most, but that is not unique to farming. Anybody in the community who works extra hours and makes more money is taxed more, and is taxed very rigorously. Consequently, when I spoke of the national consciousness I was thinking in terms like this: those bulletins which show the farming community to be improving, are welcomed by the community as a whole. There is a great deal of good-will in the community for farmers. They are still recognised as being the backbone of the country and as being engaged in our premier industry. I think that good-will will continue for some time. I recall when the National Farmers' Association ten or 12 years ago marched through the city—which was pretty badly shaken because there was a great deal of unemployment here at that time and there was a good deal of economic distress in the country— they were cheered by workers, and people who felt general good-will towards them.

I think there is danger of a subtle change in that attitude occurring. Every time housewives hear that the farmers are getting more for their products, and every time that is registered in the market place, and when they have to pay more for their meat, milk, cheese or butter they feel that the farmers are doing extremely well. Therefore it is inevitable, regardless of which party are in Government, that courageous action, perhaps action more courageous and more imaginative than this, may have to be taken to equalise that situation. It is in the best interest of farmers to realise that that is going to happen and not constantly resist it. In other words, what we need is enlightened reform of the situation both with regard to rates and to taxing. There is a great tendency on the part of both Governments, the Coalition and this one, to flinch from this because it is very unpopular and the farming vote is very large, but this has to be courageously and progressively tackled.

I am not claiming that this legislation is perfect but I tend to resist the claim that farmers should stay any longer greedily outside the tax net. We all have to pay taxes. If the farmers are doing very well, then they should be taxed accordingly. If their doing well is at the expense of the housewife, the consumer, the household of the manual worker or the clerical worker and if it involves a rise in their food costs, then that rise has to be compensated for somehow.

I do not think the farming community should be selfish—I am not claiming that they are—in seeing that the most affluent people in the community should have their surplus distributed to help the less affluent. In other words, what I am speaking of at the moment is the fact that the farming community must face, perhaps, more strenuous taxation than has been hitherto the case with them. That reality must be faced. It is only in matters of detail that the effort should be really deployed to see that the burden is spread properly.

I am not sure I grasped all Senator Butler said but he seemed to be pointing to the anomaly that the poorer type of farmer would be more strenuously hit. I should like to hear the Minister answering that point. I am not contradicting Senator Butler; he seemed to have a very strong point and it is one on which I could not declare myself qualified to comment. On this general principle—and it is on general principles we speak on Second Stage—it is inevitable that farmers will come more and more within the income tax net and that as they become more affluent they are going to have to face the fact that their surplus affluence will have to be distributed among people who are less well off. If they take that view they will retain the good-will of the community much better than if they protest at every turn. We are all Irish and we all belong to the same commonwealth of interest. It would be a very great pity if an increasing resentment were to grow up between the consumer and the farmer. It is not in the interests of the community, either the Irish community or the larger Community to which we belong, if that pattern is not recognised.

The title of this Bill is a play on words. In actual fact, this Bill does give relief in quite a number of ways and without the Bill the relief would not be there. So, it is merely a play on words. The Bill must be viewed in the context of the economic progression of the country as a whole. It must also be viewed in the context of the changing circumstances in the farming community over the past few years. At one time we all appreciated that the farming community were going through a very difficult time and, therefore, there was relief, such as employment relief, to keep people on the land. Since then, the picture has changed. We have joined the EEC. Everybody will agree that farm incomes have improved since we joined the EEC. Last year incomes improved by from 20 per cent to 40 per cent, depending on the part of the country and the type of farmer. Everybody knows that it costs money to run this country and that those costs are increasing. We are carrying a very big percentage of unemployed; we have increased health charges and we have all those things to bear. We must all share the burden of those costs, the farming community as well as the other sections of the community. The farmer generally admits it; he is realistic and he accepts it. His share of this cost is collected in two ways: one by rates and the other by income tax. Whichever way it is, it is merely his contribution to the central fund which has to pay for the running of the country.

In this Bill, the man whose valuation is £20 and under is free; he pays nothing. At the next stage, the man whose valuation is £33 pays on a valuation of £13 and so on up to the stage where there is the cut-off figure and the man then pays income tax. In that case he gets the rates allowance against his income tax. We must look at what is happening here and how other sections of the community will look at this. Take the small shopkeeper or the small industrialist, what happens to him? He has to present his accounts, he has to pay his rates. If he does not present his accounts he is assessed and it is up to him to prove that he has not made a profit. Even if he does not make a profit on which to pay income tax, he still pays his rates. There is no relief Bill for a small shopkeeper up to £20 valuation to get out of his valuation. The shopkeeper looks at his section of the community in relation to the farmer who has this relief. To assist this country we are hoping that the farming community will increase output because the country wants increased output.

Up to the stage of the 3 per cent— we are talking about the 3 per cent here—there is no other section in the community who can increase output and income without getting taxed more because they are limited to the tax and the rates. Let us look at those who pay tax under the pay-as-you-earn scheme. There was a new wage agreement recently which meant an increase of 8 per cent to 10 per cent. They will all have to pay more tax on their increases but the farmers below the 3 per cent recently got an increase from the EEC. If they are not paying income tax already, they are not going to pay extra now. This is the way other parts of the community will look on the farming community.

I believe that the farmers, as Senator Martin said, are realistic and realise that they must pay their part of the burden. As to the method of how one arrives at what that should be, certain people have said that the valuation system is not just. There may be anomalies in the valuation of land but there are also anomalies in the valuation of factories and shops and there were anomalies in the valuation of private dwellings but they are gone now. Possibly we may be able to get over this. We may be able to get some other system, but we could not, overnight, revalue all the land in the country. This seems to be the fairest system; we are able to divide up between the small, middle and big farms by the present rating system. If there is an alternative it can be suggested. I doubt if the farmers would like to accept the alternative which is what the small shopkeeper and small industrialist have today.

I am disappointed with this Bill. As Senator Jago mentioned it may be playing with words but nevertheless it is slightly dishonest to refer to this as a Rates on Agricultural Land (Relief) Bill. As I read the Bill, it is designed purely to relieve the Exchequer of a considerable amount of money that they would have been called on to pay otherwise. I hope the Minister will be able to tell us the amount the Exchequer hope to collect when this Bill is enacted over and above what was collected last year. I am also disappointed with the terms of this Bill because it is a reversal of the trend the National Coalition Government had started in derating homes and land and removing the cost of health and roads from rates onto the central Exchequer. I had hoped that we were moving towards a system which would compare with our farming competitors throughout the rest of the Community where they do not have, as we have here, this double system of taxation. This is regrettable. We are now the only farmers left in the Community who have to pay a form of taxation on our means of production. This is inequitable.

Every Senator will accept that the rating system is unjust in as much as it does not take into account the ability of the ratepayer to pay. I am opposed to this measure because it is designed to relieve the Exchequer and increase the rate burden on farmers. They are the most misunderstood of any category of persons here. The last speaker clearly demonstrated it but did not wish to imply it. I would like to point out that despite the large increases that can be accredited to the farming community, the average farm income here is not yet on a par with the average industrial wage. When one talks about 40 per cent increases or 9 per cent increases in farm incomes, one must remember that the average farm income is a family farm income where more than one member of the family has to pool his resources. It is still not on a par with the average industrial wage prevailing here.

There is too much glib talk about the entire area of agricultural taxation. It certainly needs much more thought. It is quite clear that there is a very definite two-pronged problem. The Leas-Chataoirleach said a few minutes ago that there is certainly an educational problem here and the National Coalition Government and, indeed, this Government have been altogether too hasty in thinking that they can bring about reforms overnight in this area. There is a tremendous problem of education there which is equal to the problem that farmers have of finding the cash to pay the extra demand. The majority of farmers in this country are in the older age group, people who were reared during the economic war and during the second world war when they had this terrible fear of not being able to meet their overheads. If one is brought up in that kind of situation, seeing the tools one has for production being confiscated by force, this certainly leaves a terrible mark on the mind. This is one of the problems that the people who are now hastily trying to reform this system have conveniently forgot. The concept of levying a tax on the basis of a valuation system that was set or designed 130 years ago is clearly outrageous.

I accept that the farming community must pay rates. I accept that everybody should at least fill in a tax form and one must also accept that there are a small number of farmers who are worth a lot of money. But that does not come into it. We are dealing with an industry here and when one looks at it as a complete cross section one will see that there is a short fall. According to this Bill the farmer with a valuation of £60 will be expected to pay at the rate of £10 in the £ this year. Most counties are in excess of that figure. This year he will be expected to pay £600 in rates on demand. This is a considerable increase on what he paid last year. It is not going to be much use to tell that man that he can claim a refund next year when he makes out his income tax return by entering it as an expense against his income tax demand in 1979. It is a little too glib to expect people to accept that. The approach is dishonest because in the last election the Fianna Fáil Government successfully campaigned on this very question of farmer taxation and farmer rates. People will lose faith in politicians if they find that after only a year in office there is a complete reversal in policy such as this. I doubt very much if the rural community have forgotten what they read and what impressed them so much in the Fianna Fáil manifesto previous to the election this time last year.

Our Inland Revenue have the most perfect system of tax collection here. The Collector General and his inspectors are doing a wonderful job. It is a fair system. The rate collectors have, over the year, afforded tremendous service to the public by helping many lame dogs over the way and sustaining them until gale days or fair days, or whatever the system was in more difficult times.

The urban population are being misled by the publicity that the grossly inflated price agricultural land attracts here. The average price of agricultural land obtained last year is more than three times the average price for the rest of the Community. This statistic is important. I blame the lending agencies for this inflated cost of agricultural land. Their policies include competing with one another and playing off ordinary farmers who get auction mania one against another. At the same time the lending agencies reap hefty returns on the interest rate. Nevertheless, it is good to see the people engaged in the industry having the faith to face the future with the aid of finance like that. It is extraordinary how simple that faith is because with the growing strength of the consumer lobbies right across the Community the common agricultural policy will certainly be in for stormy weather in the next five years. After direct elections when the national Governments are liable to lose the veto there may be considerable pressure for changes in the common agricultural policy.

Another point worth making is that in regard to farm income and consumers the price that the consumer pays is in no way related to the price that the farmer got for the raw material. I would like to ask the Minister if he has an estimate of the return to the Exchequer that this Bill will effect. Section I discontinues the facility for the employment allowance. Of all the employment schemes this was the first one. Over the years many Senators advocated that we should increase that allowance to encourage people to employ more. The Government have a scheme which encourages other employers to take on additional employees. In this Bill the £17 allowance is discontinued. I am disappointed that this has not been increased because by increasing it the Government could give relief in a manner that the farming community have been used to in the past and at the same time claim a refund for it from the European Social Fund.

Obviously the people in power at present are not having regard to many funds like this that could have been drawn on and which would be of significant benefit to the people here. Therefore, I very much regret that in section 1 it is proposed to discontinue the employment allowance. Over the next couple of weeks the farmers will be getting their rate demands for the first moiety in this coming year. There will certainly be no doubt in the minds of any of the Senators opposite who happen to traverse any of the rural areas as to who is right and who is wrong. From what the rate collectors tell me the increases are in the order of £400, £500, £600 and £700 and farmers who are not even in the tax bracket are liable for tax. They must pay this money on the nail and they cannot set it off against tax liabilities because they are not liable to tax. Therefore, the Bill is dishonest. Many farmers are going to have a difficult time in meeting the payments. For that reason I regret that this Bill has been introduced.

I, too, would like to comment on the title of the Bill. It is misleading. I am amazed at the word "relief". Relief from what? It is relieving farmers of an extra £7½ million. That is the relief that is involved. I notice too that enthusiasm from the other side of the House today is not as one normally expects from that lobby and for a very good reason indeed. A number of well known Senators on the far side are engaged in farming and their people at home are very upset about this. I believe that this is the first series of rabbits out of the hat, from what I can only term the "three card trick brigade".

There will never be a document that will be more thought about in this nation than the manifesto produced by Fianna Fáil. The Opposition are hardly likely to allow a copy of this manifesto to be out of their hands for more than two minutes at any one time. It will probably be the best selling document the next time there is an election. I believe either their politicians or their canvassers misinterpreted what was mentioned in the manifesto about taxation of farmers and the last general election.

I must ask the Senator to relate his remarks to the Bill as distinct from the manifesto.

It is associated with this because one of the important points about this Bill is that it had its origin at that particular time when we were told that there was a massive streamlining jobs being done on farm taxation. If this is the beginning of the streamlining of farm taxation, then God help farmers at the finish of it. This is an easy way of collecting an extra £7½ million for the Exchequer.

I acknowledge the fact that farmers must pay their due share of tax. Many Senators, particularly people who come from urban areas, are of the opinion that farmers are raking it in in millions and that they are having an exceptionally good time. I admit that there is a certain small section of farmers who are in a position to pay and should be made to pay their fair share of tax. What I object to about this Bill is the method by which it goes about doing that. There is an insinuation in the Bill that whatever amount of tax the larger farmers will now have to pay as a result of this Bill can be set off against his income tax in the following year. I want to make it clear that for many reasons this will not happen in the case of many farmers and that is why I am totally opposed to the Bill and why I prefaced my remarks by objecting to the title of the Bill. I believe that any type of taxation whether it be in industry, commerce or agriculture must be related to the ability of either the owner or the property to pay. I was always of the opinion that whatever type of taxation might be levied, provided it was fairly and equitably done, was in order.

The Fianna Fáil Senators say that perhaps there is something wrong with the Bill but the farmers are not growling about it. If that is the defence that the Government is putting up then that would imply that whatever body of opinion was able to shout loudest and pull the best possible muscle would get on the best. I am amazed at that form of government. It is a dangerous precedent. If there has not been a groundswell of opinion against this Bill it is because farmers did not understand it. But they will understand it when they have to pay. Now their turn has come. I would put it strongly to the Government that a number of farmers who were taken in by the promises of last June are not in a position at this stage to laud the so-called aspirations of the manifesto. Any farmer who is taxed with £700, or maybe £1,000, more than he thought he was obliged to pay will not be as faithful a follower of the Fianna Fáil Party as he was last June.

Let us be specific about what exactly is involved. First of all, this Bill clears the decks of all previous Bills of this type. Over the years several Bills have been initiated that would give reliefs of one type or another and in one fell swoop everyone of them is gone. Anybody who has a valuation of £75 or over gets no relief. What is more important is that on 1 January of next year anybody who has a valuation of £60 or over will get no relief.

The only plausible solution that the Government are giving on this issue is that this can be recouped through income tax. There are many farmers who in a tax situation would have a fairly high tax rebate. They have what might be described as difficult farms to run, for example, big increases, big borrowings and big families. There are people who are sick, elderly farmers. Many people have to pay hired help and the cost of wages and bank charges at the moment is high. A certain section is going to be penalised in a particularly difficult form if this Bill goes through.

I am not against anybody paying his fair share of taxes. Senator Jago said that it was important that agricultural production be increased. Is it a good incenive to put an unfair tax on a particular enterprise and expect that that enterprise will respond? Of course it will not. I believe that we are only at the tip of the iceberg. All I can say of farmers today, large or small, is that whether they are able to pay it or not, in the future they will remember the taxation system that is to be employed by Fianna Fáil in the next couple of years.

I would also like to bring to the notice of the House that in most European countries they have not a dual penalisation tax system. I believe that there should be either income tax or land taxation as we knew it in the past. It is important that our farmers be able to compete with Europe. If we have taxes of this nature being levied on an important section of our agricultural community then certainly we will not be able to meet the bill for the interest on our repayments following the massive borrowing of the Government in the last budget.

One of the reasons why this money has to be collected is that we have to pay our bills. Unfortunately, on this occasion little thought was given to the problems of valuation. It was mentioned by the other side of the House that we should have an alternative. But what is it? Senator Butler and others have commented that our valuation system is out of date and that it is penalising a large number of farmers. I would ask the Minister to withdraw this Bill until such time as a more equitable solution is found. I would ask the Minister how many farmers are involved? We have a right to know how much money is involved in regard to this category of people who are not liable for income tax but are caught in this net because they have valuations of over £75. The numbers will be greater than anticipated. I have no doubt that as a single item this is the most obnoxious Bill that has been brought before us. Many farmers will not forget it easily.

The statement from the Fianna Fáil Government that there is a new type of rating system on the way will fall on deaf ears. I would have thought that the present circumstances presented them with an ideal opportunity to show that they had a commitment to equitable taxation of farmers.

Finally, I would like to say that it is one thing for the urban dwellers to feel that they are not getting on as well as their rural counterparts. When it comes down to taxation we have the famous urban/rural confrontation. It must be pointed out to all concerned that even now, with the increases and devaluation of the green £ and so on, the average earnings of the industrial worker still amounts to £7 a week higher than that of his counterpart in rural Ireland, the average farm family. It is important to drive that home to the Government in power. It is unfair to turn the guns on a community. Unless that community shouts loud enough they will certainly get the works. That is a dangerous precedent because if it were so spread, the strongest body, the strongest voice in this country would get the greatest gains. If that is the Government's answer then, the Bill is even worse than I thought it was. It is a disaster. It is a precedent that I do not like and I would hope that even at this late stage the Minister would have second thoughts about it.

This House has seen a number of contributions from the Government somewhat in excess of the numbers of Deputies who presented themselves and made contributions in the debate in the Dáil. For that I suppose we can be grateful though one can see a certain amount of reluctance on their part. One can envisage the Fianna Fáil Party meeting and saying "Look here, we have got to be seen to make contributions in this debate. We cannot leave it to the opposite side of the House. Get in there and say something".

No problem, no problem.

That remains to be seen. This is an extraordinary Bill. First of all, one would imagine from the presentation of this Bill that reliefs were being extended to the farming categories which had not been extended before. Of course that is not the position at all. It is merely a continuation of reliefs that have been given for the past couple of decades but with a difference this time that some reliefs that have been extended in the past are now terminated in regard to certain categories of farmers.

The Minister in his very short speech, and it was quite noticeable that there were no copies of his speech presented to this House for at least half an hour after the opening of the debate—one could be mischievious and say that was an effort to hide the problems Fianna Fáil see inherent in a public debate of the Bill. No thanks is due to the present Government for the continuance of the relief on rates as far as they continue to apply to some farmers. This relief, as I said, has been given for many years. No thanks is due, but certainly what is due to them is a condemnation in regard to the termination of the reliefs applicable to farmers of £75 valuation this year and £60 valuation as from 1979. I am sorry if this debate must assume a rather partisan atmosphere about it but I think this Bill is wide open to such an atmosphere creeping in because the Bill contains certain back-tracking by Fianna Fáil on their promises and also a certain haste on their part to seek revenue from whatever quarters they can.

We know that there is a scarcity of funds in Government Departments at the moment and it is imperative for them, as it has been since just after Christmas when certain financial easements and subsidies were withdrawn, to make ends meet. I remind the Government side of the House about the withdrawal of the subsidy on fertilisers, the withdrawal of the subsidy on cheese which has an effect on farming production, the value-added tax on marts' commission. There were also changes in regard to the beef incentive scheme, and there was a ban on heifers going into intervention. There was an increase in fees for vetinerary services at meat marts. All these things were done to obtain revenue as replacement for the Exchequer funds which were lost by the abolition of rates from private dwellings.

I am as pleased as other citizens not to have to pay rates on private dwellings but the Government's attitude towards taxation should be one of equity. The logical consequence of the abolition of rates on dwellings should be the abolition of rates on other properties. I have no doubt that farmers in the month prior to the general election in 1977 were led to believe that whatever about an easement in regard to capital taxes there would be easement also for them in regard to rates on land. Much of what every Senator on this side of the House will say on this Bill will be in the form of repetition because it is such a short Bill but it is repetition which is well justified. The extra annual cost in the case of farmers with £60 PLV on land in the wake of withdrawal of this agricultural grant will be in the nature of £220 and that is only on the basis of a rate of £8 in the £. In the case of farmers, say, on £80 PLV there will be an increase of almost £300. This is an increase of almost 75 per cent on what had to be paid before this Bill.

The only defence of this Bill that Fianna Fáil tried to present in the Dáil debate was that the rate demand could be set off against the income tax assessment. That is a rather strange defence in the case of a person who is going to find himself, for a number of reasons such as poor prices, bad weather, sickness, not having any income tax to pay, and yet have rates to pay. If it is insisted that this is a rates relief Bill there is a reduction certainly in the case of those reliefs for some farmers and we cannot keep that in mind enough.

I think it was Senator Hyland who commented that there seemed to be a consensus that the valuation system as it stands is not fair or appropriate. I will not go into that debate even though I would be inclined to agree with him. If it is the consensus that the present valuation system is either inequitable or inappropriate at present then I would say that it is a logical consequence of that consensus that there should be adequate relief extended to the persons who are so inequitably treated.

In regard to the Bill itself—it is a very short Bill, so short that one can slip over its implications—section 1 contains a rather deleterious provision as regards future rate relief provisions. It would extend to the Minister for Finance powers to add to something which the Minister for the Environment is introducing in this House. I would have thought that if the Minister for the Environment introduces a Bill in this House then he should continue to have responsibility for the provision of that Bill in future years. Instead we find that the Minister for Finance may come along and may reduce the £60 PLV threshold by the stroke of a pen to a much lower figure and under subsection (2) as I read it that will take precedence over whatever the Minister for the Environment may have a mind to do in regard to rateable income, which is the responsibility of his Department. I think that is rather a peculiar departure for us to be taking in the Oireachtas as regards any piece of legislation.

There is another strange feature in this Bill in which it provides for the aggregation of valuations throughout all the country in assessing farmers' rateable liability. When I read it first I thought it should have read throughout the county to assess whether that person will exceed the threshold of £60 or £75. I think this is a new departure which is certainly going to have implications and it is no surprise to see the Minister in his opening speech indicating that the administrative implications of this aggregation are still under consideration. I am not surprised, and those implications will certainly be increased by the implications which will be very much evident when the particular section comes to be implemented. We will speak more on Committee Stage in regard to that section.

If there is a time for the future position of the farming community in relation to an overall taxation system to be understood, to be weighed up, and for some definite decisions to be made in that regard, I think that should be done as a matter of urgency. Farmers, like any business persons, must see where they are going. For example, there are certain measures in the Finance Bill this year, namely in regard to the notional system whereby a farmer who elects for that system of taxation in 1978-79 must stay with that system for another two years. Farmers cannot look too kindly on that sort of bind for three years.

The Government, of course, will try to make much of the reliefs that farmers have got from the relief of rates on private dwellings, but I am sure at this stage of their term of office they understand that eaten bread is soon forgotten. In fact, they have been aware of that now for some months but it is indicative of a situation which any Government can put itself into when it commits itself to fulfilling far too much with public moneys because those public moneys must be recouped from somewhere and ultimately it is the people who have to stand up and pay them. We will be opposing sections of this Bill because while we welcome the continuation of the relief that has applied for years the termination of relief to certain categories of the farming community is unjustified and is far too heavy an imposition on them in the overall context of the rating system now.

In conclusion, it is now time for the Government to sit down with the farming community and devise an overall equitable taxation policy for future years. The last Government had taken steps in this regard before the general election and we ask this Government to continue that work and undo some of the harm.

The first speaker to follow the Minister said that he did not get a Minister's script and there were two Labour Party Senators here who seemed to have been left out as regards the Minister's script.

The Senator understands that this is not the responsibility of the Chair.

I know, but it was very strange that two Labour Senators did not get the script nor did the Chief Whip. The abolition of rates on domestic dwellings and outhouses was the worst day's work ever done here. Lords and millionaires with no land but with beautiful big houses and incomes should not be free of rates. If the Government were trying to do something for the ordinary people, and trying to keep income taxes down they would have given the people in local authority houses rates relief and then dealt on a valuation basis afterwards.

We are dealing here with the Rates on Agricultural Land (Relief) Bill. Whoever drafted that Bill should have dropped the word "Relief" because there is no relief in it for the farming community. I do not advocate that the farming community should not pay their fair share of income tax, although they were so long not paying income tax under the Fianna Fáil Government that it came as a shock to them when the former Minister for Finance decided to tax farmers. They should have been taxed years before that, but when it came to the general election the farmers were told that it was an unjust tax and that there would be a new system which would not hurt too much. Great play was made of the fact that people with £20 valuation and under would pay no rates, but in the midlands a man with a £20 valuation has not very much land and has to have another job, on which he must pay tax. If a man has £30 valuation he must pay full tax on his earnings under the notional system.

In my constituency many small farmers work with Bord na Móna, with the Board of Works, with the Land Commission and so on, and with their valuations of over £20 they have to pay the full income tax on their earnings and they pay 65p in the £ on the amount over £20 as well. There was a lot of talk about the wonderful thing that was done when £17 relief was given to farmers who employed an agricultural labourer. There are 19 farms with all over £100 valuations within six miles of me which are well over 100 acres and only one farm labourer works on these 19 farms. We were blamed for taking away the £17, which is just one-third of a week's wages, from any farmer who employs a man. When people with £100 valuation were caught first that was a dreadful crime; then it came down to £75 in 1968 and in 1969 it was down to £60, and it will come down to £50.

I cannot understand why so many farmers opted for the notional system. Fine Gael claim that the farmers are not capable of paying this tax. Why do the farmers not keep books and offer up their profits? That is what I would advise them to do if they are being wronged under the notional system. There are people with large families, with overdrafts, and with other commitments who are getting no relief and the sooner the notional system is taken out of this country and the farmers pay tax on their profits, the better for everyone.

We had a 6 per cent or 6½ per cent devaluation of the green £ during the week. What does that mean to the ordinary worker or to people who support the Labour Party? It means that butter has gone up by 4½p and if the subsidy is taken off it will go up to 82p a pound. The subsidy on cheese has gone and people are not buying it. We found that creameries are bringing in cheese from foreign countries because they can sell it cheaper.

The Senator should move more to what is in the Bill.

I am not going away from the Bill. The question of whether rates relief should be given to people who are getting the lion's share of the profits in this country, is something I am quite doubtful about. The valuation system was referred to today and it was said to be unfair because land that was capable of high production and land that was capable of low production had the same PLV. I did not find that in any part of the country. I happen to be associated with Kerry where a fellow can have 600 acres of mountainous land maintaining 600 or 700 sheep with a valuation of about £3.10, and he will never be caught in the tax net. He will have the national system not the profits system.

People in my part of the country have meetings every night to take the reclaimed land from the bog, from Bord na Móna. In about ten years' time the bogs will be cut out and unless we are able to put them to some other use like vegetable production we will have another 4,000 or 5,000 people unemployed. The valuation on the bogs is 5p per statute acre and people are very anxious to get this land and to keep it at its present valuation. When James Dillon was Minister for Agriculture he introduced a land project scheme and he had to give a guarantee to the farmers, before they would make use of the scheme, that no matter what improvements they made on the land he would not increase the PLV. At that time if a man repaired his house or built on an extra room the valuation officer would put up the rate. The farmers were afraid that the same thing would happen as regards land. The best way for any Government to destroy themselves overnight would be to bring in a new system of land valuation. We introduced taxation for farmers and that is what put us out in the cold. Every farmer in the country voted for Fianna Fáil on the promises they got. They brought it off well enough but perhaps they will have to answer some day. I would defy anyone here to say that there should be new valuations on land. One of the sorest points in 1948 was when the land reclamation scheme was first introduced. All I have to say is that the valuations should go untouched, the national system should be abolished and the farmers should be made to keep books and to pay tax according to their profits.

There has been a lot of discussion from this side of the House. As Senator Markey has already pointed out, it is inevitable that when a Bill of this nature and size, which has only one point of concern for most people, is introduced, there would be a lot of repetition. It is important that I add my support to the opposition against this Bill in so far as it proposes to abolish the abatement of rates for certain farmers. I was surprised to hear Senator Hyland suggest that the opposition to this Bill was groundless because the Bill gave rates' relief to farmers. The implication of what the Senator said was that farmers were getting something they did not have before. Farmers are being given something in this Bill that they have had for a number of years and some farmers are being denied relief that they have had for a number of years.

It is a great pity that when Fianna Fáil were asked last year, in the course of the general election campaign, how they were going to recoup the money they would lose when they abolished the rates on houses they did not come clean and say "We propose in relation to farmers with higher valuations to abolish the abatement of rates". It would have been the truthful thing to say and would have given more credence to promises made by political parties.

The Senator knows that is not an honest statement.

The Fianna Fáil manifesto was very explicit and clear where it suited Fianna Fáil to be explicit and clear, but this proposition, for example, was in invisible ink last June. Now with the lapse of time, it has become quite clear what the intent of Fianna Fáil was at that time and is now. They did not have the courage to tell the people that their intention was to subsidise the abolition of rates on private dwelling houses through farmers' abatement, as it then stood. Even though the Fianna Fáil manifesto was explicit in some ways there were other ways in which it was vague and innocuous. One of those areas was certainly the area of farmers' tax generally. To those people who canvassed during the general election it was quite clear that Fianna Fáil, on their door to door canvas, implied, and in certain instances expressed openly, that if Fianna Fáil were returned to Government they would abolish farmers' income tax altogether. There was no mention of what would happen in relation to the rates abatement. We know that as a budgetary provision the income tax on farmers was extended and maybe that is the way it should be. I see good reason why every farmer should pay income tax. I disagree in detail with some of the provisions, but as a general proposition farmers who can afford to pay income tax should pay it. A rates provision like this, that properly belongs to the budget, is grossly unfair. Everybody, even Senator Hyland, accepts that the rating system is not a fair one. To use it now as a system to gather money from farmers is not only unfair and politically misleading in the context of the general election, but it is just a bad general principle if we disagree with the rating system.

I will suggest a couple of positive aspects to the debate. There is no doubt that our agricultural industry has massive potential for improvement. We have about three-and-a-half million acres of waste land and we produce about one-half of what we could produce agriculturally. The benefits we are losing, both in revenue from exports and in relation to employment, because of our lack of concern with agriculture, are substantial. We should be pumping as much money as possible into agriculture, not necessarily by subsidising farmers or by giving it directly to farmers. Senator McAuliffe mentioned the cut-away bog. No concerted effort has been made by the Department of Agriculture, so far as I know, or by the Government to have some policy on this, to try to use every agricultural resource we have. The potential for employment is massive. The potential for increased revenue from agriculture is massive.

In certain instances some farmers could pay more tax but it should not be taken through this system. I am disappointed that the Government have chosen this way of getting more money from farmers at a time when as much money as possible should be diverted into agriculture, either directly to farmers or through some agency, to try to ensure greater capital reinvestment in land.

Senator McCartin made the important point that many people who are not associated with agriculture believe that because there were apparent price increases for farmers over the last few years every farmer in the country is rolling in money. That is not the case. Anybody who knows, for example, the trade in store cattle, is well aware that because of the prices being paid for stock to be fattened it will be very difficult for farmers to make money on them. It is the profit in the end that counts and prices do not matter at all. We are reaching a stage where, because of increased costs and because of the absence of big capital investment to give farmers the opportunity to increase production, the net profit for the farmers in the heel of the hunt is not significant. Generally speaking, the average farmer is away behind what the average industrial worker is getting. We should concern ourselves with getting over this problem for the sake of individual farmers and for the sake of the economy as a whole. I will oppose very strongly some of the provisions of this Bill on Committee Stage.

There are a few things that must be said here. Why the Government or the Minister should call this Bill a "Rates on Agricultural Land (Relief) Bill" is beyond me. If this is passed it will take £7 million extra out of the farmers' pockets. That can be brought up to £25 million when we add to the £7 million the amount in subsidies that has been withdrawn by the Government. During the election campaign Fianna Fáil led our people to believe, rightly or wrongly, that everything here would be rosy if there was a change of Government. The people decided on a change and we accept that decision. While all the promises were made in that manifesto, all the niceties were put forward, and the carrots were left dangling—not alone in front of the agricultural community—the time must arrive if the promises are to be fulfilled. Somebody must pay the piper.

One of the reasons this Bill has been introduced is to extract the amount of money I mentioned from our farmers. There is one way of robbing a man; it is another nice quiet way of putting one's hand gently into his pocket to take the money. That is what is covered up in the Bill.

The Bill pushes up farmers' rates from 65 to 80 per cent. It will not surprise me if it is higher next year. The valuations on which the Government are working are somewhere in the region of 200 years old and they bear no relation to the value of land at the moment. These people who will pay this extra £7 million into the Exchequer may be over-valued because they have a small farm. There is a case to be made that a lot of them may be over-valued. Those people are not alone over-valued but they would normally not be liable for income tax. If a person is not liable for income tax then there is no necessity for him to pay it but in this Bill the Government are going to extract £7 million from people who may not be liable for income tax. We all know one is only liable to pay income tax on a profit. However, this money is to be taken from the agricultural community regardless of whether they make a profit or a loss.

That is an unjust procedure. If I was speaking about this a month ago I would probably say that the people affected did not realise what was in store for them but I know that in my constituency of Carlow-Kilkenny—I am sure it is the same throughout the country—within the last few weeks demand notes have arrived. I know a lot of people were shocked. Those people derive a livelihood from a small farm, try to rear families and in many cases do not make a profit. This will be felt by more than the farming community. We all know that if one does not make a profit it is hard to exist. Any shopkeeper or businessman not making a profit must either increase his turnover or increase his prices. If it is necessary for the people affected by this to increase the price of their produce that increase must be passed on to every housewife.

We are all aware that subsidies were withdrawn. People have short memories and it is a good thing to remind them now and then of what happened in case they forget. Many people may wonder at the figures we shot out in criticising the Bill. It affects small and large farmers. The Government six months ago withdrew the fertiliser subsidy. That was another £7 million. All those things add up. This business of removing subsidies and collecting money through rates under this Bill is bringing in mini-budgets week after week and month after month.

I remember when the budget was introduced in April or May but now it is brought in in January or the beginning of February. At the rate the Government are travelling at the moment, there is a mini-budget every month. This is one example of it and the withdrawal of the subsidies I mentioned is another example.

I realise that services have to be paid for but one cannot make promises at election time without telling the people at that time how the money is to be collected. I should like our people to cast their minds back to almost 12 months ago and to ask themselves—I particularly refer this to the members of the Government and the Fianna Fáil Party—if they told the electorate then when they were dishing out the goodies, as our people thought, that we were going to have this type of performance in their first year of office? If that is the procedure in the first year I may not be too far out when I mention the fact that farmers' rates which are being pushed up from 65 per cent to 80 per cent may be higher next year. The Minister should give us some idea as to whether he can make a forecast on that.

I should like to speak briefly on this Bill. Aspects of it are welcome because, as the Minister of State pointed out in his speech, the agricultural grant is paid by the Exchequer to the local authority so that relief on rates can be given to landowners. The last Rates on Agricultural Land (Relief) Act expired at the end of last year so that without this Bill being introduced there was a problem. This Bill is necessary to continue certain rates relief to farmers and other occupiers of agricultural land and to get over the legal anomaly during this temporary period. I notice that land valuations of £20 or less will benefit from the relief of 100 per cent of the general rate in the £, continuing the effective derating of these holdings which was introduced some years ago. I also note the position of those with a valuation over £20 and not greater than £33. However, there is obvious opposition to the final section of this Bill which relates to the position of land holders whose valuations are equal to or greater than the income tax threshold. There are two grounds on which this section is being opposed.

Many speeches have been of a political nature and, on this occasion, it has been justifiable to speak in political terms concerning this broad issue. It is a fact of life that in June of last year we had a general election, and a further fact of life that in that election a major issue of enormous significance throughout all of rural Ireland was the entire issue of taxation of farm profits, the issue of rates on agricultural land. Against a background where we had an excellent Minister for Agriculture, in the person of Deputy Mark Clinton, we were libelled around this land by the then Opposition who charged that we wanted to ruin the farmer by inequitable taxation. At meeting after meeting it was suggested that the tax thresholds introduced were merely the thin end of the wedge. The Opposition which formed the Government after the last election after considerable scores in farming areas had at no stage through that campaign suggested that there was to be a change in their attitude on the rating of agricultural land. In terms of income on land, one must take in the total picture; one must include both income taxation and rates in the picture. One cannot give concessions, for example, in the income taxation sector while, at the same time, proposing to take many of these concessions back in terms of hard cash under the rating system. This is not in tune with what the people had been told last year. For this very obvious political reason this section is being strongly opposed by our party, as it was in the Dáil.

In a vocational sense we oppose the Bill. We oppose this rates proposal for certain other reasons, because it has been argued for many years that rates are an inequitable system of taxation. It does not relate to the capacity of the individual to bear the burden or to pay the price as distinct from income taxation which is an entirely different matter and is simply a tax on income. In the simplest of terms this means that if one is earning an income or if a company is earning an income then, presumably, the capacity is there at a certain rate to pay taxation and tax is paid out of income made. The difference with this rates system on property and land is that if profits are there certainly the burden can be borne, but if profits are not there the capacity is not there to pay. In that sense it is an unjust form of taxation. While the agricultural sector of our economy has been doing remarkably well in recent years the tide can turn and there can be problems on individual holdings of land. For that reason this type of taxation can present major problems for the individual, perhaps not this year or next year but in some year. It is quite inequitable and we oppose it for that reason.

Fianna Fáil spokesmen said last June that the tax threshold with which we started was merely the thin end of the wedge and that while we started on a base of £100 with a reduction to £75 there would logically be further reductions in this tax threshold. Will those spokesmen now eat their words? One of the simplest effects of passing this Bill is that without the necessity for a further Bill by the arbitrary choice of the Minister for Finance one can have further reductions in that threshold without having to produce a new Bill or without having to seek an amendment to this one. We are talking of a threshold for January 1978 of £75, for January 1979 of £60. Reverting to the speeches of last year and the libelling of the position on the then Government of which I was a backbencher, it is logical to ask those people who spoke about this threshold being the thin end of the wedge to eat their words now and to challenge them to tell us what is for the future—£100, £75, £60 for January 1979, and then we are into 1980?

Effectively, we are talking about a Bill under which there is a change in the position of landholders whose valuation is equal to or greater than the income tax threshold. That income tax threshold is now £75 and it will after January next be £60 and if there is a continuation of this policy we are talking about a few years where a category of farmer to whom this system should never have applied will obviously come into this category again. I refer to the small holder. We are moving towards that if this is the trend which is going to continue. It will not require a further Bill; an arbitrary decision of the Minister for Finance at budget time can leave this very undesirable position.

While in the most general terms the Bill is obviously necessary for legal reasons to allow the continuing scale of relief for certain farmers the latter section is undesirable for the reasons I stated. For that reason it is being opposed.

Most people are wondering whether anything new can be said about this small and not very wide-embracing Bill. However, even though things have been repeated it is necessary in the context of the Fianna Fáil manifesto at the election and the promises made by those who sought votes in the various constituencies to say that this was only part of the greatest con-job ever pulled at election time. It is only right that they should be reminded often and clearly that one cannot get away with a con-job here any more and that it can happen only once.

I am sure the 3 per cent of farmers who will have to pay £7 million extra did not think at a time when a certain ex-Minister was being slagged left, right and centre by Fianna Fáil speakers for introducing tax on farmers that after Fianna Fáil were returned to power, with the greatest majority ever known, they would be the first to be mulcted. They did not expect that they would be paying something nobody ever expected them to pay. Consequently, it must be unjust to expect them to pay. It has been repeated often that the thin end of the wedge has been inserted. It had also been said that this is only a stop-gap Bill, a plastering effort to try to get over a situation that exists. The Government need money but had not the courage to say that they would collect it in this manner or any other manner except borrow it. This part of what I call the con-job is still in the air and money is needed.

I am not against farmers being taxed according to their means. I agree that any farmer who has a taxable income should pay tax but in this case only a certain number of farmers will be caught and the door is left open for other farmers to be caught next year and in succeeding years. That is what I disagree with. I am certain that will happen. The Government have sufficient strength, the strongest Government in our history and possibly the strongest in any other democratic State, to tackle de-rating. Apart altogether from de-rating, revaluation has to come if we are to have a base for taxation or for any other type of assessment in the future. Only a Government with sufficient strength to do this, and the courage to do it, can do it. The relevant valuation Act is so out of date that people who are assessed under it today can even claim discrimination. It is discrimination against any farmer whose valuations were assessed at that time because they bear no relation to the value, worth, state or likely output of the land. Those factors will have to be considered in the future. That will be a costly business but costly though it may be it will put the State on a proper foundation for taxation, the distribution of grant money and everything else. This will have to be done.

We have 3 million acres of nonproductive land. I was in company some months ago with two Germans and they were appalled at the amount of land along the main railway line in the midlands that was covered with bushes and rushes. It is practically a swamp. We heard earlier about distributing the land that has been cut away from bogs but we should first get the mineral soils, that are flooded and covered with bushes and whins into production before going to the bogs. Everybody knows that in bogs one must put everything into them.

I wish to remind the Senator that he is straying from the terms of the Bill.

I am sorry if I am broadening the debate too much but I tend to get carried away. It is closely related to the measure we are discussing. I find great difficulty in figuring out how this aggregation will come about. I am not saying anything about aggregation properly carried out but I can see immense difficulties in it. It is only when some officials of the Department will attempt to do the aggregation and find out who has conacre, land on the 11-month system, and whose brother or cousin owns something else, that they will get down to the nitty-gritty fact of aggregation. I do not hold any brief for people who do certain things they should not do, who own property that they deny they have, or who do not pay the State money they should be paying. However, aggregation is only a stop-gap. It will certainly not solve any question except bring in the supposed £7 million from the 3 per cent of landholders I maintain are unfairly being asked to pay this money.

Senator Lyons made the point that anything that could be said about this Bill has probably been said already. Indeed, what I am about to say has probably been said in one way or another already but this Bill is such a piece of political dishonesty and con-manship, that these aspects of it cannot be spelled out too often. The Minister said that this Bill was necessary in order to continue to give certain rates reliefs to farmers and other occupiers of agricultural land. It has been the consistent argument of the Minister of State in this House, and the Minister for the Environment in the other House, and Members from the other side who rose to speak—in the other House there may have been one, in this House possibly two, which denotes a certain amount of embarrassment on the part of those in the Government benches—that this is a Bill giving relief.

In my view the Bill is a fraud. The provision for relief on agricultural land from the full burden of the rates attributable to the valuation of that land has been part of our legal code for a great number of years. For some reason that is a mystery to me it has not been enacted permanently into our legislation but it is there as a temporary measure and has probably gone on for upwards of 30 years as such. Anything that has been a temporary measure for upwards of 30 years takes on the character of permanancy and is accepted by those involved and expected by those involved to continue as a permanent feature of a particular situation.

To attempt to present a Bill of this nature as giving relief when it really endorses what has been the actual position for upwards of 30 years is, in my opinion, nothing short of fraudulent. The fraud is compounded when we look at the Bill and see that its main point, the whole thrust of the Bill, is to remove that relief which has been a permanent feature of the rating system from farmers whose valuations exceed £75 this year and next year £60 and upwards. Of course it is not a Bill giving relief at all. It is a Bill to remove reliefs from a substantial number of farmers. For a Government to try and present it and hope to get away with presenting it as a relief Bill is, as I say, grossly dishonest, and this possibly explains the unusual lack of speakers from the other side.

It has been a feature of debates in this House that Government Members have spoken about the dearth of Opposition speaking on legislation and other matters coming before the House. It is significant that in regard to this measure Government Members are noticeably absent. At least it is a point in their favour that they are absent and are not attempting to defend the indefensible by following the line put forward by the Minister, that this Bill is a relief measure. It is nothing of the kind. It is dealing with the reliefs that have been a permanent feature of the agricultural scene for upwards of 30 years and one cannot say that something which has been in existence for 30 years is giving anything new.

What it does is to make a dramatic and significant change by removing totally all reliefs from a substantial number of farmers. It is done in such a way by trying it in with the Finance Bill that the removal of this relief in years to come will not even need any further Bill—at least we will be spared the dishonesty of another Minister coming in here some other day and talking about giving further relief.

The justification for removing the relief is that the farmers in question can take credit for the extra rates which they will have to pay against their income tax bill. But that argument falls down on a number of scores. First of all, the farmers concerned may not have any income tax bill to pay. That is quite likely for farmers at the lower scale of the threshold. Their farming operations may be so constructed having regard to borrowing requirements and other expenses incurred in connection with them that the net profit for the year will have them free of tax. They may have claims for children, or the other claims that are available to taxpayers, which may cancel out any liability to tax. Consequently, to tell those farmers that they may set off against income tax the extra burden provided in this Bill is to provoke the reply: "Thank you very much for nothing".

This Bill in the case of such farmers is imposing a taxation on them, a taxation which they do not now have to pay because their incomes do not justify it and that the present system of reliefs relieves them from. The farmer who does not have an income tax bill to pay will now have extra rates to pay and the income tax code in effect has found that that farmer is not in a position to pay tax. He has no liability to pay tax. He is not able to pay tax. If a person's situation has been assessed and examined and he has been found not liable for income tax, the Government propose to say to that man, whose farming operations are uneconomic, non-viable and do not produce taxable profits: "We will let you free under the income tax code but we will grab you under this so-called relief of rates Bill". That man, who is incapable of being taxed under the provisions of various Finance Acts is now being taxed, and there is no other word for it, as a consequence of this Bill, and this Bill imposes the taxation on him without reference to his capacity to pay.

It is a classic example of the inequity of the rating system. The rating system is a tax imposed on citizens without any regard whatever to their ability to pay. The argument that a man may take credit for this against his tax falls down flat on its face if he has not had to pay tax. If he has had some tax to pay the chances are that the substantially increased burden of rates he is going to pay here will far exceed any liability he may have to pay income tax.

The regressive nature of this tax— and it is a classic example of a regressive tax—is compounded by the fact that the valuation system is not equitable; that the calculation of the valuation in the £ is not equitable or consistent. It has been pointed out by Senator Lyons and Senator McCartin that there are variations throughout the country which make nonsense of the rating system as a basic on which to found a taxation system. It has its own in-built inequities, and to found a tax which of its essential nature is regressive on the basis of something that is also inequitable is surely government of the worst kind. This is compounded by the fraudulent approach that this Bill is giving relief. It is highly irresponsible of the Government to try to present a measure in the way they have done.

Another adverse consequence for the farmer in regard to his taxation position, what he contributes to the nation, arises from the fact that rates are payable in two moieties, first when the demand note issues about this time of the year and second, in September or October, whereas if there is a liability for tax, that tax may not fall to be paid for a further 12 or more months. So the credit which the farmer is entitled to take—if credit arises in his case—cannot be taken by him for perhaps 12 to 18 months after he has paid the tax by way of extra rates. In other words, the Exchequer has the benefit of this money a year or 18 months in advance through the sleight of hand operated in this Bill. This is a point which has not been mentioned by the Minister or by any speakers on his side of the House on this measure.

The Bill has built into it as well a system whereby the relief can be removed from further categories of farmers in the future without any debate in either House of the Oireachtas. I have no doubt that having regard to the constraints that are already showing themselves in regard to the Exchequer, the threshold will be brought down to £60 in 1979 and below that in years to come, because there will be such pressure on public financing that every possible source of revenue will have to be tapped, and the one of course that will be first up for tapping will be the farming sector because the industrialists cannot be touched— they are the people on whom our economic revival is depending. The wage earner cannot be touched because the delicate national wage agreements will be at issue. The unfortunate farmer will have to be looked at and again he will be looked at in this understand way.

If he were told to prepare himself for a 1980 tax threshold of as low as £50 at least he would not be discouraged and it would be a more honest approach. What will happen to him obviously is that his rates relief will be removed and the Government will put him through the full impost for rates. That farmer may not have to pay any income tax, but the Government do not mind what the money coming into the Exchequer is called, whether it is income tax or rates, as long as it comes into the Exchequer.

This Bill is a very clever but essentially dishonest way of increasing the returns to the Exchequer without calling it income tax. As I said before, it is a regressive tax, it imposes a liability on a person without any regard whatever to his ability to pay. This cannot be defended and I would be glad to have the Minister's views as to whether he thinks this is a regressive tax, imposed on a person without any consideration of his ability to pay. That is what this tax will be for farmers on the £60 upward threshold who have no income tax liability because his operations do not justify taxation, or whose income liability is less than the increased rate which he will be called on to pay as a result of this Bill.

It is a far cry from the days of 1974 when the present Taoiseach was making exactly the point I am making now when he was expressing much sympathy for the predicament and plight of the agricultural community. He was very concerned that farmers would have a fair deal. It is ironic now to see him presiding over an administration who produce this particularly harsh from of taxation on Irish farmers.

The most disreputable feature of it is the total dishonesty of the approach. This Bill would be much more properly titled if called something like Rates on Agricultural Land (Continuation of Relief and Removal of Relief in Certain Cases) Bill, 1978. At least it would be an honest approach and the farmers would know exactly what was involved for them. The administrative difficulties that will be involved in aggregation will be immense. They will be particularly unpleasant because they will involve an undue amount of prying and of non-official detective work to find out who owns what. This will produce reactions and resentment among a lot of people and bring the State more and more into conflict with individual citizens in an unpleasant way. I suppose it has to be done. It is regrettable that it has to be done, but if the hunger for increasing the revenue to the Exchequer was not as intensive as it is as a result of the economic policies which are being practised, this undesirable development might have been obviated.

I will conclude by emphasising again the fraudulent nature of this Bill and the regressive nature of taxation it imposes, and I must express the hope that the Government will see the light and, if it is decided to remove rates relief from valuations of less than £60 in future, that the farmers of Ireland will be told what is being done to them in clear and unequivocal terms.

First of all, the Rates on Agricultural Land (Relief) Act, 1976, expired on 31 December 1977, and the principal purpose of the 1978 Bill is to give rates relief to landowners. It continues the existing scale of reliefs for 97 per cent of all rated holdings. The scale of relief is fairly well known to all Members of this House and it is not necessary for me to spell it out. The Bill provides that there will not be relief on land valuation of £75 and more in 1978. Only 3 per cent of all rated holdings are thereby affected. The purpose of the Bill is to give relief which will cost the Exchequer £38.5 million this year. If the Bill is not passed there will not be rates relief on land this year. That is the simple fact of the matter.

In the course of the debate there were some very interesting points raised. There is an answer to all of them. Senator McCartin said that the title of the Bill is misleading. The Bill is entitled Rates on Agricultural Land (Relief) Bill, 1978. This is the correct title. Without the Bill farmers would have to pay full rates on their land this year. Because of the Bill the farmers will benefit to the tune of £38.5 million in rates relief in 1978. The title of the Bill clearly tells people what the Bill is for. It is to give relief of rates on land—that is the sole purpose of the Bill. It would be wrong to give the Bill any other title, in my view. It also provides for the relief of rates next year. If the title of the Bill were to be changed people could be misled. The Rates on Agricultural Land (Relief) Act, 1976 brought the unemployment allowance to an end. What was wrong with the title to that Bill? The title to the 1976 Act was right just as the title to this Bill is correct.

Senator McCartin said that because of this Bill farmers will pay the cost of the abolition of rates on houses. This is not correct. The abolition of domestic rates and certain other rates will cost £80.75 million in 1978. The Exchequer is paying this amount to local authorities. It is also paying £38½ million to relieve rates on farmers, so the Exchequer's contribution is substantial. Senator Moynihan and a number of other Senators criticised the valuation system on the grounds that it is out of date and has many anomalies. This is the responsibility of the Department of Finance but far be it from me to say any other Department are not doing something they should be doing. The position is, as most Senators are aware, that this matter was considered on numerous occasions down the years. It is a particularly interesting subject, to say the least of it. I am certain that if there were to be a revision of the whole valuation system in the morning, a complete revision of valuations, whether on land or on buildings, nobody would be perfectly satisfied when the exercise had been completed. It would definitely cost a considerable sum of money and it would take considerable time to revalue every field in the country. It may be done in the future, but I cannot see it happening in the immediate or foreseeable future. As I said, the entire country would have to be revalued. All that can be done at the moment is to apportion an existing valuation between two people if land or part of it changes hands—this is the legal position at present—without revaluing the whole country. As the law stands at the moment it would require a revaluation of whole country to carry out any system of revaluation on land.

Senator Butler criticised the title of the Bill and said that no extra relief is being given to farmers. The Senator did not mention that farmers are being relieved of domestic rates on their dwellings. That relief will put about £9 million into the pockets of farmers this year. The Minister for the Environment shortly will be bringing in a Bill to legalise the abolition of domestic rates. Farm buildings, of course, which had not already been derated are being derated in 1978 and in future years as well. This is an additional relief for farmers and a factor that must be taken into consideration.

Some Senators queried the number of farmers who will be paying taxes as a result of the Bill. The fact of the matter is that the Bill will result in a reduction of rates relief for 15,000 farmers in 1978. Those farmers will be able to offset their rates demands against income tax. I have no statistics on farmers' income tax.

Senator Butler also mentioned the valuation system. He said the poorer farmers will be hardest hit by the Bill. What may have been in his mind is that the farmer who is not liable to income tax will not be able to offset his rates demand against income tax demands. There may be many reasons why a farmer with a valuation of £75 or more is able to stay outside the income tax net. It does not always follow that he is poorer. He is a fairly substantial farmer in any case if he has land valuation in excess of £75. It is estimated that there are about 15,300 rated land holdings in the State with poor law valuations of £75 or more and about 7,800 with poor law valuations of between £60 to £74. On the basis of this year's rates in the £, the amounts needed by way of agricultural grant to apply the current primary and supplementary allowances to these categories are estimated to be £7 million and £2.3 million respectively. These estimated savings to the Exchequer will however be reduced by allowing rates as a credit against income tax liabilities.

I think it was Senator McDonald who referred to the discontinuance of the employment allowance. This allowance was withdrawn by the National Coalition Government under the 1976 Act. However, may I say that the employment incentive scheme applies to agricultural employment and this was queried this evening. The employment incentive scheme, introduced in January 1977 was due to end in February 1978, but the Minister for Labour has indicated to me that he proposes to continue it at least until the end of the current year. The primary purpose of the scheme is to encourage the full-time employment of persons who have been on the live register. The scheme also applies to employment by farmers. Under the scheme a sum of £20 per week is payable for up to 24 weeks in respect of each additional person taken on and retained in employment for a continuous period of at least three months.

Senator Markey raised the question of future changes in the valuation threshold. The threshold cannot be changed again without amending legislation which would be in the form of the usual Finance Bill. There is no question of changes affecting rates and the agricultural grant being made during the year without plenty of notice. The Oireachtas would have a full opportunity of discussing any changes. Apart from the Finance Bill, in which the actual amount of the threshold is specified, there will have to be a new Agricultural Grant Bill anyway in respect of 1980. The present Bill applies to 1978 and 1979.

Senator Governey asked for a forecast of rates for next year. I cannot do this, of course, but the Bill makes clear that the relief will continue for farmers with valuations of less than £20. They are completely derated and this is to continue next year. A farmer with more than £20 and less than £60 valuation will be partially derated.

Senator Staunton alleged that the threshold can be changed in the future without the necessity for a further Bill. I can assure the Senator and the House that the threshold can only be changed by one particular Bill, and that is by the Finance Bill. The Dáil and the Seanad would have a full opportunity to debate any change in the threshold when the Finance Bill comes before the Oireachtas.

Senator Cooney said that the Bill more or less endorses the position which has existed for 30 years in respect of rates. I do not agree with the Senator, for example, in respect of buildings. For a number of years past we had a measure known as the Temporary Reduction of Valuations Bill which was amended from time to time by various Housing Acts, so that this type of a Bill is nothing new.

The Rates on Agricultural Land (Relief) Act, 1946, was a temporary Act and since then the agricultural grant has been continued by means of temporary legislation. In my view there is something to be said for temporary legislation in certain circumstances. The advantage of temporary legislation with a regular review is that it is more flexible. Agriculture is rapidly changing because of EEC membership. The agricultural grant is one of the most important channels of Government aid to the farming community. It is important that it should be reviewed and modified upwards or downwards in the light of changing circumstances.

Some Senators referred to land valuation and the impact which this measure would have in certain areas. I will quote a few examples of the average valuation on land per acre in a few counties as a matter of interest. The average valuation of land per acre in Donegal and Mayo is 19p; in Dublin county, 104p; in South Tipperary, 122p and the average for the whole country is nearly 41p. The average acreage of land with £75 valuation in each of these areas is as follows: in Donegal and Mayo, 395 acres; in Dublin county, 72 acres; in South Tipperary, 61 acres; and for the whole country 185 acres.

I would like to make one other point before I conclude. If the 1977 reliefs had continued into 1978, the cost to the Exchequer would have amounted to £45.5 million. The effect of the Rates on Agricultural Land (Relief) Bill, 1978, will be to reduce this to £38.5 million, a saving of £7 million. The State expenditure in relation to agriculture is estimated at just under £155 million for 1978, an increase of almost £10 million on the provisional outturn for 1977. In addition, farm houses, like other domestic dwellings, have been 100 per cent derated from 1 January 1978, and a conservative estimate of the cost of this relief is £9 million. The Government have also implemented their commitment to derate all farm outbuildings which are not already derated. This will cost a considerable sum in the current year.

I hope I have answered all the queries raised and I would recommend this Bill to the House.

Question put and agreed to.
Committee Stage ordered for Wednesday, 31 May 1978.
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