Seanad Éireann debate -
Wednesday, 25 Jun 1980

Vol. 94 No. 11

Rates on Agricultural Land (Relief) Bill, 1980: Second Stage.

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

Minister of State at the Department of the Environment (Mr. Connolly)

The agricultural grant is paid to local authorities so that they can give relief of rates to land holders. The reliefs in the Rates on Agricultural Land (Relief) Act, 1978, expired at the end of last year. This Bill is necessary, therefore, to allow for the rating reliefs to be given to rated occupiers of agricultural land in the present year and in 1981 and 1982.

Under the Bill the rated occupiers of land holdings with a valuation of £20 or less will continue to be, in effect, fully derated. For holdings with valuations between £20 and £33, rates will be payable only on the part of the land valuation between £20 and £33; no rates will be payable on the first £20 of those valuations. Rated occupiers with valuations of £33 and over, but less than £40, will be relieved of 80 per cent of the rates on the first £20 valuation and 30 per cent of the rates on the valuation over £20. The cost of the reliefs will amount to an estimated £37,725,000 in 1980. The cost is made good in full to local authorities through the agricultural grant.

The change from the reliefs which applied in 1978 and 1979 is that the ceiling on the valuation of holdings to which the reliefs apply is fixed at £40 in the Bill for each of the three years to which the Bill applies instead of being linked, as it was under the 1978 Act, to whatever lower valuation limit might apply to whole-time farmers for income tax purposes on 1 January of each year.

The Bill sets out how the valuations of separate holdings in the occupation of the same person are to be dealt with so as to decide whether the total valuation is within the £40 upper limit. This is contained in subsection (2) of section 1 which replaces the provision in the 1978 Act. It sets out more clearly than the earlier provision how the total valuation is to be arrived at. Under the 1978 Act the Minister could, by order, defer the arrangement under which valuations outside the county would be taken into account in arriving at total valuation. Orders were made in 1978 and 1979 mainly because of the technical difficulties in going outside the county. The need for doing this no longer exists and subsections (2) and (3) of section 1 of the 1978 Act are, therefore, being repealed by section 5 of this Bill.

A number of technical amendments are contained in sections 2, 3 and 4. These remove doubts and make it easier to apply agricultural grants under the 1976 Act to land added to county boroughs, boroughs or urban districts by boundary extensions. I commend this short Bill to the House.

Mr. Cooney

The first thing is that the Minister has a great neck to come in proposing a Bill which has the effect of dramatically and drastically increasing the rates burden on a huge number of Irish farmers while telling us that the Bill is essentially to allow for rating reliefs to be given to rated occupiers of agricultural land. That is so crass as to be dishonest because the whole purpose of the Bill is to reduce the rating relief entirely so far as the farmer down to £40 valuation is concerned and adversely change the rating reliefs under that. To try to present this as a relief Bill when it is imposing additional burdens is quite ridiculous and makes a farce of language.

For example, a farmer in the Minister's own county on a £40 valuation was paying £174.78 in rates in 1979. This year as a result of the Minister's Bill he will be paying £430.40 at a time when farm income is dropping, when the farmers on that size of a holding should be receiving encouragement to reinvest, at a time when we hear that the reinvestment in terms of fertiliser is dropping drastically. Members know that without fertiliser, production cannot be increased let alone maintained. Instead of leaving money in the hands of the farmer to invest in increasing his production, the Minister through this Bill proposes to take it from him in this heavy and draconian way. In County Offaly a farmer with a £40 valuation, and that is only a small farmer as the Minister of State knows, is going from rates of £174.78 to £430.40. Those who are good at sums can work out the percentage increase. It is several hundred per cent.

A farmer with a £50 valuation in County Offaly is going from £242.75 rates to £538 this year. The Minister says in his opening remarks, "This Bill is necessary, therefore, to allow for the rating reliefs to be given to rated occupiers of agricultural land in the present year and in 1981 and 1982". Yet, he is imposing those huge increases.

Let us take the case of a farmer in County Mayo with a £59 valuation and there are such farmers in County Mayo. Senator Staunton gave us the figures here yesterday. There are 90 farmers with valuations of £70 and over so we can assume that there would be well over 100 farmers in that category. In 1979, that farmer paid £496.42 in rates and as a result of the Minister's efforts he will have to pay £1,029.55 in County Mayo where land is marginal. This is the Bill that is presented to us as a rating relief Bill.

Throughout the country there are similar examples of massive increases being imposed on farmers as a result of this measure. Having regard to the poverty and dire straits into which the Exchequer has been let go by the Minister and his colleagues in Government, one need not be too surprised that draconian steps have had to be taken but one must be disappointed that they are now beginning to affect the small farmers of Ireland, the people to which Fianna Fáil traditionally looked for support and where traditionally they got that support. It comes badly from that party to reward those years of support with the draconian increases in rates proposed by this Bill. It is a measure of the desperation of the Exchequer for cash that that party would do something so politically inept and untypical of them.

There seems to be something wrong, something perverse in government thinking that leads to extra rates being imposed on small farmers while freedom from rates is maintained for large and expensive dwellinghouses. It is a long cry from the party of the poor man, who prided themselves on having no backside to their breeches, when they are prejudicing the small farmer in order to keep well in with the wealthy merchants of this country. It is crazy social legislation. I am not surprised that the Minister's opening speech was so scanty. It contained no justification whatever, no economic, fiscal or administrative arguments for making these changes. It was just a bland announcement that the changes are being made and there was a cynical and dishonest attempt to present them as relief.

I will be glad to hear from the Minister when he is replying to this debate the reasons, the philosophy as to why his Department have found it necessary to reduce the threshold for the abolition of rates relief. I will also be glad to know why he has decided that it is time that the small farmers should get this financial blow and to let me know why there is a need to continue exemption for expensive dwellinghouses. Was it a conscious decision that it had to be done, that the only way the shortfall could be met was at the expense of the small farmers of Ireland?

I will be glad to hear from the Minister also his justification for having to bring in this Bill. If one stands back and looks at it there is one compelling justification as far as the Minister and his colleagues are concerned, and that is, they are stuck for money. The Minister and his Department must know this especially: he must know that his Department is flooded with letters from unfortunate public representatives doing the donkey constituency work we referred to earlier, trying to get grants from his Department. The number of letters that are needed to get action towards getting a grant is quite extraordinary. The reason is that there is no money and the administrative machine is being used to show down the whole process. As a result of that the bottom of the barrel is being scraped. I do not mean anything disrespectful to the small farmers of Ireland when I put them in that category when it comes to taxing them through the rates system. Their incomes will not render them liable to income tax, because their incomes are dropping and their inputs are increasing but they are going to be caught by this Bill.

Yesterday the Minister for Finance did not want to hear anything about this when he said that a farmer with £40 valuation would not have any tax to pay because he has not got the income. When I pointed out that under this Bill he would have a huge increase in rates the Minister said that that was another day's work. It is all money coming into the Exchequer. The Minister of State and the Minister for Finance know well that if they want to get money from the small farmers it is not through income tax, because they have not got the income to sustain an income tax liability, but they will get it through the unjust system of increasing rates. We all know the well-founded arguments, and arguments which are a common case between all sides of the House, about the injustice of rates as a system of taxation. First of all, it is based on the Griffith valuation and as Senator O'Brien demonstrated here yesterday this leads to great variations between different parts of the country and even within different counties. You could have farms with the same valuation having a totally different productive capacity to pay the same burden of taxation in the guise of rates. It takes no account of the efficiency of a farmer in investing in his holding to improve his productivity. There is no account taken of the personal responsibilities of the farmer in respect of support of his wife and children. It takes no account whatsoever of geographical location or farming potential. All these arguments have been made before but they are equally valid to make again now in the face of this Bill which imposes a huge financial burden on the small farmers of Ireland.

I am disappointed that there are not more members of the Government Party opposite to debate this important Bill because I would like to give them some more examples of how their colleagues and their supporters will be affected. For the benefit of Senators in County Roscommon, a farmer with a £40 valuation in 1979 paid £217.26 in rates if he was able, having regard to the fall in his income. This year he will be receiving a demand for £531.60 and, if Senator de Brún votes for this Bill, he is imposing a 100 per cent block increase on his small farming neighbours in Roscommon. The new Senator from Wicklow, one of the many people with information from Seanad Éireann, will be able to bring back to his constituents, the information that a farmer in Wicklow on a £40 valuation whose rates bill last year was £201.24, in 1980 will get a rates bill for £492.80. There are a good many big farmers in Wicklow. Take the farmer with the £59 valuation. Last year his bill was £349.93; this year his bill goes to £726.88 and possibly one of the first votes in which the new Senator will be involved will be to vote that imposition on his fellow farmers in Wicklow. That is what the reality of the Party Whip means. In County Galway, for Senator Dunne's information, in 1979 on a £40 valuation a man had a rates bill of £213.48. In 1980, that poor farmer in Galway—bearing in mind some of the £40 valuations in Galway, I would not like to have to try to make a living out of them—will have to pay £523.20 if Senator Doolan and his colleagues vote for this Bill. It might be of some interest to Senator Hillery if I give him some figures with regard to the £40 valuation farmer in County Clare. In County Clare, £194.76 was his rates bill in 1979. I give the figures also for the benefit of Senator Honan who is possibly more frequently and in closer touch with the small farmers in Clare than Senator Hillery. Senator Honan and Senator Hillery, by voting for this Bill, will be increasing the burden on that small farmer from £194.76 to £476.40, over 100 per cent increase. That is the reality of the Bill that is being presented to us as a relief measure. I have already indicated the theoretical reasons why rates are an unjust form of taxation. It is a disgrace that the affairs of the country have been let get into such a mess that the Fianna Fáil Party, the party which prides itself on being the friend of the small farmer, is now reduced to this grubby stratagem of imposing heavy penal taxation to try to cure the ills of the Exchequer.

Mr. Mulcahy

It is false rhetoric to say that this is not a Bill about relief. That seems to me to be nonsense. It is about relief. To say it is equivalent to putting income tax on farmers is also twisting the facts. I could not let the occasion go without pointing that out. I see no reason why the Senator should take this view or indulge in that type of rhetoric, given that a Rates on Agricultural Land (Relief) Bill existed in 1978. It is not as if this is a new Bill or a new title.

Mr. Cooney

It is new for a £40 valuation farmer.

Mr. Mulcahy

The Senator is a legal man. Words either mean what they say or they do not. To say the Bill was introduced for some false purpose or some hidden purpose is bending the meaning of words. From a legal man, I expect much more straight talking about the Bill. The Senator had messages for many people on this side of the House. I noticed he had no message for me or for my friends in Sheriff Street in relation to rates on agricultural land. To compare the paying of rates on land and rates relief on housing seems to be stretching the purpose of rates. There are 750,000 or so dwellings in the country. Rates relief given on those dwellings is enjoyed by many ordinary people who are glad to have rates relief on their houses but the very many services the State has to provide to enable farmers to make their land productive, justifies payment for those services. The question is, what is a fair amount of rates? This Bill gives relief. The fact that there is a reduction in relief is beside the point. It is giving relief. I want to make that point. I am not involved in the agriculture business directly but I challenge the Senator on the tone he adopted.

Mr. O'Brien

In the context of the increase in the number of farmers being drawn into the rates net, the House should bear in mind the taxes imposed on the farming community by this Government in the last year. I listed them yesterday and, in order to get this question into proper perspective, I will run down through them quickly today. They were: the 2 per cent co-responsibility levy, Bord Bainne levy, dairy inspection levy, 30-day test, veterinary inspection fees at factories and the Agricultural Institute levy. If we take, in conjunction with these levies, the abolition of subsidies for lime and fertiliser, subsidies that applied to the south-western countries, we will get the picture into proper perspective. This decision to take more rates from a certain section of the community comes at a time when there is despondency on the land with regard to future prospects and rising costs.

It is worth pointing out that in Farm and Food Research, a periodical published by An Foras Talúntais, we are told in the issue of December 1979 that on a full-time farm costs were 53 per cent of gross output in 1978. With the rapid increase in costs over the last 12 months, I am sure it is reasonable to suggest that the percentage of costs to output is closer to 63, perhaps even 65 per cent. There is a dramatic increase in the farmer's costs, a drop in his income and a growth in inflation. If the farmer were to maintain the same standard of living as he had a year ago, he would need to be in a position, in order to keep pace with inflation, to have a 20 per cent increase on his return. There is little possibility of a 20 per cent increase in return when his costs of production are increasing very dramatically and when, in addition to that, the Government come along and impose further taxation by way of increased rates on the farming community from £40 poor law valuation upwards.

Yesterday, I drew attention to the mistake it is to base taxation and rates on these Griffith poor law valuation figures. Senator Cooney has dealt again with that today. I do not intend to develop it, except to state again that it is well known that poor law valuation figures under the Griffith scheme do not justly apply in the light of present day circumstances to different areas of land. It has been proven that there are areas of land of high productivity carrying a lower poor law valuation than areas quite convenient to them that are less fertile or less productive.

I should like also to draw the attention of the Minister to some other facts from the farm management survey of 1978 in the Farm and Food Research periodical for December 1979. The heading is: “Some of the Main Results from the 1978 Farm Management Survey.” Average family farm income per farm, part-time and full-time combined, was £3,300. For a full-time farmer the average was £5,305. The important point was that there was a big difference between farms of different sizes. The average income for the 15 to 30 acre group was £1,902.

I put to the Minister that there are farms in the 15 to 30 acre group in parts of the country carrying a valuation of £40. Farms coming close to 30 acres are certainly in the £40 bracket in some areas of the country. The average income for that type of farm in 1978 was £1,902. In paragraph 3 there were big variations between areas. Incomes in Munster and Leinster were 25 per cent and 21 per cent, respectively, higher than the national average. Incomes in Connacht and Ulster were 42 per cent and 39 per cent, respectively, below the national average. My view is that this increase in the rates demand on people on over £40 valuation will impose a very severe hardship in some parts of the country. Unfortunately, no exception is made in the Bill. If the poor law valuation figure of the farm is £40 or over, irrespective of whether it is overvalued or not, this new rate charge will apply.

Just over 50 per cent of all farms, part-time and full-time, had a family income of less than £2,000. When we consider figures like these, it is apparent that this new measure will impose severe hardship on a big number of people in the farming community. For full-time farms alone, under 24 per cent had incomes of less than £2,000. It is quite likely that numbers of these people, with incomes considerably under £40 a week, will have this added burden which in general on a £40 farm works out at something like £200 to £250 increase in rates. These rate demands will have to be met.

I believe it was a mistake to introduce this measure calling on farmers with a valuation as low as £40 to have to pay the full rate. In conclusion I will read one paragraph from the Foras Talúntais December 1979 issue of Farm and Food Research which points out:

The distribution of income within farming on a regional basis is also a cause for concern. In 1978 the average income for full-time farms in Connacht and Ulster was about 40% below the national average. There were about twice as many low income farms in Connacht as in Leinster, Munster or the three counties of Ulster in that year. Many of the causes of low incomes in the poor regions cannot be remedied in the short or medium term and, if we are concerned to maintain a viable rural population in all regions, we must reconcile ourselves to the fact that the community as a whole will have to be a net financial giver to, rather than a net taker from, farming in many areas of the country for a long time to come.

If we take that in conjunction with all the levies, six in number, imposed on the farming community last year, if we take the withdrawal of subsidies for lime and fertilisers in the poorer areas where a greater application of lime and fertiliser is necessary if they are to reach a viable standard of living and if we take in conjunction with all that this added imposition, the net result will be to cause undue hardship amongst a big section of the farming community.

When we take into account the drift there has been from the land and the hopes there were of improvement in conditions on the farm as a result of our joining the EEC, it is regrettable that at this juncture with all the uncertainty that prevails the Government see fit to impose this added burden. We may describe it as rates relief. In so far as it is rates relief for a very small sector of the community it is simply a continuation of what existed before. The alteration comes when we get as far as the £40 valuation where no relief whatever is provided from that rate band up. It is simply a continuation of relief to one group, an abolition of relief to the other group. That is a fact and there is not much sense in quibbling about it.

I would like to refer to the sentence from the Official Report of the Dáil of Thursday, 24 April, column 2016. At the conclusion of the debate in the other House, Deputy L'Estrange drew attention to the fact that not one Fianna Fáil backbencher had come in to back the Minister on this Bill. This leads to the conclusion that there is doubt in the minds of the backbenchers of Fianna Fáil, especially those from rural constituencies, as to whether this is a measure that should be openly supported or not.

Mr. Connaughton

I also oppose the Bill. It is peculiar, as Senator Cooney said, from the point of view of a party that purports to be the lifeline of the weaker sections of the community, that we have to go to Sheriff Street for a Senator on the Government side to support the Bill. I will be listening very carefully to the rural Senators from the Government side, to hear what their view is. Constituents who are trapped in the over £40 valuation category will not take too kindly to a Government supporter who openly votes for this Bill. All is not well with this regime because, in days of yore, no Fianna Fáil Government, to their credit, saw fit to nail the type of people the Government are about to nail now. It would lead one to believe they are in dire straits as far as their financial arrangements are concerned. Having listened carefully to what the Minister for Finance had to say yesterday, it would seem that as far as the agricultural community is concerned there is no light at the end of the tunnel. In relation to this Bill and to others, the admission by the Minister for Finance that the resource tax may not be concluded or cease to be operated after this 12 months, was something which will raise the eyebrows of many thousands of farmers. It will also raise eyebrows today, when you consider that there is a dramatic drop in the threshold from £60 to £40 on which people will have to pay rates. I am not too sure that the £40 poor law valuation is the threshold which will be held for much longer.

This Government have allowed themselves to get into such a financial knot and mess that they will stoop to anything to get themselves out of it. We must accept that taxation of any category is scrutinised closely before a Government would impose it. Taxation must be equitable and be based on ability to pay. It must be seen as a vehicle to motivate extra production, whether in agriculture or in industry.

Having regard to the type of taxation Fianna Fáil have been imposing on farmers in the last year or two, it is easy to see why we have arrived at a situation where production is static. All the economists openly say in order to boost the economy, agriculture must expand and production must continue to increase. There were times when we had 2, 3 and 4 per cent increases in production and in agricultural exports. This year we are in a static situation. The basic reason for this is that the Rates (Relief) Bill, together with the other Bills which I will mention in a moment, have eroded the confidence of farmers, big and small. The Minister and other people might be forgiven for saying what would a man under £40 valuation have to worry about, we are imposing the rates only on people above £40 valuation? There is no reason to believe that a guarantee could be given that in the year to come and in the not too distant future farmers on £30 and £20 valuations will not be within the rate net.

There is lack of confidence on the part of many farmers who in normal circumstances, would invest in extra stock and extra machinery. In the normal course of events we would hope to sell on foreign markets the extra production thereby achieved and, in the final analysis, it would mean extra nonagricultural jobs. It appears to me that there are people vested with the responsibility of looking after agricultural affairs and some of the agricultural organisations who have accepted promises, or so-called promises, that will not materialise. I am putting on the record of the House today that the future of agriculture for the next couple of years is in serious jeopardy. It is true that the Rates (Relief) Bill on its own might not upset the apple cart. The problems facing the agricultural community are driving farmers to react in the way they do.

I want to say to people who might not be au fait with agriculture, that in years gone by when farmers were called on to increase production they rallied to the call. The goose that lays the golden egg can die. The greatest disincentive, as the House is well aware, is the belief that at the end of the day, even with your best endeavour, you will wind up worse off at the end of the year. This causes a chain reaction and allows a situation to develop where people will rest on their laurels. I am surprised that the Government should pursue that policy because, in fairness to them in years gone by they did the reverse.

I am all for people paying their fair share of rates and tax. Senator Mulcahy might be under the impression that when comparing rates on agricultural land and rates on houses, people who do not understand the agricultural scene would say that farmers are getting away with murder. That is not true. We pay direct and indirect tax in various ways. There are certain farmers who are well able to pay. I hope they will be asked to pay and made pay.

The country's problems start when you stifle production. When the Industrial Development Authority, for whom I have the height of praise, create industrial jobs there is a furore, excitement, front page headlines. We have been reasonably successful in that line but it is true to say that our natural agricultural industry has not had sufficient notice taken of it in recent times. There is far too great an emphasis on taxation. Farmers will be more than worried by the comments of the Minister for Finance yesterday. This rates relief Bill is an extra nail in the coffin. Irrespective of what anybody says, the only relief in it is for the Exchequer.

If this Bill had come before the House in previous years when former Ministers for Agriculture had arrived back from Brussels with something reasonable by way of a price increase for farmers, we would not have felt so badly about it. What has happened? We spent a year fighting what we call the farmers' super levy. Indeed, every other country did the same thing. There was no reason to doubt at any stage that it was socially unjust, that it would not actually be implemented and, of course, the super levy was dropped. It was dropped at the expense of a reasonable increase in the incomes of Irish farmers. We got a so-called 4 per cent increase. In real terms not alone did we not get an increase but in the price of most commodities we took a decrease immediately after the Minister for Agriculture came back from Brussels.

This is directly relevant to the rates relief Bill because the farming community would pay this with a heart and a half if they got a reasonable increase in the price fixing arrangements in Brussels. Our Minister and Government came badly out of that price fixing. As I mentioned here yesterday, the price of cattle at our factories is decreasing. It is certainly less than it was 12 months ago. Our sheep industry is on the floor because of the French problem. Barley growers are in trouble. They are offered only £80 a ton for their produce by the grain merchants. The price of a gallon of milk at the moment is the very same as it was last year. Where is the 4 per cent there? It has been eaten up by the processing industry and it certainly has not got back to farmers. When this Bill becomes law, as I am afraid it will, it will be another straw to break the camel's back. We have had a series of all types of levies. This is probably one of the worst wallops the farming community have got. It could be argued that money paid by a farmer in rates could be claimed against income tax but, in a year when the farmers' real incomes are decreasing by as much as 25 per cent I am absolutely certain that the category of farmers between £40 and £60 valuation will have no income tax to pay. Therefore they cannot claim for that.

The poor law valuation system is unjust. I realise it would take a lot of money to set it right but we will never have equitable taxation until that system is tackled. From the point of view of ability to pay, this rates problem is most inequitable. A farmer with £39.50 valuation will not have to pay any rates but, the minute he goes over £40, he is automatically involved. While there is some marginal relief for him, as rates move up along the line they get extremely heavy.

To illustrate the point I am making, take a farmer with a £40 valuation in County Galway in 1977. He was liable to pay £174. In 1980 that will be £523. There will be some adjustments on that but there would have been some adjustments on the 1977 figure as well. A farmer in County Galway with a £50 valuation in 1977 paid £241.75. In 1980 he will be getting a bill for £654. As I say, the same adjustments will apply. Such farmers are certainly a little bit above the average farmer in County Galway but we have several of them.

The bigger farmers with £59 valuation paid £302 in 1977. This year they will be expected to fork out £771. This is a tremendous leap and it all happened in the lifetime of this Government. There was a tremendous amount of talk about the £75 valuation in the 1977 general election and, while no guarantee was given as such, there was an unspoken and unwritten guarantee to the electorate that, if Fianna Fáil got into power, we would not be talking about £30, £40 or £50 valuation as a taxation threshold. That is why I say in this House today that not for one moment do I believe that the £40 threshold will be allowed to stay. I have no doubt that this Government will become so entangled that they will have to single out the farming community for extra attention, as they are now doing.

This so-called rates relief Bill imposes great hardship. Due recognition will not be given to farmers who, for one reason or another—their land may be highly valued; they may be in bad health; they may be very heavily in debt—have great loans hanging over their heads. No notice can be taken of all those things in this rates relief Bill. Where there is severe hardship, suitable legislation should be put through to let those people off the hook. When a farming family gets into a very serious position, the law is not the law at all unless it takes due note of severe hardships. There is no doubt that there are people within that category who will be well able to pay but I am speaking about the people who are severely handicapped in one way or another. At a time when farmers' real incomes are dropping by as much as 25 per cent, this Bill will make very bad reading for thousands of small farmers.

A number of commentators have asked, "If this Bill is as obnoxious as you say it is, why has there not been greater farmer reaction to it?" When this Bill was before Dáil Éireann many farmers knew they were classified as rateable for tax but the penny did not drop until they got the bill through their door. In the past couple of weeks there has been sheer amazement on the faces of many farmers at the size of the bill they got. This really sinks home when the bill is received. I have no doubt that, because of the situation in agriculture, several thousands of farmers will find it terribly difficult to pay. I make a last petition to the Minister to ensure that there is provision in this Bill that, where hardship can be proven, due note of it will be taken.

If the Department of Finance and the Department of Agriculture do not soon change their views radically on the method of taxation, both direct and indirect, for the farming community, we will not be able to rely on agriculture to provide the type of incentives and extra production that will get this economy out of trouble. I know it has all been said before in recent months. I want to put it on record that, unless there is a major change of policy, the Government will certainly contribute to the general downfall of the economy. There are certain things this Government can do to help themselves but, unfortunately, they are taking no notice. It would be very difficult to explain this Bill to a farmer who has borrowed heavily to do the best he could on a small farm of 40 or 50 acres. He is expected to pay this in the best interests of the country. On the other hand, he cannot get his grant for land drainage, or his cattle house, or farm buildings, or whatever, for six to nine months because the Government have no money. It would be very difficult for this Bill to make sense to that man. I am asking the Minister to ensure that, when this Bill becomes law, farmers will get what they are entitled to and get it fairly quickly. They have to pay the rates very quickly. In recent months the grants situation has got out of hand. I am asking the Government, if and when they take money from farmers, to give them back what they are entitled to.

Mr. Howard

There are a few observations I should like to make on the Bill which we are discussing here today. While I accept that it represents the continuation of existing rate reliefs for one group of farming ratepayers, the reality is that it removes rate reliefs from another group of farmers. It is to that aspect that I should like to address my remarks. The Bill raises the rates burden on several thousands of farmers with land valuations between £40 PLV and £60 PLV. The effect of the removal of the rates relief from these people represents pressure on two aspects of their situation. It represents increased costs and, on average, as far as I can calculate from information I have received, the increased cost to a farmer with £40 PLV is approximately £6 per week; the average increased cost to a farmer with £50 PLV is £8 per week; and to those on £59 PLV, the increase is approximately £10 per week. Therefore, it increases costs to the farmers involved. If you like you can express it in another way. It also represents a reduction in the disposable income of farmers.

In my county the greater part of 1,000 farmers will be affected by this removal of the rate reliefs in the band between £40 and £60 PLV. Mostly they are medium to small farmers. They are a category of farmers in a critical bracket where their survival as viable farmers is concerned. I regard that as perhaps the most serious aspect of the situation. Farmers within that bracket will be under the most severe pressure in the next five to ten years. If their farms are to survive as viable farm units, providing a livelihood for a farmer and his family, they can only do so through intensive development and modern and effective farming methods, all of which will require substantial development and working capital. Therefore if through this legislation we take away a sum that varies between £6 and £10 per week, we are draining away the development and working capital which farmers in this bracket require for their economic survival.

Their position is vulnerable. Their position deserves grave consideration from all of us with responsibility and an interest in seeing the promotion of a successful agricultural industry. There are the additional pressures on them of growing inflation and unfortunately reducing incomes. On other occasions I have referred to the fact that farm incomes are now indisputably on the slide. Of course, the smaller the scale of farming, the smaller the farm size, the greater is the adverse impact of the sliding scale of farm incomes. Therefore, we are talking about a category of people who are extremely vulnerable.

Senator Mulcahy spoke on this Bill. I will say this for him. He broke the silence on the Government's side of the House. He charged in, made his contribution and left. To some degree he suggested that Senator Cooney was not being totally straight in his presentation of the facts. Having listened to Senator Mulcahy, I cannot but admire the agility of his own footwork because, while he emphasised the fact that this Bill continues relief to a certain category of farmers, he very shrewdly avoided making any reference to the point a number of other Senators are concentrating on today, that is, that it takes away that relief from another category of farmers who enjoyed it up to now and who require it.

He said that Senator Cooney had a message for practically every other Fianna Fáil Senator in the House except himself. He asked Senator Cooney for a message for Sheriff Street. There is, of course, a message for Sheriff Street in what we are talking about, and for every other concentration of urban population. It is this: young people in Sheriff Street or any other urban complex will be looking for jobs. They will be seeking employment in a situation in which unemployment is increasing. Therefore, if we permit a situation to develop in agriculture where its capacity to retain people who are now living on farms has diminished, and where the young people of rural Ireland are forced into an overcrowded labour market, the message for Sheriff Street is this. If prosperity in agriculture declines they will find themselves competing for jobs that are already scarce with growing numbers of additional competitors who, if conditions were right, could find a livelihood and a future on the land. For all of us that is really the message.

On another occasion Senator Mulcahy said there was a need to show equity in farm taxation, not in relation to the Bill but another one. Of course I agree with him. He also referred to the rift in understanding between town and country. All of us, including Senator Mulcahy and others, who recognise that this rift is there, and who also recognise that conditions in agriculture are being misrepresented, should do our utmost to set the record right. Do we have equity in farm taxation or equity in taxation generally? Let us have equity in the capacity of the people who are required to pay it, on their ability to pay it on their income and on their disposable income. If we accept that principle then, of course, we have to reject the whole principle of rates, resource taxes, and so on. These are levied without regard to the income capacity of the person involved to meet these charges.

There is one other aspect to the point I made about the competition that can arise from people coming of the land and competing for industrial jobs. If we can inject into agriculture both the confidence and the capital it requires for expansion and development, we can provide increasing job opportunities on the land and take away the pressure from the labour market. There is an obligation on all of us to ensure that that will always be a top priority.

I believe, for the reasons that I have outlined, the removal of rates relief is striking a dangerous blow at the confidence of the farming community, a confidence already undermined by growing inflation, by increasing farm costs, by the imposition of a multiplicity of levies and duties and taxation measures. The effect of this Bill, perhaps not in isolation but tied in with various other measures, is to nibble away at and extract bit by bit capital required for the development of Irish farms. The combined impact of all these measures, including this Bill, is to shake confidence in the development of agriculture particularly among farmers whose valuations lie between £40 and £60.

Mr. Jago

We have to look at this from the point of view of equity across the whole field of taxation. We cannot look at it from the point of view of farmers' taxation alone. Over the years before we joined the European Community, we had to assist the farming community and one of the means of assistance was relief on rates. Also a considerable amount of money was spent on development in the farming area. That money came from taxation paid by people in other fields. Since we joined the European Community through prices alone the farming community has gained.

It has been said that this is not a relief Bill but, taking one figure alone, if the rate in the £ is £10, the farmer on £33 valuation pays £30 instead of £330 if this Bill was not there. A farmer on £39 valuation will pay £173 instead of £390 if it was not there. Today we have a problem, that is, to get jobs for the community. One of the areas in which we are looking forward to getting jobs is the small industry area. Today if you have a small industry and a valuation of £40, that industry has to pay the full £400. There is no relief there. It is definitely a relief Bill in the agricultural field. When you look at other areas in our community, especially with the big increases in oil prices, relief is necessary there too. In equity you cannot continue the same relief to one section of the community which is improving while another section is coming up against greater difficulties.

Minister of State at the Department of the Environment (Mr. Connolly)

I want to thank the Senators who have spoken in this debate. I listened with great interest to what they had to say. At the beginning of the debate I tried to explain as clearly as I could what the Bill does. It might be no harm if I were to go over that again. So much has been said about things that are not in the Bill at all that it is easy to forget what the Bill is about. It is about a relief from rates for rated occupiers of land.

First, for 396,871 land holders with valuations of up to £20, there is full relief of rates on land. Secondly, for 58,684 land holders with valuations between £20 and £40, part of the rates are relieved. Add these two together and you get a total of 455,555 holdings which get full or part relief of rates under this Bill. These are the small holders. People with up to £40 valuation under this Bill may get a relief which costs the best part of £38 million in this year alone. The relief is not limited to this year. The Bill applies to this year, next year and the year after. I am talking about 1980, 1981 and 1982. No amount of talking about other things should be allowed to hide from us what the Bill does.

I want to refer to some of the remarks made here by a number of Senators. Senator Cooney said the purpose of the Bill is to increase the burden of rates on farmers. This is not correct. Farmers could not get any relief of rates unless a Bill is enacted. That is why we had to bring in a new Bill. The previous Act expired on 31 December 1979. To ensure that the full burden of rates on farmers under £40 rateable valuation is eased a full Bill is now necessary. Senator Cooney said it is wrong to give relief on big houses and not to small farmers. He seems to forget that farmers big and small get full relief on their houses whether their houses are big or not and this relief on farmers' houses costs the Exchequer about £11 million in this year. This Bill gives relief to small farmers on the rates on their land. The only farmers who are outside the relief are farmers with £40 rateable valuation or more. These may not be big farmers but they are not what we call small farmers in Ireland.

I come from the farming community and am involved in it. There is a lot of belly-aching and crocodile tears and the Opposition in some cases want to play the two roads. They want to go down one road and if it does not suit at the end of it they want to come up again and go another road. Senator Cooney stated that the Bill would affect adversely farmers under £40 rateable valuation. That is not true. The purpose of the Bill is to give relief, not to take it away. Without this Bill there can be no relief of rates for the 455,555 rated occupiers of agricultural land who will benefit from the Bill.

Senator O'Brien might like to know what the Bill does in respect of County Cavan. It gives relief in 1980 of £1.945 million to land holders in County Cavan. It gives relief of 71 per cent of rates which would otherwise fall on the farmers. I hope I am clear on this. Senator O'Brien said a good deal about farm income. In the Dáil on Committee Stage, I dealt with taxation, which does not arise here. I share the Senator's concern for the small farmers. He says that most of them are in the western part of the country. The Bill gives relief in 1980 to small farmers of 71 per cent of the rates in County Cavan, 73 per cent in County Galway, 67 per cent in County Donegal, 69 per cent in County Kerry and 88 per cent in County Mayo. Senator Howard referred to County Clare, where 82.4 per cent of farmers are under £20 valuation and 12.1 per cent are between £20 and £40 rateable valuation. A total of 94.5 per cent are in the standard rate situation and 82.4 per cent pay no rates. The total over £40 valuation in County Clare is 5.5 per cent. I would like to get this record clear.

Mr. Connaughton

The Minister knows all about it.

Mr. Connolly

I know all about it. Senator Cooney referred to Laois and Offaly. In Laois 68.9 per cent under £20 rateable valuation pay no rates and 16.8 per cent are £20 to £40 valuation. The total under £40 rateable valuation is 85.7 per cent.

I now return to County Offaly where 69.4 per cent are under £20 valuation, 18.5 per cent are £20 to £40 valuation, bringing the total there to 87.9 per cent. The number over £40 valuation is 12.1 per cent.

Senator Connaughton said the £40 valuation threshold will not last for very long. I will forgive him because he has not been a Member of the House for long and he may not have studied the Bill. The Bill states that the £40 rateable valuation threshold is for the years 1980, 1981 and 1982.

Mr. Connaughton

We heard that before.

Mr. Connolly

Yes, but I wanted to clarify the situation. The Senator spoke also about the many things that have to be weighed in the balance when the whole question of farming income, taxation and investment is being considered. The Senator knows that the Bill will benefit the vast majority of the occupiers of land in County Galway. I am going to come up with a very interesting figure now. In County Galway 97 per cent of the land holdings are under £40 valuation. I could not believe it but that is a fact.

It was Fianna Fáil who de-rated all farmers under £20 valuation in 1967. We are continuing that de-rating in this Bill. For the whole of the country 79.8 per cent are under £20 valuation. Farmers between £20 and £40 valuation amount to 11.8 per cent, making a total of 91.6 per cent in the whole country. The total over £40 valuation is 8.4 per cent.

If the farmer is paying income tax, he can write off the rates against tax. I do not wish to get into taxation because we are dealing strictly with the Rates (Relief) Bill. I want it to be clear that he can set his rates off against the tax account. For some Members you would think that it was the end of the world. I have given the figures and I want to make it clear that the Bill is for three years. If we had not brought in the Bill we could not give the relief that I am talking about to the farming community.

Of course, there are other scales of relief as well. As a Government we have not got confetti money. We never had confetti money and any future Government will not have it. We have to strike a balance. I come from the midlands, as Senators know, and no farmers have complained to me. We are talking about taxation. Most of the farmers now are swinging over to accounts and anyone will tell you that. They are even swinging away from the notional system.

To conclude, I want to thank Members for their contributions and I hope that I have cleared up any confusion that existed or most of the problems that have been raised. I hope I have dealt with them adequately. I have given the percentage breakdowns. To hear some people talking you would think that we have put our arms around the farmers and herded them into a corner. We certainly have not and we have no intention of doing that.

Question put and agreed to.

Agreed to take remaining Stages today.