Farm Tax Bill, 1985: Second Stage.

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

Minister of State at the Department of the Environment (Mr. F. O'Brien)

The purpose of this Bill is to provide the legislative basis for the introduction of a new farm tax as announced in the national plan Building on Reality. The separate matter of the amendment of the income tax code, in so far as it affects farmers, will be dealt with by the Minister for Finance in the Finance Bill for 1986 but I should mention that the intention in that regard is that farmers with fewer than 80 adjusted acres will be exempted from income tax when the new farm tax is in operation in relation to them; those with 80 or more adjusted acres continue to be liable for income tax but will be allowed their farm tax payments as a credit against income tax.

This Bill provides for the calculation, levying and collection of the new farm tax. The main features are that the tax will be determined on the basis of the number of adjusted acres in each farm and that smaller farms — those below 20 adjusted acres — will be exempt from the tax. The rate of tax will be uniform for all local authority areas and the determination of the number of adjusted acres in each farm will also be done centrally by a body established specially for that purpose under the Bill. The Bill also provides that the tax will be levied and collected by the local authority in each area and that the proceeds of the tax will form part of the current revenue of the local authority in each case. I should mention, though, that it is envisaged that there will be adjustments in the amounts of the grants in relief of rates by reference to the revenue from the farm tax; these adjustments are outside the scope of this Bill and will be determined as part of the process for settlement of the amount of the rate relief grants for each year at the appropriate time. The Bill also contains provisions for appeals, enforcement of collection, dealing with hardship cases, etc., to which I will refer as I deal with the main provisions of the Bill in more detail.

The farm tax will be based on the adjusted acreage of farms. Section 2 defines an adjusted acre as the area of land having the equivalent productive potential of one acre of the best land in the country in ideal growing conditions. In adjusting the acreage of any farm, the factors which are to be taken into account are spelt out in some detail in the Bill and include the quality of the soil, the prevailing climate, aspect, shelter and so on. In adjusting acreages, land will be assumed to have a reasonable level of management, maintenance and investment applied to it.

The task of classifying land into adjusted acreages will fall to a new farm tax office under the control of a farm tax commissioner and the system will operate on lines similar to those of the Valuation Office in relation to rateable valuation of other property. The farm tax commissioner, whose appointment is provided for in section 14, will be appointed by the Minister for Finance under whose general oversight the classification process will be carried out. The appointment will be a temporary one for a period of five years but this period may be extended if required. It is the intention that the farm tax commissioner will continue in office until the classification of land is completed when the residual function of keeping the classification up to date will pass to the Commissioner of Valuation. A staff of about 200 will be available to assist the farm tax commissioner. About half will be officers of the Land Commission, the remaining number being recruited temporarily for the purpose. The recruitment process is well under way. The commissioner will have power under section 15 to delegate his functions under the Bill to any of his officers.

The commissioner's staff will have the right, under section 17 to enter on land and to receive a reasonable level of cooperation from the farmer for the purposes of classifying land or dealing with appeals. There are penalties of a fine of £1,000 and up to six months imprisonment for obstructing the classification process and the Bill also contains provisions designed to enable the classification process to overcome any obstruction.

The impression has been created in certain quarters that the farm tax commissioner will adjust acreages from Dublin without inspecting the land. I want to make it clear that this will not be the case. Land will be inspected by officers of the commissioner before the adjusted acreage is determined but, as I have already mentioned, provision is included to deal with the situation where farmers refuse entry on land should that arise. Section 4 has been amended specifically to clarify this point.

Section 3 enables interim thresholds to be specified by the Minister for Finance until the classification of all holdings down to the 20 adjusted acres to which I have already referred has been completed. This will enable the farm tax to be applied during the classification process by reference to the interim thresholds obtaining at a particular time and without waiting for the entire classification to be completed. The classification will start as soon as the Bill is enacted but it will take some years to complete. The process will start in each county with the bigger farms and work progressively downwards until all farms of 20 adjusted acreage or more have been classified.

The classification list for each local authority area will contain particulars of the owner, occupier and adjusted acreage of each farm. As the work progresses, the classification list will be made available to each local authority at the intervals specified in section 4 of the Bill until the list is completed. The first instalment of the list will be available before 1 October 1986 to enable the tax to commence in 1986. It is the intention to assign manpower to the classification process in such a way that it proceeds at an even pace throughout the country.

When they receive the classification lists the local authorities will be obliged to make them available for public inspection at their offices for a period of 21 days, and, to notify individually farmers whose land has been classified, so as to enable those farmers to consider lodging appeals.

The question of appeals is one to which I have paid considerable attention in the Bill. One of the reasons for the collapse of the valuation system on land was that there was no procedure for having land valuations reviewed in the light of changing circumstances. There are provisions in the Bill, which I will now briefly describe, which will ensure that adjusted acreages are kept fully up to date.

The farm tax commissioner will be the initial vehicle for dealing with revisions and appeals. Appeals to the commissioner will arise in two ways. Firstly, there will be an appeal open to the farmer and to the local authority against the initial classification decided by the commissioner's office. Secondly, once the initial classification has been finally determined and circumstances, such as land sales or arterial drainage, cause the classification to require revision, then the farmer or the local authority can request the commissioner to revise the initial classification. The commissioner's decisions on appeals and revisions can be appealed to a Farm Tax Tribunal, the special purpose body for which the Bill provides in section 8 and in the Schedule. There is further specific right of appeal to the High Court on a point of law against a determination of the Farm Tax Tribunal.

The tribunal is designed to provide a speedy and flexible system of dealing with appeals. The members of the tribunal will be appointed by the Minister for Finance and will hold office for a three year period. The tribunal's proceedings will be in private and they will be empowered to call witnesses and to award costs against unsuccessful applicants. While it will largely be a matter for the tribunal to regulate their own proceedings, the schedule to the Bill envisages the tribunal operating through three of the members being called together as necessary to hear appeals. This should ensure a flexible system whereby the tribunal can be scaled up or down depending on the volume of appeals arising. The tribunal will, unless there is good reason for not doing so, award costs against unsuccessful appellants. I must emphasise, however, that these costs should be modest by comparison with court costs.

The Bill also provides for the levy and collection of the tax and for some residual arrangements. Section 9 provides for the levy annually of a farm tax at a flat rate per adjusted acre. The rate of tax will be prescribed by the Minister for the Environment, but I will come back to that later, and the local authorities will levy and collect the tax.

The tax is payable by the person who stands entered as the occupier of a farm in the list of adjusted acreages produced by the farm tax commissioner. The procedure for levy and collection of the tax resembles the procedure with rates. Local authorities are obliged to prepare details annually of each farmer's adjusted acreage and his tax liability. These details, to be known as the farm tax record, which are similar to those in the rate book, must be publicised and put on display in local authority offices.

There was some comment on the provisions in the Bill relating to the display of the classification list and the farm tax record in Garda stations. The view was expressed that this provision would not be acceptable to farmers and that it would in some way criminalise the farming community by making public their tax liability. This was not the intention. The view was that the classification list and the farm tax record should be available as widely as possible for the convenience of farmers who live some distance from the county town. However, in deference to the strength of the views expressed, all references in the Bill to display in Garda stations have been dropped.

Once the record has been publicly available for 21 days, local authorities are to send out farm tax bills and payment is due two weeks later. The Bill envisages payment being made in one lump sum. or alternatively, under regulations which I intend to make, in instalments. It is my intention to encourage local authorities to develop payment patterns that suit their own and farmers' requirements as far as possible. Where tax remains unpaid after two months of being due, interest at 1¼ per cent per month — the same as applies to other taxes — accrues on the outstanding amount.

The Bill provides that payment of the tax must be made where appeals have been entered. Senators will appreciate the reason for this provision, which mirrors existing rating law provisions and is somewhat similar to the income tax code. Clearly, it would put local authorities and the farm tax commissioner in an impossible position if the mere entry of an appeal was sufficient to halt the collection of the tax. This would encourage frivolous appeals and would disrupt the whole assessment process. The Bill, however, makes it clear that the outcome of appeals — whether they be in the farmer's favour or otherwise — will have retrospective effect. Where this results in a lower adjusted acreage, local authorities must make a refund to the farmer concerned.

We, of course, recognise that there will be circumstances where payment of the farm tax would cause undue hardship and the Bill provides that the local authority can agree in these circumstances to postpone action to collect the tax for a specified period. During any such period, interest will not accrue to the outstanding amount. I have to stress, however, that the tax remins due and will, indeed, be a charge on the land until it is paid. I believe that the provision in the Bill provides a flexible system which will adequately cater for the inevitable hardship cases while, at the same time, protecting local authorities from claims for relief which may not be well based. I might mention here that when the tax is implemented, I will be issuing guidelines to local authorities as to the circumstances in which to apply the hardship clause so as to ensure a reasonable degree of uniformity throughout the country.

Section 10 of the Bill is designed to ensure that farms just above the threshold of 20 adjusted acres will not have to pay the full farm tax. A farm of 20 adjusted acres but less than 21 adjusted acres will pay only one-fifth of the tax; 21 to 22 adjusted acres will pay two-fifths; 22 to 23 adjusted acres will pay three-fifths and so on until a farm of 25 adjusted acres will pay the full tax. The same form of marginal relief will apply to interim higher thresholds which will apply before the land classification is completed.

The Bill provides adequate powers of enforcement. First, the interest provision should act as an incentive to early payment of the tax. Second, local authorities may pursue defaulters through the courts. Third, in the event that a local authority owe a defaulter money, the farm tax can be set off against the money owing. Fourth, in common with the capital acquisitions tax, farm tax will automatically become a charge on the land until it is paid, but small sales of land will be exempt from this provision.

There has been much speculation about the rate of tax and how the rate will be adjusted in future years. Let me clarify the position. The rate of tax in the first year will be £10 per adjusted acre and I will be prescribing that amount for the first year under section 9 of the Bill, just as I have to prescribe the rate for each subsequent year. Indeed, the Bill, as amended now specifies that the rate of £10 is to apply in the first year. As regards those years after 1986, section 9 (4) (b) of the Bill as amended in the Dáil, provides that the rate of tax will be indexed to changes in farm income as measured by the Central Statistics Office. The farming community need have no fears, therefore, about dramatic increases in the rate of tax unless farm incomes rise in a similar manner.

The classification of land will take some years to complete and will, as I mentioned earlier, commence with the bigger farms and work downwards. The tax will commence in 1986 and will be levied on the larger farms initially. The Bill facilitates this. The effect will be that if, for example, by 1987 the classification has progressed down to say, 40 adjusted acres, the threshold for liability to the tax in that year will be prescribed by the Minister for Finance at 40 adjusted acres. Farms with adjusted acreages below the threshold will only become liable for tax as they are assessed in the following years. In these cases, the farm tax will not apply retrospectively. Income tax exemption for full time farmers with farms between 20 and 80 adjusted acres, to be provided for in the Finance Bill, 1986, will take effect as liability to the farm tax arises.

In conclusion, I might remind Senators that this legislation represents an attempt to improve the contribution of the farming sector to national taxation. Land is probably our most important national resource and its value as taxable property was recognised in the system of agricultural rates which farm tax will replace.

Since the abolition of agricultural rates, we have not had a satisfactory and easily administered system of taxation for farmers. I believe that the Bill will ensure a more realistic contribution from the farming community to the provision of local services and that this will be achieved in a manner which involves no disincentive to agricultural production. I look forward to a constructive debate on the Bill. I commend the Bill to the House.

Mr. Smith

Before I say a few words on this Bill, I would like to be associated with the welcoming remarks to yourself, a Chathaoirligh, on your return to this House. I am glad to see that you are back in the very best of health again.

Over the past ten years or so there have been few more contentious issues debated in this House and in Dáil Éireann and indeed in different parts of the country than the issue of farm taxation. It is one of the areas where there is considerable difference of opinion about what the real solution should be. Because of the fact that that debate has continued for so long and has in many ways bedevilled Irish agriculture as we tripped along from wealth taxes into a discussion on 2 per cent levies and speculation about resource tax, we were unable to settle down to what would be a fair, equitable and reasonable system of taxation for farmers. I thought a few years ago, when the income tax system was about to be applied to all farmers regardless of their valuation, that at long last we had come to the end of this, in many ways, futile debate. For that reason I regret that we are once again lurching back into this age-old problem. It is one which adds enormously to the urban-rural rift and, indeed, creates divisions between farm organisations, where there is obviously a very wide difference of opinion. None of that could be argued as being in the best interest of the development of Irish agriculture.

It has been said time and time again that farmers want to pay their fair share of tax. There has to be some doubt about that as far as a small group of farmers is concerned. Perhaps the same could be said for other professional groups such as solicitors and other self-employed groups who have at times exploited the income tax code to their benefit. The PAYE sector and people whose incomes are easily identifiable and who pay to the last penny have a genuine grievance when they notice situations which are presented to them which obviously have considerable inequity in them. Do you solve the problems which are created by a minority by spreading the burden right across the backs of all those engaged in agriculture regardless of their ability to pay?

The first matter, therefore, that I want to put to the Minister of State is that every tax system as far as possible should be aimed at being fair and equitable. Successive Governments have failed to extract what would be a fair amount of income tax from certain groups in society. Some farmers are not exempt from that position, but do you solve that problem by spreading the burden right across the board? In saying that, I agree all farmers should pay their fair share; and, looking at the surveys on farm incomes that have been carried out over the years, I think it is clear that the vast majority of them, perhaps two-thirds, do not have a taxable income. Where their income is below the exemption threshold for income tax obviously no accusations can be levelled against them for the nonpayment of tax.

The introduction of the income tax system for farmers as a whole, regardless of valuation, in my view would be working much more satisfactorily over the next few years if we had adequate staff in the offices of the Revenue Commissioners. Many farmers in my area have not received as yet any forms from the tax office with regard to their income. The Revenue Commissioners tell us that they have not got the staff to follow it up. The short cut through all of this is to introduce a land tax based on £10 per adjusted acre—I hope to demonstrate later that the adjusted one creates a dilemma which is almost impossible to solve. There was a time when you could have adjusted acres and you could take into account the climate, the access, the quality of soil and all the other factors which this Bill tries to encompass.

I would not have any general argument with the overall method and the general emphasis that is placed when determining what an adjusted acre is. The crunch question that I have does not relate to the quality of soil. It does not relate to climate. It relates to the imponderable that has hit agriculture as far as quotas are concerned. How do you compare acres of the same quality of soil, the same climate, the same access, which, by accident or by design, historically speaking or otherwise, have access to a milk quota where a corresponding and equally resourceful acre has no access to that quota? All the figures that are available from all the scientists in this area would clearly indicate that milk production is, generally speaking, by far the best means of obtaining a reasonable farm income, particularly on small and medium-sized farms. The possibility of expansion for people already in the business no longer exists. Young farmers and others who want to get into the business cannot have that opportunity. I would like to ask Senators in the Labour and Fine Gael parties and the Independent Senators, in an effort to try to find a solution to this problem, not to ignore these basic, fundamental facts as far as restrictions and quotas are concerned in our present situation in agriculture today.

Basically, I am not arguing against the style and the way in which the Minister and his officials are trying to measure this adjusted acre. I have my own doubts about how long this is going to take. It is quite an involved job. It is true to say that we have the second edition of the soil survey which puts Irish soil types into 27 different categories: These categories can be found in every county in the country. The best land in Ireland can be found in every county, as can the worst, but in different proportions.

It is true to say the Land Commission have a lot of experience in deciding issues about adjusted acres: One could ask any land commissioner as to how that was exercised. There were times when adjusted acres were adjusted upwards to help somebody to come into a qualifying category. There were times when they would be adjusted downwards to try to spread a small pool of land over a greater number of people. I do not argue with the social sense behind that. There has been no scientific measurement, either used by the ACOT services or by the Land Commission, in determining what an adjusted acre is. We are not exactly starting from scratch, but there is a very long and difficult road to be travelled. One has to take into account the variety of different situations that exist in the country.

The Minister for the Environment said in Dáil Éireann that the estimated amount taken from land tax, when fully operational, would be £72 million. He also told the Dáil that at the time land tax would be fully operational the income tax from the farming community would then be £6 million. I am quoting the Minister for the Environment. The present income tax from the farming community is £35 million. That £35 million presents the worst possible picture. A very considerable number of farmers have not been assessed, apart from not leaving the tax collected. There are also considerable arrears due from certain groups of farmers.

The National Economic and Social Council, the Commission on Taxation and others have stated that the tax system for farmers is only beginning to work. If we look at farm modernisation schemes, particularly over the mid-to late seventies, we will see that the graph accelerated during those years in the provision of in wintering facilities and land improvement. The amount of money spent by the state, by EC sources and by farmers was by any standards phenomenal.

Arising from that expenditure, under the income tax code farmers had been getting capital allowances which are progressively diminishing. As these allowances are exhausted and as there is not the same compelling need for continual development of that kind, obviously, the income tax taken from farmers will have to increase dramatically. Otherwise, they will have to cut back on production quite enormously. I do not think that anybody can argue that the law of diminishing returns comes in as fast as that, as far as our income tax system is concerned. There are farmers who argue that it does but I do not happen to be one who accepts that.

We must take two factors into account. Suppose you take £72 million out of this system when it is fully operational. It is to be spread over the whole country after a complex effort to try to find out what was fair. I am telling you that you are not going to be fair. You cannot be fair; the odds are against you. It is not humanly possible. You can try to be fair, but you are not going to be fair. Therefore, into the back pockets of solicitors and lawyers will go thousands of pounds as people argue about the question of fair payments. Leaving that aside, £72 million is to be collected. How long will it take to have the system fully operational? There is not a person living in this country who believes that it could happen within five years. I will give the Minister the benefit of the doubt and say that it will happen in five years. At the end of five years the total amount that can be collected from this system is £72 million. That is approximately — leaving out bogland, lakes and rivers — adjusting Ireland's land at one half-acre to every acre at present. Income tax from farmers at that time, according to the Minister, will be £6 million. We go through all this paraphernalia — the urban-rural rift and the Government dropping this down in the middle of a local election campaign.

Do not tell me Fine Gael wanted to do that. With the haemorrhage from the Labour Party during the campaign, something had to be done and this question of farm tax arose. We have the rift that I mentioned between the farming organisations and the incalculable differences that are going to evolve on the question of what is an adjusted acre. There will be court sessions and tribunals. We will have the transfer of people from the Land Commission and the question of new recruits who are badly needed in the Revenue Commissioners' offices but who cannot be put into them. They can be found to deal with this matter. At the end of the day, after five full years we will be trying to reach £70 million, not allowing for hardship cases and people who will not be in a position to pay. I want to ask everybody in this House whether they conscientiously believe that a Minister for Finance worth his salt and the Revenue Commissioners, taking into account what is happening in Irish agriculture and even with the restrictions, have not the capacity within the income tax system to produce that kind of money. I am a Dutchman if it is not possible. Maybe my understanding of this is all wrong. Maybe it is possible to do this within a short time, but I am trying to be logical. I am trying to be as understanding as possible in the situation. That is the way I see it.

A number of speakers in the other House referred to the problems of the PAYE sector and how they view this whole situation. I said earlier that I recognise that identifiable income, as far as our income tax system is concerned is harshly dealt with compared with the way the system operates where income is not as easily identifiable. I am trying to demonstrate that in the effort that is being made to appease PAYE people by the introduction of this tax, one is not being fair to anybody and certainly not fair to a person who has a young family and who probably has heavily borrowed. Such a man will pay exactly the same amount of land tax as somebody who has money invested and, perhaps, has no family at all.

The national intake of tax is not going to be increased in the way that is being claimed. I have tried to demonstrate that it is going to take a long time to get the system operational. There will be many delays and hiccups in it. On the basis of the figures, after five full years, we will still only achieve the type of figure which the income tax system, based on income which would be fair can stand over, without the whole country falling again into the sort of mess which I thought had ended.

I want to ask the Minister a question about the hardship clause. One of the good things about the old rating system was that the county managers had the power to waive the payment of rates where farmers or ratepayers could prove that they were not in a position to pay. I am not saying that in all instances the hardship clause should be such as to waive entirely a commitment to pay land tax. I would like to see in the Bill a flexibility under which it would be possible to waive entirely the demand where a person could prove they had a "nil" income tax situation on the basis of their income. We should not have this continual overloading effect on individuals whereby they were unable to pay but saw a mounting bill, year after year, developing. They would be unable to meet such bills and that would put them into a more hopeless position in which they would not be able to meet their commitments. At the same time letters from the county council would be coming annually, or more often, seeking payments which they could not afford.

I cannot find in me any great support for the Bill but nevertheless I recognise that the Government have a majority in both Houses and that it is likely to become the law of the land. Therefore, we have an obligation to try to see if measures can be introduced which would give some kind of flexibility in hardship cases. The Minister will know the problems from his own experience. He is noted for his political intuition. He will know that there are plenty of genuine cases around the country in which this land tax will apply and in which individuals will not have the means of paying it. On the question of waiving it for the time being, I want the Minister to imagine what that is like for the individual who is not in a position to pay. It is still held against the estate. That is wrong. I clearly support that notion where the circumstances are different and where there is likely to be a sale of a place or where there are elderly people and where other people are going to benefit considerably by the transfer of that holding ultimately. I see clearly a difference in that situation. I have no argument with the principle of carrying on the liability, but I think in the sort of hardship cases I am talking about and which the Minister will understand, a more lenient approach should be taken.

I want to deal with one or two samples of the kind of situation that can develop in a land tax regime. Take a farmer with 150 cows, owning 150 adjusted acres. We will say for the sake of argument that he has a tax liability of £10,000. When land tax is introduced, his income tax liability will reduce by £1,500 and that £1,500 will be paid in land tax. For that particular farmer today there is absolutely no change under these proposals. He has 150 adjusted acres. He has 150 cows. He has £10,000 of a tax liability. The Minister is not saying he will take one extra penny from him. Take a farmer with 30 adjusted acres, with a young family. There are plenty of them in this country. You can say 40 or 50 acres. The Minister is saying to that man, "you have to pay more." That just cannot be fair. I do not think it would stand up if it was critically analysed. The bulk of the transfer of what is allegedly an extra intake of tax has to come in the main from that group of farmers, who by any standards do not have taxable incomes.

Basically, what I have been trying to say is that the central theme in any tax regime is that it should be fair and equitable. I have tried to demonstrate as simply as I can that this tax has glaring faults and inequities in it. It reintroduces an unnecessary hassle at a time when we are in enough difficulties in agriculture. In the long run after all the hassle and five years' solid work and preparation and much litigation in the meantime, the actual intake as a result of all that effort will not have increased in my view by one pound on what could have been produced if we had an income tax code properly developed, properly manned and used to the utmost degree. That is why I will be opposing this Bill as will my colleagues later on today.

Mr. Hourigan

I would like briefly to extend my welcome to the Cathaoirleach on his return to the House. It is good to see him in good health and I wish him well for many years to come.

I welcome this Bill. There are certain aspects in it that all of us would like to be somewhat different, but in the main it is just about introducing an element of equity and fair play. There is, unfortunately, a very false impression held by many people that there is a great deal of money in agriculture, in other words, that there is a big crock of gold out there that can be taxed and can yield a vast amount of money. This is based on totally wrong information and lack of understanding. Indeed, it has led to very undesirable urban-rural rifts. This is something that we all should be extremely conscious of. There is a more correct understanding by the non-farming community of the problems within farming. Indeed, may I hastily add to that, that the farmers understand the major and difficult tax problems of the non-farming sector such as those in the PAYE and in the business sectors.

There is a great deal of educational work to be done in order to inform people clearly and precisely so that they can fully understand and accept the position of the various other sectors. It is a matter of priority that this better understanding should exist, because it is only in this way that we can look forward to progress in the true sense of the word. We, at the present time, witness a great rift between the different sectors of our community. Much of this is based on misconceptions, misunderstandings and perhaps vested sectoral interests in promoting this division. It is, indeed, undesirable and is causing much damage. It is, of course, essential that farmers themselves would adopt a reasonable and correct attitude towards the whole question of taxation. There is no point in talking at any level about tax equity unless we clearly see that there is support right through the various strata of society for the realistic introduction of equity so that it will not be just a throw-away phrase with people talking about tax equity without the basis and the understanding that it deserves and must have.

There is a misconception by many people in society with regard to any Government of the day. The Government of the day essentially must assume the role of managing the finances of the State in a business-like and correct manner. They have to collect through the various avenues open to them £X million from the people and must distribute this money in the form of services — for instance, health, education, social welfare and maintaining law and order — as well as providing good infrastructures and meeting the many other requirements of the people they have been elected to govern in a fair and correct manner.

The precise role and function of the Government of the day vis-a-vis taxation is not always understood as it ought to be: that it is essentially fulfilling a housekeeping role in ensuring that moneys that ought to be collected are collected in a fair and just manner and that moneys being spent are spent in a fair and proper way; that there should be no inequity in the collection of the finances and no misappropriation in the distribution of them. Those are the main guidelines the Government have to follow. I am quite satisfied that the present Government and indeed Governments in the past have performed or endeavoured to perform in this kind of role. I am not sure that members of society have acknowledged that as a central role of Government and as a key function of the Government.

There is little point in politicians being other than absolutely honest and straight with people with regard to taxation. Frankly, by and large, people across the spectrum of society do not wish to pay tax if they can find a way of avoiding it, legitimately or, indeed, otherwise. For that reason it is grossly dishonest on the part of politicians to mislead people regarding taxation and to give the impression that taxation levels need not be at a certain point and that tax is being imposed upon them almost for its own sake. This is extremely serious because one is dealing with a sensitive area when talking of taxation.

It has to be acknowledged that there are many persons in our society at present paying in excess of what they ought to be paying. There are also many people who are not paying their fair and just share of taxation. Unless we accept that as a clear and definite basis, we cannot make headway. At present it is only fair and correct to acknowledge that the PAYE sector are overburdened with their share of contributions towards the tax coffers of this State.

Recently I came across individual instances of PAYE taxpayers. I can recall vividly where one particular recipient of an income of £20,000 per year, a single person with no allowances other than the ordinary allowances, was paying 51 per cent between taxation and PRSI. In other words, he had less than £10,000 in take-home pay out of a gross salary of £20,000. Another man in the same salary bracket had a take-home pay of something like £13,000 — he was married with two children. One further example of two people earning £15,000 — a married man with two children had a take-home pay of less than £10,000, having paid tax and PRSI: the single man had a take-home pay of £7,000 having paid tax and PRSI. These are startling figures. I say this in order to be helpful so that there is an understanding among people who are not in the PAYE sector but in the farming and business sectors and so that they would appreciate that there are people paying substantial sums of money in tax at present through the PAYE system. We have heard of global figures talked about from time to time. The percentage of the total tax take that comes from the PAYE sector is most telling when one gets individual cases which reveal the actual position of individuals. Perhaps it is more acceptable to people if they are given that information.

As proposed in the Farm Tax Bill, 1985, 92 per cent of farmers in the future will not have to keep accounts. In other words, 92 per cent of farmers will be reckoned to come within the category of 80 adjusted acres or less. This, to my mind, is of very considerable help to those people. There are, of course, within that bracket people who may not fully and totally agree with this proposed land tax. Frankly, I have met many farmers recently and, by and large, any references to land tax were in favour of land tax rather than otherwise.

I appreciate the individual positions, policies and stances of the farming organisations and other organised groups but farmers, in my estimation, generally do favour this farm tax as it is being proposed in this Bill. From the farmers' point of view, there is a great advantage in so far as they know at the beginning of the year that with the present proposed figures of £10 and, say, 75 adjusted acres, they pay £700 or £750 and that is the beginning and the end of their tax liability, their tax obligation, their obligation in regard to keeping records or accounts for tax purposes. May I hastily add, however, that the maintaining of records and accounts for management purposes is something that we should all encourage. We should make certain that we do not get a departure from a system that has been building up under which farming was like other businesses and being treated as such, where records and so on were being maintained. That is important for that purpose but from a taxation point of view, farmers would not have to concern themselves any further with accounts having met their obligation.

People with an excess of 80 adjusted acres would have to be assessed for tax in accordance with the provisions of this Bill. There is the other point, conveniently overlooked by those who oppose this Farm Tax Bill, that those who pay income tax, for example, persons who have 150 adjusted acres and who have a tax liability of say £2,000 or £2,500 when they pay their land tax may deduct the £800 which will represent £10 per acre in 80 acres from their £2,000 leaving them with a payment of £1,200 in the form of tax. In other words, it is a direct tax credit. This again is being conveniently confused and hidden by those who oppose the land tax.

I believe that this farm tax, for the reasons I have referred to, has put people in a position of knowing where they stand. It gives them an incentive to work harder, knowing that once they have met their liabilities taxwise fully, they are free to earn that extra pound for themselves. This is an important thing. It is something that was often argued in farming circles, that people were not given the incentive to move forward, that the moment they made any move forward to improve their situation they were hammered with tax left, right and centre. I believe that argument has been removed and that this is a very progressive step.

Much discussion has taken place on the adjusted acre and there has been much deliberate misunderstanding. It is not as complex as has been portrayed by many persons at present. The adjusted acre, as has been specified, is the best acre of land in the country and this is used as the base to arrive at the productive capacity of an acre of land. May I stress again that the productive capacity of that best acre of land is used as the basis on which to adjust one's acreages. To elaborate very slightly on that, the best acre is regarded as an acre that is capable of maintaining one adult bovine for 12 months of the year, that is providing winter feed in the form of hay or silage and also providing summer grazing for the animal. That would broadly be the criterion for an adjusted acre.

Adjusted acres will be arrived at from a commonsense point of view, a scientific point of view and various other criteria will be adopted to make sure that it is not something that is pulled out of the air. The criteria used to arrive at the adjusted acre will incorporate such matters as soil depth, which is extremely important, soil type which would include the whole area of whether the land was arable or not, whether it was land that could be ploughed and could be used for the growing of crops as well as growing of grass or, instead, of growing of grass. In other words, its capacity for use would count very much. Drainage, the whole topography of the land, taking full account of slopes, hills valleys and other related matters in this area, will have a bearing on the working of the land: whether or not machinery can travel over the land, machinery for spreading fertilisers on grassland and for various other things that are done to grassland.

The whole area of climatology is a factor and this would obviously have a relevance in the context of, say, an acre in the south of Ireland, in the county of Cork, as compared with an acre in County Monaghan or County Cavan. The growing season in the southern area would perhaps be three or four weeks earlier than in the northern areas. At the other end of the scale while the growing season at the beginning would be that much earlier in the southern area at the end of the year the winter period would probably begin at an earlier time which would mean that the entire winter period would perhaps be around five or six weeks in one part of our island as against another part. That also would be a factor that would be considered in the adjusting process.

An extremely important factor is height over sea level. This could mean that it could take ten or 20 mass acres or more to give one adjusted acre in the final analysis. We again have other factors included here and related to what is mentioned here in the Bill, such as the uses to which land can be put and access.

Senator Smith made a valid reference to the question of land usage. Further consideration must be given particularly to the position with regard to milk quotas. In the adjusting of the acre that marketable factor will not be brought into the reckoning. It is not one of the guidelines for those doing the adjusting of the acres. The question of the usage of the land will have to be considered at the appropriate stage. Choice of land use can determine and dictate what the results and returns from the land will be. I am concerned about land usage not included in the criteria laid down for the adjusting of the acre. Whether land can be ploughed will have to be taken into consideration by those adjusting the acres because the soil type and soil depth will come into that.

The other important point which is not totally understood is that every acre of land will be scrutinised and walked and examined very thoroughly. This is right because within any small area of land of five or ten acres a visual assessment from a short distance of several hundred yards might give a totally wrong impression. There could be outcroppings of rocks. There could be hidden matters in that area of land. Every acre of land will be examined very thoroughly, in much more detail then on a per acre basis. It will go down to a lower area of land within the acre itself. This will be the approach and will lead to a situation where more people will be satisfied in the end.

The farm tax commissioner who will have the responsibility of ensuring the correct direction of this Bill, aided by a competent team of professional people capable of applying the proper criteria to the adjusting of acres, will obtain a right result. As indicated by the Minister, there is a tribunal to which appeals can be made if people are not satisfied with the acreage ascribed to them. The variations will be very considerable taking all the criteria accurately and fully into account. It could take a couple of acres to yield one adjusted acre in certain instances. That could vary significantly within districts and townlands, and even within farms. In other cases the total small area may not differ significantly from the adjusted acre position.

I want to move on to the amendments introduced to the Bill by the Government which have made a great difference to the Bill. The Bill now provides very clearly and fully that this tax is income-related. One of the great fears expressed — genuine in many instances — was that the farm tax had no income-related base. This is not so. It is good that that amendment has been introduced, together with others. It is important that we recognise that we are now starting with a declared figure of £10 per adjusted acre as the farm tax rate for 1986. There is indexation to ensure that the farm tax is related directly to farm income. As the Minister stated, this is based on Central Statistics Office figures.

As an example of that, I will take £100 as being the base for 1985 which will give a farm tax figure of £10, subject to its being finalised in this House. We will have £10 per acre for 1986. We will assume that the CSO figure will reveal an income base of £110 for 1986; the farm tax figure for the following year, 1987, would be £11. Should the figure be £90, the farm tax figure would be £9 per adjusted acre. That is my understanding of the situation. In the interests of progressive farming, one hopes that the figure moves upwards but there is direct provision for the figure to move in either direction.

The Minister referred to another important point, the proposal to display details with regard to adjusted acres and farm tax in Garda stations. That proposal has been dropped. I welcome that. With regard to hardship cases, section 11 (8) goes a certain distance to meet them. Hardship cases can be examined and classified as such at county manager level and a postponement of this collection of moneys can be made. This is an area that could be further examined. Postponing something that is a hardship matter will not, in itself, resolve it, particularly when payment of the money is postponed, and will continue as a first charge on that holding. That is not correct. I am confident that some modification can be found to overcome that, because genuine hardship cases exist. One could enumerate them for a long time which I do not propose to do. Where there is an obvious inability to pay due to lack of income, little income and, in severe cases, perhaps no income, from a farming enterprise, the extreme and genuine hardship case, not a cooked up one, must be looked upon in a different way from a postponement arrangement. That is not sufficient.

I am confident that this Farm Tax Bill will meet the aspirations of the farming community and, indeed, the general public. Understandably it will have teething problems. I am confident that the Minister and the people in his Department will overcome those teething problems and, in time, it will be seen by those it concerns mostly, the farming community, as a progressive measure which will allow them to make progress in their farms, having met their just and genuine commitments.

I should like to ask the Minister about the three 1 per cent income levies. Basically the relevance of this point is that it would be rather cumbersome for those who will not have to keep accounts in the future for tax purposes to have to keep accounts specifically for the purposes of the three levies, the youth levy, the income levy and the unemployment levy. I would like to know how it is proposed to incorporate those into a general overall system. Finally, I commend this Bill to the House and I hope that some of the concerns I have expressed can be successfully taken on board as time progresses.

Mr. B. Ryan

Agriculture has claimed for itself a mystique as a result of which it is regarded as something close to impertinence for people who are not formally, officially and directly connected with agriculture to open their mouths about it. It fascinates me that if a similar exclusion were to be imposed on those who have never experienced the alleged joys of industrial work, very few Members of either House of the Oireachtas could ever talk about the experiences or the performance of those who work in industry. There are far more people with agricultural backgrounds involved in politics than there are people who come from an industrial background. We have this mystique about agriculture. The idea that there is some sort of art form inherited or secret ritual involved in being a successful farmer is incomprehensible to those of us who, perhaps, lack either the magic potion, the family origins or the experience to be able to do it.

The country that has probably had the greatest success agriculturally speaking is New Zealand. They also have the interesting fact of having a higher proportion of people working full time in agriculture who come from a totally non-agricultural background than any other country in the world. In other words, they have demonstrated conclusively that farming is a business, a business which can be learned, analysed and studied and the expertise can be learned and transferred from one individual to another in precisely the same way as the expertise of any other business is transferred. Because it is a business and because it is what should be a successful productive business that everybody should, first, understand agriculture and, secondly, be involved in discussions about the future of agriculture and the way in which agriculture contributes to the national economy. There is no mystique involved.

One of the myths — and one that has been perpetuated by a certain intransigence in the Department of Agriculture — is the implication that you do not need much in the line of education to be involved in agriculture. So we have the most appalling inadequate, third level education in the area of agriculture in Europe. It is reflected in a large part of our agricultural performance, in our attitudes to agriculture and in our attitudes to expertise in agriculture. That is one piece of mythology about agriculture that should be disposed of. We should have large numbers of young people from urban backgrounds working full time in farming because, if they want to and if they are properly trained, they can probably do a better job than many of the people who have the so-called traditional expertise.

Another thing that fascinates me about Irish agriculture, and this is related to the Bill, is the dedication of most of the leaders of the farming community to what they describe as private enterprise and free market economics, particularly for people in industrial employment, where they object to trade unions having excessive power especially in farming co-ops, and particularly and sadly, very often for social welfare recipients. Some of the leaders of farming organisations have been responsible for some of the most scurrilous attacks on social welfare recipients. When it comes to themselves and agriculture, they abandon all notions of free market economics and demand guaranteed price increases every year totally unrelated to the market forces, to production and to future sales. They simply demand that a price increase be given to them which is entirely unrelated to their capacity to produce and which is entirely at variance with any concept of private enterprise or a free market.

They have a totally artificial market situation within the EC, totally artificial prices and totally artificial aspirations for the future. I support all that, but that is because I do not believe in free market economics in the first place. Those who most loudly preach free market economics, particularly in the farming community, are the first to demand that the entire free market concept be abandoned when it comes to their own area of interest which is agriculture. That is the second bit of mythology — that somehow we have these sturdy private entrepreneurs working the land. They are sturdy private entrepreneurs with guaranteed prices artifically inflated and with protection from free competition which is supposed to be the basic backbone of the system to which they subscribe.

The whole idea of taxation and farming is that we should have what is usually described as a fair tax system where everybody pays their fair share. I do not believe there is any interest group anywhere in this country which would not accept that its members should pay "their fair share" of taxation. The problem is that everybody's idea of a fair share of taxation is based on the idea that, "I am paying too much and the other fellow is paying too little." This is particularly true in the case of farming. I do not think anybody would argue that the average industrial worker earning roughly £8,000 a year — £160 or £170 per week for a 42 or 43 hour week —is not paying a fair share of taxation. Some people talk about a fair level of taxation, and other people believe that they should pay some tax, but the definition of fairness is what they think is fair. This is particularly true in agriculture. The definition is not, what should I pay, given my income, given the needs of the public sector and given the levels of public expenditure. That is a very different thing. Given the fact that we have a huge dependency ratio, a huge number of young people needing education, a huge number of old people needing to be supported and also tragically a huge number of unemployed people, we are inevitably going to have high levels of public expenditure. One of the myths is the idea that we can reduce public expenditure. We cannot. We would do far more damage, we would create more unemployment and we would create enormous hardship. We have to live with high levels of public expenditure and therefore with high levels of taxation.

A fair share of taxation means that every sector pays their fair part of a high burden of taxation. That means that the farming community must pay not some sort of marginal level of taxation but the same proportion of their incomes in taxation as those other sectors of Irish society already have to pay. That is a very different concept from the one that is usually articulated by those who speak for farming. That is the real concept of fairness, that people pay the same share of their income as others do. That is going to be painful for everybody because Irish taxation is high and will inevitably remain high.

This Bill is a step in the direction of ensuring that, for a large minority at least if not a majority of the farming community, a relatively prosperous section of Irish society pay their fair share of tax. All the accountancy mumbo-jumbo and juggling of figures will not convince me or most other urban dwellers that there is not a large element of prosperity in rural Ireland today. If you drive past places like dog tracks on a Monday or a Wednesday afternoon in Cork and look at all the cars that have come in from rural Cork to test out their dogs for the following Saturday night's racing, you do not see much in the line of small cars or cheap cars. Somebody, somewhere in rural Ireland is spending a great deal of money. Somebody, somewhere in rural Ireland has a fairly substantial income. It is not, being reflected in the taxation that is being paid. This Bill is a step in that direction.

Given the harshness of the regime that other sectors have to put up with in terms of taxation, given the extraordinarily limited exemptions and allowances that are available to people under PAYE, given the way in which their allowances have been devoured by inflation without any indexation, it is extraordinary how generous the exemptions are in this Bill. I do not blame the Government. I congratulate the farming organisations for the extraordinarily effective lobby they manage to carry on. The sensitivity with which individuals' needs, problems and concerns are reflected in this Bill is extraordinary. The details into which Senators have gone on this Bill on the concept of an adjusted acre obviously would provide for every possible concern and conception that might upset people's productive capacity.

I still do not know how many adjusted acres there are in the country. Mr. Joe Rea is quoted in the Irish Farmers Monthly of this month as saying that there are about 10.8 million adjusted acres. I do not know how he knows that. He seems to know many things about other areas. He is an expert on the fact that Irish trade unionists do not work and that Irish social welfare recipients do not deserve much of what they get. If his information on farming is as reliable as his other information, we should not trust him even though he is the most prominent spokesman of the farming community.

Mr. Rea talks about a 10 per cent adjustment on the total acreage in crops and pasture. We have introduced a concept of an adjusted acre. There is an estimated figure for overall revenue from those adjusted acres. I would like to give a few figures to illustrate something that deserves to be illustrated because it underlines my point that fairness is a relative term which depends on who is looking at it. The number of adjusted acres below which a farmer would be exempted from income tax is 80. We do not know how many real acres would represent 80 adjusted acres. All the variables that are listed in the Bill will vary substantially from region to region.

In 1979 Mr. Rea gave a figure of £80 as the current profit on an acre. I do not know whether that is an adjusted acre, a big acre or a small acre. If you assume that he is talking about profit per acre as the total profit from agriculture distributed among all the acreage of agriculture and if you accept the fact that there is a huge almost unproductive sector in Irish agriculture with small farms and old people producing very little, you will have to assume that those people who have farms above 20 adjusted acres — and they are entirely exempt — make a profit of around £100 per acre. On 80 adjusted acres that is an income of £8,000 per annum. That 80 acres is regarded as equivalent to 80 of the best acres of productive agricultural land. Somebody with that income from farming, according to these proposals will pay £800 a year in taxation. The reason I picked on £8,000 is that it is in or around the average male industrial earnings. The average PAYE worker earning £8,000 per annum, taking family circumstances etc. into account, will pay at least £1,500 to £2,000 a year on income tax. If they are single they will pay well in excess of £2,000 in income tax on an income of £8,000 per annum. The counterpart in agriculture will pay £800 per annum.

The creamery milk suppliers have been very sensible. They recognised that for most farmers there is much to be said for it. First of all, it is a relatively low level of taxation. It is simple and it is many other things. It is clearly arguable that it is unfair in terms of the level of contribution from an income that a farmer will make on the basis of these figures. It is not going to guarantee that a person earning £8,000 per annum in agriculture will pay the same proportion of their income in taxation as a person earning £8,000 per annum working in a factory or elsewhere. Until we get to a position where people pay the same proportions of their income clearly and in a way that is irrefutable we will not get any sense of solidarity between those who work on the land and those who work in industry. There has to be a sense of a burden fairly and evenly shared. This Bill as it has been produced will not really end that misunderstanding. It may be a step in that direction but that is all.

The concept of fairness with which I began is ludicrously still absent from this Bill. There are so many generous exemptions. There are so many protections. The interesting one is that people's liability will decline if the farm income declines given that the real earnings of industrial workers have been declining in recent years. At the same time their tax bands and tax exemptions have not been adjusted but in some cases have been squeezed further. It is hard to persuade people that the average industrial worker only earns £160, £170 or £180 a week. Most people have the notion that people working in industry are earning vast fortunes of money on overtime etc. In fact the figures are quite small. Until people pay an equivalent proportion of their income, irrespective of how it is earned, there will be no sense of fairness.

One of the great anomalies in agriculture is that close to 50 per cent of Irish agricultural land is in the hands of — I will not even say being worked by — elderly bachelors reaching their late fifties who have no great interest in increasing the productivity of their land, who have no great interest in raising production and who are perfectly comfortable the way they are. It was not I who first adverted to this fact, it was a very prominent member of the Fine Gael party who has been responsible for my education, Professor Raftery, a member of the European Parliament. He has to my satisfaction — in discussions with some people in agriculture I believe his figures are not challenged — indicated that until we deal with the fundamental structural problem of having close to half our agricultural land in the hands of people who cannot or will not work it we cannot really talk about a vibrant agriculture in this country. I hope the idea of a flat rate tax, to the extent that it will apply to these people, will be an incentive to them to work their land, sell it, lease it or otherwise dispose of it to somebody who will contribute in that direction.

In conclusion, let me say that somebody else listed advantages of a flat rate acreage related tax far better then I did. I quote from the Irish Farmers Monthly of July 1985 the gains from such a tax:

1. Farmers can increase production without paying extra tax.

This is particularly true of those under 80 adjusted acres.

The man who wants to work gets rewarded. Nationally this must be the right way to go. This tax is not a tax on output, therefore farmers will strive to maximise output

That is the first gain for farmers.

2. Wasteful farm investment would be stopped. See examples in UK and Denmark.

3. Farmers are saved the cost of accountants. This will result in a saving of at least £15 million a year.

4. The Revenue would make a major saving on collecting tax. This could be used as a discount on the amount of tax due nationally.

5. Yield to revenue is underwritten, which should ensure that no new type of tax is imposed.

6. From a public relations viewpoint the farmer contribution to the Exchequer is clearly identifiable. It comes in one lump. That is not the case if the contribution continues to be collected through a variety of taxes-rates, income tax, VAT levy.

7. The Flat Rate of Tax, with some adjustment can promote land mobility in a major way. However, this is a matter of major debate which could confuse the tax issue.

That is a fine list of seven good reasons for introducing a land tax. I gave the source: the author is a person called Joe Rea and he made this submission on 2 April 1979 to the IFA National Council. There is nobody better to argue against a land tax than Joe Rea because presumably he has changed his mind. It is very hard to argue with that rationale for a simple land tax. I object to the level of generous exemptions, to the kid glove handling of those who will be liable to pay it and to a ludicrously low level of payment which will leave many people in agriculture paying a ludicrously low proportion of their income in taxation.

Mr. Lennon

Being a farmer myself, I would be wrong if I said I welcome any new form of taxation that would extract more money out of my pocket. Governments over the last few years have given serious thought to this problem, as to what form of taxation would be the most acceptable to the farming community. I agree with Senator Brendan Ryan when he said that the farming community at one stage favoured this type of taxation themselves but I do not agree with all of what he said. I can understand fully the opposition to this. I can understand that Mr. Rea is not necessarily acting on his own behalf but is acting on behalf of the organisation he represents. Perhaps it is not his thinking but the thinking of the IFA.

It is true to say that some years ago they did — as indeed did the president himself — favour a land tax. I, speaking as a farmer, favour a land tax also. I know many farmers from the small county of Louth and I find that the great majority of them welcome the land tax. There are approximately 4,000 farmers in County Louth. Of those 4,000 farmers, 2,000 of them have under 20 adjusted acres, what we believe will be the new adjusted acreage system; 1,600 of them have under 80 acres and 400 have over 80 acres. It would be true to say that it would be the 400 farmers with over 80 acres who would be shouting the loudest. I suppose it would be true to say that the 2,000 who have under 20 acres and indeed the 1,600 who have under 80 acres would love to have over 80 acres. We can all agree on that because some of them who have less than 80 and less than 20 acres are renting conacre for up to £150 to £200 per acre.

I am not jealous about the amount of land the big farmer owns. I consider the big farmer is doing a good job in his own way. Perhaps his grievance is — he is among the 10 per cent of farmers who are still left in the income tax net — that he would like to get out of that tax net and get away from the accountants. That is why I believe the majority of farmers in this country welcome a land tax. I am speaking on behalf of a great many small farmers in County Louth. Of the breakdown I gave of the 4,000 farmers, perhaps 3,600 will not have to continue keeping accounts. They welcome this tax. The farmers in this country want to get away from accounts, especially the older generation of farmers. They would much prefer — I have said this publicly before — to spend one or two hours longer working in the field or in the yard than to use a pen for ten minutes. Perhaps the younger generation of farmers who have a better education can attend classes and courses and might be more able to do their accounts than the older farmers. For that reason people like to get out of keeping accounts.

Speaking as a farmer, I would prefer a situation in which I knew exactly how much I had to pay, provided I was able to pay it, at the beginning or the end of the year as the case might be, like the old rent system. Some people can say this is rates by the back door if they want to. What does it matter what it is called. When we had rates for many years — we cannot thank governments for getting rid of them, it was a court decision — they were paid to the tune of about 99.9 per cent of farmers in every county. They may not be paid without some grumbling but perhaps it is our nature to grumble a bit anyway, but at least they were paid. For that reason, if we call this rates, even though it is meant to be a land tax what does it matter? At least that is the way I feel about it.

We must talk about the fears that farmers have at the moment about this land tax. Certainly, some farmers have fears about it. One of the fears that they had, maybe still have at the moment, is that this is starting at £10 and they fear, will be increased yearly from £10 to £15 to £20. It must be said that, in fact, farmers last paid rates in 1981. If we take a farmer at the moment with 100 acres of land, even 100 adjusted acres, he is going to pay less now. Even if we take the man with 80 adjusted acres he is going to pay less land tax now than he would have been paying rates. It would be true to say that if rates had continued increasing in the normal or abnormal way they were increasing they would be paying far more than £800 on 80 acres at the moment. The fears of farmers are that this can increase. I want to come back to that point.

I would have greater fears if it were the local county council who had the power to increase this. I want to say that publicly. If I look at my own county council, perhaps, it is not any different from any others, but I would say that the majority of members on that are urban, wearing two hats, county and urban and, certainly, they could turn on the tap at any time on the farming community to increase the tax up to £15 or £20 as the case may be without fear of a backlash because in some cases, or maybe in many cases, they would not be depending on the rural community for their vote. It is true to say that. I am referring to the county councillor who is an urban councillor as well and is not depending on the farming vote. I want to spell that out. The Chair is looking at me in amazement. Perhaps, the point I am making is not understood. I come from a county where there are two big towns, Drogheda and Dundalk, where, in fact, the majority of the councillors are not farmers and are from those two big towns. For that reason I am much happier that it is the Government of the day who will make the decision or has made the decision, and will make the decisions in the year ahead as to whether they feel £10 is adequate or inadequate. I want to make that point. I can understand the opposition of the farming community. They would not be natural if they did not oppose an additional tax or a tax as such on their land.

Senator Brendan Ryan — he has left the House now and I do not want to talk about people for too long in their absence, I would much prefer to talk about them when they are here — projected himself as the expert on farming this morning. He made a statement about when he drives past a farm. I think that is as close as he gets to it. He drives past it. He made another very derogatory remark about the farming community. When he passes the dog tracks he sees all the big cars of the farmers outside the dog tracks. I never thought that farmers were gone to the dogs in this country. I never believed that. In fact, if he was here, I would nearly ask him to withdraw it. I think it is as much as he knows about farming. It is as close as he got to it, to drive around. We find many people — he is not a representative sample, perhaps, of the urban community — from the urban areas who look at the amount of money paid in income tax by the farming community. If the figure has not increased. What does that indicate? They were paying income tax on their profits. Is this an indication that their profits have fallen? One could read that into it if he liked.

He made another statement which I resented. Perhaps he quoted Professor Tom Rafferty. This was the allegation about a great number of bachelor farmers who were not producing the maximum from the land. I cannot remember the number of farmers he mentioned. It would be true to say that there are a small number of farmers from whom we are going to get money as a result of a land tax, where we did not get income tax from them because they were quite happy in their little situation not to produce the maximum from their land, thereby not paying income tax. I do not know exactly how many of those are around. When I go around the country I do not see that many acres gone to loss or gone wild. Perhaps they are in his area. I doubt that, I assure the House.

I think it is fair and true to say that since farmers finished paying rates most local authorities are in financial difficulties.

Anybody who is a member of a local authority today will agree that the loss of the farmers rates going into the coffers was indeed tremendous. In recent years I have heard farmers say that the rates should never have been done away with. I am sure most Senators will agree that farmers have said that and perhaps, are still saying that. What they want to think about is that if they had not been done away with at that time and they cannot thank the Governments for it, they would be paying more in rates today. I am specifically talking about the farmer with under 80 acres. They would be paying more in rates today than they are now going to pay in a land tax of £10 per acre. I defy contradiction on that.

Having regard to the amount of money that is now extracted from the farmers in income tax, it saddens me to hear farmers saying that they pay substantial amounts of money — maybe some of them in the 80 acre class — some of them saying that they pay £200 or £300 or £400 in income tax and that they give £400 to the accountant. In other words, the accountant got as much out of it as the Government of the day. It is not the £400 that the farmer gave to the accountant that worries him but it is the number of visits he had to make to that accountant to satisfy him and to satisfy the Revenue Commissioners that he was not liable for any more. In some cases we have people paying hundreds of pounds to accountants to satisfy the Revenue Commissioners that they are not liable for income tax and they pay no income tax. Surely, the farmers would be happier — and I know them for a long time — to pay that specific amount of money as a land tax and get away from the accountants.

It also saddens me to hear some larger farmers say, "Ah well, the first low gear is good enough for me. There is no point in my killing myself working. I am only working for the tax man." I do not like to hear that. I hope that is not happening to any great extent, to think that that might be the attitude of farmers, that they are deciding to go into first gear rather than produce the maximum from their land. I would hate to think that that would be the attitude of many in this country.

I would love to see, nonetheless, if we had a land tax, that there would be an incentive for people to work longer and harder. For example, take the man with the 80 acres who perhaps, knows that he has to pay £800. But when he knows he has that figure to pay, if he feels like it he can work all night, on Saturdays, Sundays and on Christmas Day if he so desires. There are not that many people anxious to work these times. If he desires to do that, he should not be stopped. I would let him work on and I would put no disincentive in his way.

We must take into account the long hours that farmers work. Christmas Day is often the same as any other day; anybody in livestock particularly, anybody with cows and cattle, one day is just the same as any other day to them. They have to go out and work. We must take account of this. Maybe I am labouring this point about the fears of farmers at the moment. I referred to this earlier on.

Senator Hourigan referred to the objectionable provisions relating to the display of the classifications list and the farm tax record in Garda stations the tax being displayed in the barracks. Thank God, that is not in the Bill any longer. I see also that at least we now have a hardship clause there to take into account people's inability to pay. I welcome that. Maybe there are one or two points about that that I am not happy with. I feel that perhaps the Government may well consider exempting the people who are at the moment in the resuce package. Maybe they might consider that in the weeks and months ahead. Some of these people in the rescue package are there for that reason and it is self-explanatory when they are there to be rescued. We must consider those people in that package.

I read the Minister's speech and he talked about the people at the moment who are unable to pay. He says:

... provides that the local authority can agree in these circumstances to postpone action to collect the tax for a specified period. During any such period interest will not acrue on the outstanding amount ...

In the old days when we had a waiver clause at the local county council, if we used the clause in relation to Mr. X on his rights, that was not there as a charge on his land afterwards. I might stand corrected on that. If he was unable to pay his rates in a certain year, they just automatically fell by the wayside. I think that was the position. But the position here is that if he is unable to pay this year, all right, we will leave it so until such time as he is able to pay it. But what he has not paid today is still due tomorrow. It is there as a charge on the land. Perhaps, it was not easy to get around this. Maybe the Minister might take another look at this, because if the person is unable to pay, for example, £800 this year, and we waivered that until next year, he might be less able to pay £1,600 next year. Maybe I am wrong about that but I am reading the Minister's speech and that is the understanding I took from it. However, if I am wrong the Minister will correct me.

The marginal relief in section 10 is designed to ensure that farms just above the threshold of 20 adjusted acres will not have to pay the full farm tax. To many people that will be welcome also. A farm of 20 adjusted acres but fewer than 21 adjusted acres will pay only one-fifth of the tax. A farmer with 21 to 22 adjusted acres will pay two-fifths, and with 22 to 23 adjusted acres will pay three-fifths, and so on. That must be welcomed at this stage. Perhaps many people did not think that that was going to be in the Bill.

Coming back to the adjusted acre, that is another one that is kicked around like a football, as to what way this is going to be done. Everybody suits himself in relation to what answer he comes up with on that one. I have no fear of that one at all. People are asking me questions about it at the moment. I cannot answer them. If, for example, they have 100 acres of a middling sort of land, it might be 80, as the case may be, we may come up with a very fair way of doing this. People have fears about that. I can understand their fears. I am sure everybody else can too.

With this new tax there is an incentive there for the farming community. Perhaps at the outset I can understand their opposition to it. There is an incentive there which the farming community may well appreciate in the years ahead when they know exactly the amount of money they will have to pay. Many farmers have said to me that they like this situation. We must be realistic also and say that money must be found somewhere. I can understand the opposition to it from Fianna Fáil. They are in Opposition at the moment. Their policy might well be that everybody is right except the Government. But somebody has to pay. We have a situation, and I want to refer back to it, where local county councils have no money. If we had no money we might not have had to introduce service charges in some cases.

There is an onus on all of us, on all sides of the House, to face up to our responsibilities and if Fianna Fáil, by chance, ever get back into power they will have to do something like this. At the moment they are saying to the farmers that that tax is not right and not suitable. But they have not come up with any alternative. There is a time when all of us must act responsibly. The time has come — maybe the time has passed — for everybody in politics at the moment to act in a very responsible way. The day is gone when people are going to get anything for nothing. The old argument used to be made by farmers — and it used to be made to me as a member of the local authority at the time — that when they paid high rates they were paying rates they were not sure what they were paying them for. Some of them did not enjoy any of the services at the time. Some of them had not got good roads to their houses; some of them had no water laid on; some had no sewerage. Yet, strangely enough, when the rates went and when they realised, or did not know what was coming next most of them were saying that they would prefer the old rates system. There was that threat of a further tax coming from somewhere. They did not know what it was going to be. I venture to say at this moment that 90 per cent of the farmers in this country, and maybe more, will welcome this land tax of £10 per acre. As I pointed out, the concern of a few small groups in relation to the £10 being increased upwards and to the hardship clauses and so on will be allayed when all this is explained quite clearly to them. There will be an acceptance across the board by many farmers that this will be the most suitable tax for them.

It has been said often that farmers are not paying their fair share but in this regard we must consider the amounts paid in income tax. There are many other levies which we pay and I do not intend to dwell on that at the moment. I do not think that the amount collected in income tax gives the full story. For that reason it is as well that people have another look at this situation and realise that farmers in some cases are paying as much as they can.

There is not very much I want to say on this subject at present except to express the hope that in the years ahead the Minister will only increase the £10 upwards if farmers' incomes increase. If this happens many farmers would not object. We all like incomes to increase. That was the way with the old rates system. There was rarely a year during my time on the county council when the rates did not increase. Often in the old days there could be an increase of £1.50 which was a lot of money at the time.

The approach taken by the Government and the talks they have been engaging in with the farming bodies in the last few weeks have ironed out quite a number of the problems. I am sure the Government are still quite willing to have meetings with the farmers in the days and weeks ahead to sort out any other problems and allay the fears of the farming community in relation to certain points in the Bill which hopefully will be amended in the months ahead. I have no problem in supporting the Bill.

Mr. T. Hussey

Fianna Fáil's primary concern is to secure tax equity and to reform the taxation system to ensure a fairer distribution of the burden of taxation between all sections of the community. We are committed to a system whereby the farming community should pay their fair share of taxes on the same basis as every other section of the community, that is, that they would pay on their income at the same rates as are applicable generally. We are opposed to the present land tax principally because it contains a number of objectionable features and provides no certainty as to the contribution which farmers will be called upon to make to the Exchequer. The initial rate of tax is £10 per adjusted acre. I am glad to see that as regards future contributions, a slight change has been made in the Bill whereby after the first year the rate will be indexed and increased according to changes in farm income. I do not know if this is right because I have a fear that at some stage when some Minister for Finance might find himself short of a few million pounds, he will find here a very useful system whereby he can decide to take that few million pounds from the farmers at any given time. That would be a very wrong approach.

Equity requires that any tax system would have regard to the circumstances of the individual and be related to his or her capacity to pay. It would be unfair that a farmer with a large family would be expected to pay the same tax as a single farmer with the same adjusted acreage and no dependants.

There could also be a situation where a farmer, because of the disease situation, might be deprived of an income for two or three years. He might have to sell his cattle to a factory at giveaway prices but would still be expected to pay his tax in full. Surely that situation would not be tolerated in any tax system.

The changes that have been made in the Bill under the hardship clause are not sufficient because one is merely postponing the evil day: the charge will be made on the land concerned and eventually it will have to be paid by somebody. We know that where land is transferred from a father to a son or to a nephew or to whoever it might be, there are many charges on that transfer. Certainly, the number of charges at present is not encouraging any father to transfer his land to his son. A transfer involves the payment of stamp duty, inheritance tax and so on. If a farmer cannot pay this new tax when it is due it will be passed on to somembody else, thereby eventually creating hardship. As Senator Lennon pointed out, there could be a system whereby the charge could be written off, as happened under the old rates system. This is something which the Minister should think about. There is no point in carrying on this charge if the person responsible at the time cannot pay.

Under this legislation we are setting up a whole new bureaucratic system to squeeze a few million pounds from farmers. If the same energy were applied to the system now in operation and if the Revenue Commissioners were allowed to recruit extra staff — I understand that 200 will be needed to operate the land tax — there would be no reason for the Government not getting in those extra millions that are not now collected because the offices of the Revenue Commissioners are understaffed. Of course, the Government still apply an embargo on the recruitment of staff.

When it comes to the payment of tax farmers are no different from any others. They will not pay until they get the demand. If the Revenue Commissioners do not send out the demands they are not going to get those extra millions they are talking about. It is just not right to brand all farmers across the board as tax evaders. They do pay their fair share and there are many hidden taxes that people outside of farming never hear about. The Government in their programme Building on Reality, proposed to take £7 million from farmers between November 1984 and November 1985 under the bovine disease eradication levy. Farmers will be paying more at the factories and marts at a time when there is great uncertainty in the cattle trade. There are other levies farmers have to pay to Bord Bainne, the ICMSA and to all the farming organisations which we never hear about. The system of land tax now being proposed will set up a whole new bureaucracy of tribunals, commissioners and inspections. When their salaries and expenses are paid, there will be very little extra revenue for the Government.

The process of adjusting acreage will be very slow. Each farm has to be visited by an inspector and the land inspected. Will this inspector take soil samples of every acre on that farm? How does he arrive at the final adjusted figure? This has not been made clear to us so far. We all know that there is quite a difference in the quality of soil from one acre to another. In order to get a true picture it would be necessary to sample every acre. This will be a very slow process. I am not sure that those inspectors have the qualifications to carry out this work. If a farmer is not satisfied with the final adjusted acreage produced, he has the right to appeal. I can see this whole process of settling adjusted acres and dealing with appeals leading to a collapse of the system and to general dissatisfaction in both urban and rural communities.

The tax proposed is inequitable and will be inoperable. It does not tackle the basic problems of farm taxation. Farmers, like everybody else, should be taxed on their incomes. As I have already stated, the structure for collecting tax is already there. All that is needed is the recruitment of additional staff by the Revenue Commissioners and perhaps a more efficient administration of the present system.

The Bill now before the House provides that the tax will be levied and collected by local authorities in each area and that the proceeds of the tax will form part of the current revenue of the local authority in each case. However, this does not mean that local authorities will be getting extra revenue to pay for their services. It is envisaged that there will be an adjustment in the amounts of grants and relief of rates by reference to the revenue from farm tax. In other words, local authorities will still be getting only the same amount of revenue, even though they are responsible for the collection of this tax. I would expect, since local authorities will have the responsibility of collecting this tax, that at least they will be allowed to retain extra revenue to help compensate for the amount of work involved in collecting it.

The present critical position local authorities find themselves in as regards finance to pay for services is that they do not have that finance at present. Certainly, the Government do not seem to be prepared to come to their rescue or to provide that extra revenue. It would be only right, since local authorities are responsible for collecting this money levied under this legislation, that they should be allowed to retain an increased amount of it to pay for their services.

In conclusion, I submit that the land tax now introduced is inequitable and unjust. Above all, it is divisive. It has already divided the farming organisations. At the early stages it almost caused the collapse of the Government. Certainly, the results of the recent local government elections have demonstrated to the Government parties that the system proposed is not acceptable. Farmers are being singled out for special treatment when the Government should be striving to perfect the system at present in operation and to ensure that farmers pay tax on their incomes on the same basis as every other section of the community.

Mr. Ferris

As the first speaker from the Labour Party on this legislation in this House there are a few facts and figures which I want to put on the record. This legislation evoked widespread controversy throughout the country. That controversy was generated in particular by one farming organisation who, I am now satisfied, represent the bigger farmers. It goes without saying that there was obviously a vested interest at work in some of the utterances of farm leaders from one association when they were judged on what finally has come through the Dáil to the Seanad today.

In the two recent general elections I was appointed by our present Tánaiste and Party Leader, Deputy Spring, to accompany him throughout the country on the campaign. In the process of visiting each county where we had Labour representation or Labour candidates, and in the process of meeting various groups of people representing the economic life of the country, without exception we had a request from each local county executive of the IFA to meet them to discuss farm taxation. Of course, being democrats and having an aspiration to be involved in legislation and in Government, we welcomed the opportunity to talk to people to allow them to represent their views to us on the very important subject of farm taxation.

As a small party with an involvement in Government, we are always willing to meet people and talk to them, but we also try to ensure in the area of taxation that account is taken of the ability of people to pay. We have never deviated from that policy in Opposition or in Government.

In the area of farm taxation we have always been advocates of ensuring that farmers were seen to contribute their fair share of taxation. We were instrumental originally, ten or 12 years ago, in ensuring that farmers were brought into the tax net. It was obvious from the services that were being demanded that we would have to broaden the tax net to take in other areas which, up to then, had not been included in the taxation system.

Certainly the farmers had always been subjected to a rateable system which, in my opinion, was unfair, unjust and inequitable and ignored many of the principles I have just spoken about. However, the rates were a fact of life and they were a source of financing for local authorities. When we met these executives from the IFA, without exception one of their primary requests to us was to abolish what they called the accounts system of income tax for farmers. A certain section of them were in the tax net and the Government had proposals at that time to bring every other farming enterprise into it irrespective of their valuation. In spite of that, they felt that taxation, as they understood it, was an alien thing. They felt it was hindering them and interfering with their everyday business affairs. Farmers are very busy people who work very long hours, unlike businesses which operate from 9 o'clock to 5 o'clock each day.

The farmer and his wife and family have a very busy life. One of the points in their submissions was that they found it almost impossible to come to grips with keeping accounts or keeping records for accountants. Because of that they appealed to the local representatives to look seriously at a system which would not be a disincentive to production but would be simplified for them. The younger generation of farmers keep accounts because it is important for them to know which particular enterprise pays them to be in business. One of the surest ways of doing that is to keep some semblance of accounts. That is one of the reasons why the schemes which have been initiated in the EC insist on farm accounts being kept. Whether they apply for farm modernisation grants or other grants from the EC it is of benefit to farmers to keep accounts. Circumstances have changed so drastically over the past ten years in agriculture that there are times when one wonders why particular farmers stay in a particular enterprise because of the level of income from it. The case being made to us at that time was that we should move away from the system of accounts. I would prefer if farmers had opted to stay with accounts.

The Joint Programme for Government stated that this Government would be committed to a replacement of the PLV system which has since then been found to be unconstitutional. I felt that farmers should pay tax based on their incomes and that their ability to pay should be taken into account. They should also pay a contribution to the local authorities by way of replacement of the PLV. This was in the Joint Programme for Government. We have just had a minor reorganisation of the local authority system but we will have to have a major reorganisation. Farmers like everybody else create demands for services on local authorities. They create a demand on roads servicing their farms, minor roads and county boreens servicing four or five different farmers. I have been successful in achieving a level of service to farmers to which they were entitled under the old rateable system because they were contributing to the upkeep of local authorities. With the abolition of the rates those demands continued. Demand was being made on the national Exchequer through the county councils to meet the cost of providing these services to local authorities and to rural people. The rural people are entitled to these services. The best people to deliver the services are the local authorities. It is unacceptable that the national Exchequer should be asked to take up the bill. One of the few contributors to the national Exchequer is the PAYE sector who have to pay for many of the services provided by local authorities, such as water charges, etc.

Some equitable system of taxation which would meet both criteria will have to be found by the Government. The Governemnt set about that task of trying to ensure that local authorities would be financed and that farmers would get the services at local level to which they were entitled and also that farmers would have a simplified system of paying their other taxes to the national Exchequer. In the process of trying to achieve all these systems in one, if possible, the system of farm tax was evolved by the Government and was published in the Government plan Building on Reality. At the time when the plan was initiated the Taoiseach and the Tánaiste said that the plan would not be subjected to pressure groups from any side. That has followed through. It was a tragedy when emotive meetings were held by the farming organisations — one in particular — throughout the country at county level when some of the things that were said publicly were unwarranted. It was not becoming of the organisation which I considered to be a very responsible one.

I am fortunate in my constituency to have both leaders of the main farming organisations, Mr. Seán Kelly, President of the ICMSA, and Mr. Joe Rea, the President of the IFA. As the party spokesman on Agriculture I have had opportunities to talk to them and their representatives on numerous occasions. They know my views on the industry and its importance. I have always been forthright in my comments saying that while recognising the importance of the industry I felt it should contribute its share to the national Exchequer and to local authorities. The Joint Programme for Government has been fulfilled in this area of replacing the PLV. Regarding the system that was mentioned in the joint programme based on soil samples and otherwise, the farm tax definition of adjusted acres would meet that criterion. I hope when it comes to adjusting those acres that account will be taken of the discrepancies throughout the country and the varied productivity of the acres of land. I come from what would be considered to be a fertile area of the country, namely the Munster area, in County Tipperary which is the Golden Vale. That is a milk producing area. There is a lot of mountain land some of which is in the disadvantaged areas. There are varying degrees of acreage there which, if properly adjusted, should take into account the ability of a person to survive on particular qualities of land.

If the adjusted acre system is operated properly farmers would welcome the farm tax package. Proof of that was our ability to talk to people in rural Ireland during working hours on their farms when we were on the election campaign. With the exception of six farmers in the Tipperary electoral area the rest of them were in favour of this package. They were in favour of it before it was passed by both Houses of the Oireachtas on the principle of what it would do for them and the ability they would have to produce efficiently and effectively and not be penalised in doing so. The six farmers who objected to it were actively involved in a particular farming organisation. As their organisation had taken a particular stance on the issue they probably felt it would be difficult for them to take any other course.

Members of this House from all sides of the political spectrum who have discussed this Bill publicly and privately have come to that conclusion. I wonder whether there is some hidden advantage in the system that we do not know about, because everybody is in favour of it. If there is a hidden advantage it is the ability to produce without being penalised. That is a good thing in agriculture. Of all the industries, we do not want to be penalised for increasing production in agriculture. On some statistics I have as agricultural spokesman for the party, I found that about 60 per cent of the grassland of this country — which is about 11 million acres — is under-utilised as we know it. The farmers and the farming organisations know it. By any objective criteria in relation to the feasibility of output and production, the levels per acre being produced are not at all what they could be.

There will be arguments — and rightly so — that, with the changes in the Community, the milk levy and so on the question must be asked: where does a farmer turn to now to increase his production? He cannot produce more milk without being penalised. He cannot quickly change his system of farming without finding a lot of either capital input or a proper level of income from another enterprise. A lot of research has been done in this area by ACOT, An Foras Talúntais and other people. They are not unmindful of the fact that there are problems facing the agricultural community in the next decade because of the changes in the demand for the products we have and the shrinking of the markets in the Community. Indeed, in markets in the Third World there is the keenest of competition from other producers.

I am not unmindful of the problem when I say that there are difficulties about either increasing production or changing production. A lot of grassland in this country is underutilised, whether through stocking rates which are too low or a lack of initiative to change enterprise. Certainly, agricultural production could be raised with more effort. The people would be prepared to do that if they felt that the Exchequer would not penalise them. That would and does give a very privileged position to the farming community, I welcome that because it is an important industry.

No other incentive to any other section is given without penalty. For instance, a PAYE worker who works overtime is penalised by the tax system. We now have the situation where there is widespread absenteeism from particular areas of industry by workers who, because of the tax regime in operation feel a disincentive to work the final two months in the tax year. People avail of those two months to go sick so as to be able to reclaim their taxes. But this flat-rate system of taxation based on what an acre is capable of producing is a definite advantage. It is one that all interested in agriculture would welcome. Certainly the farmers who are efficient and progressive welcome this tax regime, because it will not act as a disincentive for them.

The fact that there are cases of hardship has to be recognised. A lot of the publicity given, by the IFA in particular, to this scheme indicated that the Government would ignore people's ability to pay and would ignore hardship created by an illness in the family. Now that the Bill is before us it has become clear that not alone were we aware of that problem in a flat-rate system but that the Government were prepared to take into account the waiving of this demand in certain categories of hardship. But perhaps all of us, as legislators, would like the Bill to be more definite about what the areas of hardship would be.

The ICMSA have been very constructive in this debate, have made regular submissions to the Government and have even produced their own formula which they felt could be more acceptable. I compliment Seán Kelly and his organisation on the constructive way they approached this debate. They would like to see certain categories of hardship cases included in the Bill. If it is written into the Bill that authority will be given to county managers to consider hardship cases and if that is operated as well as the managers operate the other systems of hardship, I would have no worry: managers are subject to representations from public representatives on county councils and so on and therefore that account will be taken of a person's inability to pay. I hope that that will be operated as liberally as similar waiver schemes always operated in the past. It is dangerous to specify categories. Because of acts of God, floods and so on, people can be put out of business. Entire areas of what is normally good agricultural land in the Glen of Aherlow can be flooded for months of the year. If that type of case was not mentioned in the Bill the manager could say that the legislation did not specify that flooding of land was a hardship case. But we left a certain amount of flexibility to the manager, this area of hardsip would be dealt with in a way that would satisfy the reservations of the ICMSA. I appreciate that they made a submission in this area and that they had discussions with the Minister and the Government. I compliment them for acting as a responsible farming body.

Senator Hussey made the point that it was unfair to continue a charge into another year, just because that was a bad year for farmers. If a man is put out of business for one year, then his books should be wiped clean. I would like the county manager to have the power to decide that, if some catastrophe struck a farmer in a particular year, he would not have to worry about a continuing charge being made for the bad year. I would like the Minister to look into this. If somebody on income tax is not earning in any particular year, they are not taxed in that year; and, if they have work the following year, that does not mean that they pay tax for the previous year. The same principle should apply here, and I hope that the county manager will be given discretion to wipe the books clear in certain circumstances. Certainly, if somebody is ill for a couple of months during the year and there is hardship created by that situation, the manager should look into the possibility of a part of the tax being a continuing charge. I am worried about a continuing charge piling up which would create a problem for the farmer. He might never be able to work again or whoever inherited the farm from him would be inheriting a small millstone around his neck because the section in the Bill is not sufficiently definite. Perhaps the Minister, when replying, would say whether the manager in certain circumstances would have discretion to write off these charges?

If the acres are adjusted fairly, and are seen to be adjusted fairly, there will be widespread acceptance of this legislation. The number of people appealing it will be negligible. Even if a person appeals it and his case is listed for appeal and pending, in the meantime the tax will have to be paid. That applies to all taxes. It is appropriate that it should apply here. It is appropriate also that for the nonpayment of taxes in this category a penalty will apply by adding interest, because this also applies in all other areas of taxation. Farmers do not want to be treated in any different way.

When the system of charging farmers for health services was introduced by the county councils through the health boards, and some of it collected by the Revenue Commissioners, the amount of payments in that area was very small, simply because farmers have been used to collectors coming into their farms. Under the old rateable system the farmers knew their rate collector; they met him and made arrangements with him. There was always a very high level of yield from rates, 97 or 98 per cent. Every year we looked at the rate books coming in and we were often amazed at the effort made by ratepayers to pay their rates. This happened because this personalised system of payment was there through the rate collector. I would hope that when this farm tax is in full operation, through the farm tax commissioner, that system of collection will be used and the existing rate collectors redesignated with responsibility in this area of collecting. Only in that way will the fullest possible response by farmers be obtained to what will be a charge on their property. I feel that the sending of bills to farmers will not solicit from them the same response that would be secured by personal collection by collectors or otherwise. I am suggesting that to the Minister as a possible way to ensure the success of the scheme.

The success of this scheme, from the farmers' point of view and all other taxpayers' point of view, is that there will be a proper payment, that the yield will be appropriate and that the income from it will be perceived to be what we expected it to be. If people play the system otherwise, there will be widespread discontent in a lot of other areas. The farmer has been subjected to a lot of bashing, both from trade unionists and from people living in urban areas who cannot even perceive some of the problems in an agricultural, rural area — the problems of trying to manage a farm and to have a proper livestock husbandry and a system that will bring in the hay, the silage and the corn all at the appropriate times, irrespective of the weather conditions. I do not think anybody really understands the hardship that can be created at farm level. I certainly do. I have worked with farmers; I know them. I associated with them on a daily basis. Unfortunately, through the media and otherwise and also through the leaders in the trade union movement, this urban-rural divide has been widened. If the tax take in this area was not what the Government envisaged — something in the region of £60 million to £70 million — I think there would be widespread dissatisfaction — and rightly so. When we look at the figures of the total tax take broken down, as we know them, it is inevitable that there will be dissatisfaction among large sections of the community who have no opportunity either to produce accounts or to appeal or to plead inability to pay. They are just in a tax regime that can be ruthless.

Anybody involved in dealing with workers realises the tax burden that is imposed on the PAYE sector. The figures published early last year, show that the total tax taken in the previous year amounted to £1,660 million. That is an astronomical amount of money. Of a total tax take by the State we find that the PAYE sector paid £1,423 million. The self-employed paid £250 million. Every day of the week we try to give them incentives to create employment and to match the challenge of the economy and to pay a fair share to the Exchequer. We find that farmers in that category paid £32 million. It is appropriate that efforts should be made by this Government — and that would be the aim of the Labour Party — to secure a levelling out of that tax burden and have it spread across as wide as possible a spectrum of people. In that we include farmers who, we hope would pay something in the region of £60 million to £70 million. We do that in the knowledge that from the information available to us farming incomes have improved somewhat. They had some bad years and they have had some good years. The statistics available for the previous tax year is that their incomes went up something like 15 per cent. Nobody begrudges them that. With that income improvement the amount of tax take has not been great. In the system of accounts to which they object, naturally they have the facility to be able to charge as many expenses as possible — I am not suggesting for a moment that charging is not legitimate. In that process they have the opportunity to charge various expenses against their incomes. The amount left that would be taxable has been small, even negligible.

One-third of the top farmers of the country earn something like £15,000 a year or more. The amount of tax taken from them would not compare at all with the amount of tax taken from the PAYE sector with the same level of income. It is also fair to say that about 50 per cent of the remaining farmers earn something like £2,000 to £5,000 a year which is really only a subsistence income. It is not even one you can survive on. It may be slightly greater than the level of social welfare. This tax takes into account that many farmers of 20 adjusted acres or less will have to pay nothing — rightly so, because they would not be in the situation of paying tax.

This Farm Tax Bill reflects a system of fair play. It certainly would give an opportunity to farmers to increase their production without being penalised. That would be good for the overall economy of the country. Any tax regime that allows that kind of improvement in incomes in the farming sector, which would compensate them in some measure for the hardship that they have to go through, would be a good thing and should be acceptable to the vast majority of farmers. During the election this was the kind of message that I received on the doorstep. I was quite amazed because at that time the anti farm tax campaign was at its highest, for political reasons. I would suggest that some of the results probably reflected a view that the farmers, although they believed in it, were also afraid to go against their farmer leader. He has done a disservice to the farming community in adopting that stand on this subject.

Mr. M. O'Toole

I am afraid you cannot adjust the results at this stage.

Mr. Ferris

I am not suggesting that we should adjust the results. I am putting on record in the House what the results were. I also will put on the record of House that if the incoming Fianna Fáil Government, whenever they take office again — if ever they take office; they are fairly optimistic they will — follow through on their promise to abolish this tax they would find if there was an election shortly afterwards that they would also lose because a lot of people are in favour of this tax system. By its abolition many farmers who would then be using the system would not lightly forgive any Government for abolishing a system that they had welcomed. Democracy is an extraordinary thing. It can be made to work, or be seen to work but so long as it works in the pockets of the people concerned it will produce results. In the long term, this Government will be given the credit for having tackled this problem of farmer taxation. It has been — and Senator Smith was quite right when he said it — always a source of controversy in the country whether farmers should or should not pay tax, or whether they were ever paying their fair share and if they are now in a tax system and paying a fair share why is it not left that way?

I would ask the farming organisation why did they not leave us alone when they had the system. They were afraid that rates would be replaced in some way, the PLV, and that in that process they would find themselves paying on some sort of a rateable system and they would also find themselves paying an income tax. Now, they have the best of both worlds. They are paying one tax which replaces the PLV and it also replaces their income tax system. That is for the ordinary farmer and it is the ordinary farmer that I feel that I represent and can speak for with some authority, and not the big land ranchers in the country who, of course, are worried about this farm tax. Basically, none of them wants to pay the tax — they do not want to pay anything. There are very wealthy farmers who do not want to make any contribution and still demand many services from the Government. They even have the facility, in the 80 adjusted acres or over category, to have a direct credit from the farm tax against their income tax. Nothing could be fairer. It is so fair to them that it is probably unfair on the smaller people.

I would like to think that a farmer in the very high income bracket would pay income tax — because he would be in a position to do so — and that he should also pay some form of taxation to the local authority, on which he makes quite a lot of demands I would go so far as to suggest to the Minister for the Environment that any farm tax collected from those people in the higher adjusted acreage bracket should be retained fully by the local authority for use by them, because a contribution in income tax will already have been made to the Exchequer. I suggest that the Minister should look at that suggestion when the scheme comes into operation.

Farm tax received from the larger farmer, after the direct credit and everything else, should be retained by local authorities as that farmer is also paying a contribution to the national Exchequer. I would accept that, in the category of 80 acres down to 20 acres, the county council should and can only keep a percentage, but it is an important percentage and one that I hope would not be eroded by a decrease in other grants from central authority, block grants and otherwise, to local authorities. If we had this kind of money available to us, with a certain autonomy in how to spend it, this Farm Tax Bill would have met many of our demands.

All members of local authorities, whether they are Fianna Fáil, Fine Gael, Labour Party, The Workers' Party or Independents, would like to feel that they had some control over some of their funding, that they could collect it and spend it as they wished, within reason. Then we could really do something about the county roads, the surface dressing of county roads, the cutting of the bushes and all the things that need to be done but cannot be done because central Government dictate how we spend their money. If you have some autonomy about how you collect your taxes then you have some autonomy in how you spend it. I would hope that there would be a fairly liberal attitude by the Minister for the Environment, in conjunction with the county managers and the elected members of local authorities.

I have heard it said in certain circles that somehow or other this Government have been unfair to the agricultural sector. I would like to disprove that by giving some statistics on how liberal the Government have been in the payment of various grants to agriculture. I welcome these grants; I fought for them and asked for increases in them and I welcomed the advantages accession to Europe gave to farmers. No doubt some of these figures I am talking about will be grant-aided from the European Community. I will try to impress on the minds of the public — the farming public in particular — that for what they are paying in taxation to the national Exchequer, the national Exchequer has been liberal in the distribution of grants to the farming section over the past couple of years. Some of these, admittedly, go directly to the farmer, but you cannot have a properly organised agricultural sector without having a Department of Agriculture to implement policy, to initiate various policy moves and to negotiate on behalf of farming enterprises in the European context.

You must have education in farming and you must have universities to produce graduates in agriculture. In fairness, once these grants and payments are made they are of direct benefit to the farming community. We pay £8.7 million towards the education of agricultural graduates, and graduates in veterinary medicine, the Faculty of Dairy Science and so on. These are all of direct benefit to the farmers, without them they probably could not survive. We give payments of over £15 million to An Foras Talúntais; we give payments of over £15½ million to ACOT. We give them £1,750,000 for capital purposes. We give a grant-in-aid to Muintir na Tíre, which is really a rural-based organisation. We have Bord na gCapall, which is a small farmers' horse breeding board to which we give £670,000. The committees of agriculture get £150,000 — which is a miserly sum. If you look at what they do in formulating schemes of agricultural advice and training for young farmers in counties that is a miserly sum.

The Irish Co-operative Organisation get £22,000; the Irish Country Women's Association get £24,000; Macra na Feirme get £45,000; the Expansion of the Cattle Breeding Scheme, £7 million; the Interest Subsidy Scheme for non-development farmers, £500,000; interest subsidy for farmers in severe financial difficulty, £1.669 million. We have looked for all the schemes and advocated their continuance. The Government have responded by continuing them. These figures tend to be forgotten.

Mr. M. O'Toole

They were always there.

Mr. Ferris

They were always there and they are still there.

Mr. M. O'Toole

They are not relevant to this Bill.

Mr. Ferris

They are very relevant in that there is major capital expenditure by the Government in the area of agriculture. It is not unreasonable to expect that a contribution should be made to the national Exchequer. I could go on ad infinitum but that expenditure works out at about £205 million. Senator O'Toole would like to hear some more of them so I will give them to him. We have miscellaneous livestock schemes which receive £500,000; the exchange rate guarantee on loans for agricultural purposes, £1.5 million; reactor grants, £3½ million.

Mr. M. O'Toole

These are in the Book of Estimates every year.

Acting Chairman (Mr. Harte)

Would Senator O'Toole just take notes please and not interrupt?

Mr. Ferris

The Senator is worried because he would like to insist that this Government have forgotten about the farming enterprises. He also forgets that many farmers also benefit from other schemes, such as smallholders' assistance schemes and medical cards from the health boards. There is a range of assistance which farmers get, and rightly so, because most of them — particularly medical card-holders — are in an income bracket which we know is barely at subsistence level and they should be looked after. It is appropriate that those who are better off in the farming community should pay something towards the national Exchequer. That can only be decided on the number of acres available to them, on the acres being adjusted towards their production capabilities and with some regard to a person's inability to earn through hardship or otherwise.

Generally, speaking, from what we have learned through talking to farmers, they welcome this scheme. I have no doubt there will be administrative problems in making the scheme operative. The Minister said they will start with the top bracket farmers. I listened to that assurance here before about the Smallholders' Assistance Scheme. When the larger farmers in Wexford brought their case to court and found the rateable system to be unconstitutional, they did not realise they had stirred up a hornet's nest then, resulting in having everybody assessed on income grounds for every other scheme which was available, including the Smallholders' Assistance Scheme. When we brought in the Social Welfare Bill which changed that, an assurance was given here that we would start looking at the larger valuation farmers, up to £40 valuation at a time. The reality was that, when inspectors went to investigate, they began looking at the very small farmer also and people we felt might have got another one or two years in the old system, were being penalised.

The good point about this is that, if the Minister gives a commitment that only the larger acreages will be adjusted first, the other system will still operate in the tax regime. If after a couple of years of adjusting the larger farms we still have not got to the smaller ones, with the tax system that applies at the moment continuing if the income from farmers based on accounts in that interim period proves the point Senator Smith made — that the income would have doubled or trebled under the old system — I am sure the Minister will be prepared to look at whether we should confine this scheme to the larger farmers only. We will have to wait to see how it turns out in practice. I would hope that in the process of adjusting—I am glad of the commitment that it will not be done from an office in Dublin, that somebody will visit these places to see the problems — each year a certain number of names will be notified to the county manager, of farmers from whom there can be an income to the councils in that year and the others will be paying an income in the meantime directly to the Exchequer based on the accounts they have already been keeping.

One other point that has not been adverted to in this legislation is how farmers will pay their health contributions, their youth employment levy and their income levies. If accounts will not be obligatory after the full period of adjustment, I wonder on what basis would health boards be recouped for the services they now charge farmers for or, indeed how the Revenue Commissioners will deal directly with people in that bracket of 80 adjusted acres down to 20. When we are talking about accounts, we must look at how important accounts are for other things, such as social assistance and health contributions. These will probably be tidied up on Committee Stage of the Bill which presumably we will debate at length here.

It is important to be able to put on the record the views of people who will be affected by this tax regime. The views that have been expressed to me at the moment have been favourable. Perhaps there are things in the scheme that I have not seen at all that will make it very difficult to operate but, reflecting the views of the people concerned I can say that they are very happy about it.

One of the prime concerns of the Government in bringing in this scheme was to try to facilitate farmers and make it easier for them — not to have to keep accounts, not to be spending figures like £20 million a year on accountants. The farmers would prefer to have the credit for having given that to the Government. These are some of the cases being made to farmers. I often wondered why they had to go to that expense with accountants because many of the accounts that I have seen and indeed assisted many farmers in completing, were fairly simple. They were simplified accounts and there was no difficulty whatsoever in completing them. The response from the Revenue Commissioners was a notification to say that they were exempt from taxation for a period of two or three years. However, they went to the extreme of spending money to prove that they did not owe money and got no credit from the urban dweller or the trade union movement for having spent that money.

For that reason alone, anything that is now paid under this scheme directly in tax on their land or their property will at least be credited to them as having been paid. It was so diversified under the previous system that very little credit, if any, was given to them. That did create this unfortunate situation in the minds of people that farmers were not paying anything. I have listened to people, inside and outside the political system, who are generally of the belief that farmers do not pay anything. That is untrue but in comparison with what other sections pay, up to now they have certainly paid much less than the PAYE sector which has been burdened with almost the total State bill for running the country and indeed repaying debts incurred by previous administrations over a long number of years. That created some of the problems that this Government have had.

If the changing of this tax structure makes it simpler for the people concerned, is not a disincentive to production, gives some level of autonomy to local authorities and increases the overall take to the Exchequer, then this is useful legislation. I hope that the public will see it in that way and that the farmers themselves will welcome it. We have only to wait and see what happens and indeed wait and see that future administrations do in this area if and when they get the opportunity. It will be interesting to see what will happen in this area. You can promise everything when you are are in Opposition but it is what you do when you are in Government that really matters. I hope the electorate will take that into account in any future decisions they make about who they vote for on particular issues and that their decisions will be based on what politicians have done and not what they promise to do but never do.

Mr. M. O'Toole

Over many years previous to this many methods of taxation were designed in order to ensure that the farming community of this country would pay more tax than they were paying heretofore. Many systems were devised behind closed doors that never came to light. Long, long debates ensued in many circles, in trade union circles, in political parties and especially in the Labour Party of which Senator Ferris is a member. Naturally, he supported this Bill and tried to defend it here today. Later I will deal with some aspects of what he said.

When the Government brought out a document known as Building on Reality they indicated in that document that a farm tax would be introduced but, very wisely, they ensured that it would not be implemented until they had left office. Of course it is now blatantly clear that no farm tax whatever will be introduced during the period of this Government. It was left aside until the matter became urgent because of the local elections this year. They were postponed last year for the very same reason. All the amendments to this Bill except six, were by the Minister for the Environment. This Bill was rushed through the draft stages in order to have it on the Order of Business prior to the local elections. It was on the cards — and indeed it has been proven since — that a very poor result would be forthcoming from the people at the local elections and it was a matter of urgency for the Government to bring in this Bill in order to attract all the Labour votes throughout the country and all the city votes and indeed the votes of everybody other than farmers.

The Government are now caught in midstream. If they could bury this Bill today and never let it be heard of again — because they know quite well it will not be implemented during the lifetime of this Coalition Government — that is what they would do. They are caught in midstream; it has to go through this House of the Oireachtas and the other House and it will become law but will never be implemented. That is something I can be sure of. I am as certain of that as that I stand here today. I know that terrain and the land that has to be adjusted and with the productivity that we can expect from officials that are going to tackle this business progress will be slow. We are told that one hundred of them are from the Land Commission; there are 100 more whose origin I do not know and their qualifications are not spelled out in either the Minister's speech or the Bill. However, I will come to that later. My own view is that this scheme will never be operated and the local authorities will not have this farm tax as their mainstream of financing.

If one had to question their political affiliations down the years and one was an independent observer of the stance of the IFA as we know them, one would immediately say that if they had any political leaning it would be towards the Government of today. I am sure that if in any way they could accept the farm tax as presented in this Bill they would have done that. But they are the largest farming group and they have examined it in depth. They have, no doubt, rejected it in full and rightly so. If the Bill never came into an operational status, if the farmers and the IFA members opposed the Bill and its constitutionality, then that would deem the Bill to be sub judice, which would mean that the local authorities, until that case was heard in the High Court, or possibly the Supreme Court, would have to go on as they have been, starved over the last number of years, and continue to be starved for the next few years.

I would like somebody to define an adjusted acre to me. I know quite a bit about land. I am a farmer on a small farm and I have a wide knowledge of farming, both in my own county and indeed other counties. I take an active interest in farming developments. I know the soils of the different counties. I know the soil of Meath, and I would regard it as the best fattening soil in the country. I know the soil in Kildare that is regarded as a very light soil and is not at all as suitable for fattening as that of Meath. I know the soil of Wexford and Carlow which is a deep moor-like soil and is excellent for tillage as indeed is the soil in southern counties such as east Cork and in some other counties. Will somebody tell me on what acre are they going to define an adjusted acre? Is it with a Meath acre, a Wexford acre or a Carlow acre? Is it a tillage acre, a grassland acre, land for producing beef, grain or milk? It has not been spelled out in any submission that I have heard at any meeting I attended when farm tax was discussed. Nobody was able to tell me what type of acre is going to be the baseline. It is important for that to be spelled out by someone in authority who will be putting this Bill into operation.

I believe it is going to be done by a central authority. It was felt that it was happening so fast that it would be done from an office. I am glad to see that at least those people are going to come onto the land. I am sure they will have some difficulty when they come to my county where there are such fragmented holdings. Indeed, when I spoke on the Control of Bulls for Breeding Bill the other day the Minister handling that Bill was not aware of what was happening in the commonages in the west. I spelled it out as best I could. When you start adjusting a fragmented holding, where a man has 17 or 18 plots in different parts of different townlands, I cannot see how an official or a number of officials could adjust such a fragmented holding, some such holdings have turbary rights, some are foothills and some are commonages at a very high altitude. Are all the lands of this country going to be adjusted? If they are, then there is not a hope of this ever coming to fruition. I am sure most people with any realistic knowledge of Ireland will realise that this is the case.

I know an attempt has to be made at this stage to go on with the Bill until such time as this Government leave office. It is vividly and blatantly clear that the next Government that will take up office will be from this side of the House. The smallest child in the land could nearly give you the result of the next election. When I was at the county council elections people were not worried about those elections but as to when we would have a general election. That was the word I got on the doorsteps. I can assure you, unlike Senator Ferris, that land tax came up in nearly every second or third farmhouse that I canvassed. Of course, people in the west are worried about this farm tax. They feel that it is a new dimension with an open-endedness, I will come to that later, where it may be £20 next year or the year after.

While the Minister has spelled out that certainly until they get out of office in 1986 it is not going to be any more than £10, he has not said if it will be based on the farm incomes from there on in. But if the farm incomes drop, as has been the case over the last number of years, then will the £10 level come back down to £7.50 or £6 in accordance with farm incomes? I have not seen anything in the terms of reference or the explanatory note about the lowering of the £10 base. One can assess that in their own light but I believe that it will be open-ended and it will go up and up like every other tax which was introduced — PAYE, VAT, and indeed the turnover tax. All those taxes that were introduced in the lifetime of the State, whether it was by this Government or any other Government, were open-ended, and up is the order of the day. I have never seen them being reduced, whether it was rates or otherwise.

It is serious legislation. It is more serious for farmers I know in the west who have been reclaiming their land under the western drainage package and under the EC package. Much useful work was done on barren land which made it productive. If that was done with a view to increasing one's productivity one would now be caught under the farm tax that is going to be introduced. But if one left land barren, rented it and it was left non-productive then one will come out very well under this tax. I feel it would be a disincentive in the future for anybody who wishes to improve his land. Farmers are going to leave that land there because if they improve it they will be taxed on it. It will be better to leave it there as it is because the income from the increased productivity will not offset the taxes which they will have to pay in the future.

According to the Minister's own document on the management, maintenance and investment in that land, it is immediately indicated that the man who reclaims his land, has good management, brings it up to high fertility and invests in it, is going to be the first to be caught with this land tax. There is no incentive at all for men who have gone into the field of reclamation over the years and who have done a worthwhile job. I want to put on the record of this House that the western drainage package has brought more productivity acres into the west than we ever saw before. That must be agreed by everybody. Anybody travelling along the coast in the west will immediately see the improvement that the western drainage has made. It is the progressive farmer who will get caught and this is the most detrimental part of this new tax.

We are to have a farm tax commissioner and I suppose he will be appointed by the Minister and possibly be a political appointment. It has not been spelled out whether it will be an appointment by the Appointments Commission or by the Minister. It says in the legislation that it will be by the Minister but that often means it could be sanctioned by the Minister and selected by the Appointments Commission. I hope that will be the case rather than a political appointment. Of course, it is important that the person who is appointed in this field will have a background in agriculture, have a training in farm tax, and have some real ability to assess the position on the ground.

We have taken on 100 recruits to help the Land Commission in the adjustment of acres. I did not see the advertisement in the paper so I do not know what type of people were recruited, but I understand that the recruitment has been almost completed. I hope they came from an agricultural background and that they had some training in the agricultural colleges throughout this country. I cannot understand the urgency of having thresholds at any given time. If you do not have classification completion you have a threshold base for tax in the interim. I cannot understand what that means but I am sure the Minister will reply to it. Thresholds are not necessary. You are either classified or you are not. You cannot pay in an interim period until that classification is completed. Therefore, I cannot see where the threshold situation would come on stream.

As regards revision on appeals, the farm tax tribunal will be appointed by the Minister for Finance. Will this be a political appointment or will they be appointed by the Appointments Commission? What type of people will the Department consider? Will they be from the Revenue Commissioner's Office? I would not like to see them being drafted from the Revenue Commissioner's Office above any section of the community, because they have tunnel vision in regard to collecting money and nothing else. I cannot see what ability they have to assess the farming community. Therefore, I could not agree to the Minister for Finance drafting his men from the Revenue Commissioner's Office.

What I do not like about the tribunal is that when an unsuccessful appellant appeals to the tribunal he has to pay all the costs of that appeal. That is very unfair. If you appeal a case you are levied a very sizeable amount. The Minister indicated that he hoped that this would not be too large a fee. That is very open-ended. In my view it would be penal to charge unsuccessful appellents for attending that tribunal and make them pay the costs of all the people who might be involved in appeals which might go on for days in some cases. That is a very harsh type of levy on unsuccessful appellants and I would like to see it removed.

I am not too clear about the display of the classification list. Nowhere in the Minister's speech or in the Bill is stated that assessed, classified and adjusted the farmer must be then notified of the result of that classification. I read into this Bill that the farmer does not get any notification personally. A list is put up at some given point. The only reason reference was made to garda barracks was that farmers might be too far away from the county town or from the local authority district and might not see the list. I cannot see what this means. Surely if you have a team of these boys on your land for any considerable time, and they go back and assess you and classify you, you are entitled to be told what the result of that assessment is. If you get a registered letter giving the result of your classification you will know where you stand under the adjusted acres system. Under that system you will have to pay the local authority.

If the farmer is notified then it is not necessary to display the classification of other farmers. A statistical type of document will be displayed by the local authorities the same as you would see on a notice board at election time. People have not time in this day and age to read these technical data that appear in such great numbers in any garda barracks. That is a ridiculous suggestion. I understand the Bill was rushed through. This is indicated by the 70 amendments we have here. As the Bill goes through there will be many more adjustments to it. It is not relevant anyway, because it will not come into operation.

As regards payment of tax in two weeks, this means that, when you are adjusted, you get a bill from the local authority to be paid within two weeks. That could not be put into operation because farmers do not have money available to them. A shopkeeper can take money out of the till and hand it to the traveller when he comes in to collect his dues. This is not the position with farmers. Farmers sell their stock once or twice a year and only then would they have money available to pay anybody. It is impossible to ask a farmer to pay on demand in two weeks. Even with regard to the poor law valuation rates system that was in operation there were two moieties, a first moiety and a second moiety. One was paid in March and the other was paid in October. Surely a system like that could be brought into effect rather than a system demanding payment within two weeks. I know farmers who are waiting every week for the dole in order to pay the grocery bill. How could they have this type of money available to them in two weeks?

If there are refunds to be made to the farmer there is no mention of it being paid in two weeks by the local authority. Of course, this is a different system. If one is owed some grants for essential repairs to housing or loans for building from the county council a refund will be made to the farmer. If one receives a bill from the local authority this has to be paid inside two weeks. This is a very highhanded type of legislation. I agree that this legislation was rushed through the House.

As I said at the outset there is going to be a £10 levy in the first year. I understand that it will be £10 in the second year also. That was brought about by a deputation from the ICMSA to the Minister. The future rate will be adjusted in accordance with the farm income. I would like to quote from the Minister for Agriculture, Deputy Deasy, in a document issued by the IFA, Irish Farm Centre, Bluebell, Dublin 12, entitled Farm Incomes up 20 Per Cent which states as follows:

The average income of farm families in 1984 recovered and was some 20 per cent higher in real terms than it had been just three years earlier.

If you do feel 20 per cent better off, the following facts and figures compiled by IFA Chief Economist, Mr. Con Lucey, from published CSO data, may help to explain the reasons.

Total farm incomes increased by 11 per cent in real terms betweeen 1981 and 1984. but choosing 1981 as a base, Mr. Deasy chose the lowest possible base as can be seen from the diagrams on page 2. If he had chosen a different base year, his result would have been very different. For example; farm incomes in 1984 are 29 per cent lower in real terms than in 1973, 34 per cent lower than in 1977, and 18 per cent lower than in 1979.

Between 1981 and 1984 the volume of agricultural output increased by 11.6 per cent. Thus all the increase in real incomes came from increased output; in other words from greater efforts by farmers themselves and not from higher prices. The diagrams on page 3 show that the price: cost squeeze continued to operate in the 1981-1984 period. In fact, between 1978 and 1984 input prices increased twice as fast as output prices, and in the 1981-84 period input prices increased 60 per cent faster than output prices.

Mr. Deasy achieved his figure of 20 per cent by adjusting the 11 per cent increase in real farm incomes, by the reduction in the farm labour force over the three years.

This reduction has been estimated by the EEC at 6.2 per cent which would yield a per capita increase of 18.3 per cent. The fact that numbers in farming are falling so rapidly is the result of declining incomes.

The IFA message to the Minister for Agriculture, Deputy Deasy, is as follows:

National farm income is now lower in real terms than in pre-EEC years. Selective use of statistics distorts the true position.

If farm incomes are to be based on what the Minister has said we are going to get an unrealistic farm income and a distortion of farm income figures. The £10 we speak of here will be in accordance with farm income and not with what the farmers are in a position to pay.

In conclusion, I think the tax is unrealistic and penal. It does not take into consideration the ability of a person to pay and that is the crunch on which this tax is going to fall. Whether a person has one child or indeed ten children, whether the woman is a widow, whether there is sickness in a family, whether there is disease breakdown in herds or whether it means a replacement of herds the farm tax carries on regardless of what happens. In my view it is inherited by the next occupier of the land. Senator Ferris did not tell that to the House this morning. If one has not the ability to pay at any given time, whether the husband dies or whether there is sickness in a family, the manager of that county can only defer payment of tax for that particular year or for the next year. No matter how long the tax is deferred the next occupier will inherit that levy. The Bill states that the farm carries the tax regardless of one's ability to pay for successive years and for all times. At no time is the tax wiped out in any given year.

When Senator Ferris speaks of all the grants being paid to farmers, I do not know what he was quoting from, but these are annual grants that are laid down since the beginning of time and they are increased every year in accordance with the income index figures. On his own admission he stated that they never get past the farmer's gate. What addition are those grants to farmers who have to pay tax inside two weeks to the local authority? I would like to say to the Minister of State at the Department of the Environment that he should be thinking in terms of financing the authorities of this country. This system will never finance the local authorities. It has done what it was supposed to do — got you over the election — and we are now in midstream. It will be gone with the Coalition Government. We will bring in a restructuring of the whole tax system. Farmers are entitled to pay tax but not in this way. Some other system will have to be devised. The Minister of State at the Department of the Environment, Deputy O'Brien, should be thinking in terms of making money available to the many local authorities, as we cannot wait for this type of tax because it will not be forthcoming. He should be thinking of preparing a budget for the coming year to make available moneys in local authorities where there are newly elected members who will try to do something for their areas. It behoves the Minister of State at the Department of the Environment to make sure that that money is made available this year because this system will not have the effects that the initiators of this Bill desired or the people that initiated this Bill had in mind. I want to warn the Minister that it is not a system that is going to finance local authorities in the future.

Mr. Browne

Ní dóigh liom go bhfuil fonn ar éinne sa tír seo cáin ioncaim a íoc agus creidim féin nach bhfuil na feirmeoirí ag déanamh faoi láthair ach mar a dhéanfadh gach aon dream eile sa tír dá mbeadh cáin ioncaim le n-íoc acu i gcóras nua. Tá siad ag gearáin agus tuigim go maith an rud atá á dhéanamh acu agus an rud atá á dhéanamh ag ceannaire an IFA. Cé nach naontaím leis tuigim an rud atá á dhéanamh aige.

None of us like tax and, in case Senator O'Toole leaves I should be fair to him and say that I want to take up some matters which I did not intend doing at all because I am tired of long speeches. I can forgive the leader of the IFA for misquoting some of the things in the Land Bill. He did not have the document but Senator O'Toole had. I cannot understand how he made the allegations he made here. He made one about the improvement of land, that a farmer was going to be taxed into not improving his land. Let him look at section 2 (c) (i) of the Bill. It clearly states:

If investment in the land is at a level that is higher than a reasonable level for land generally or falls short of such a level...

It will be adjusted up or down. They explain what investment means. It is the use of fertilisers or other substances, the levelling and general reclamation of the land, clearance of boulders etc. That is clearly taken care of. There is nobody here to report our debate today because we do not count any longer as part of the Oireachtas. It would be dreadful if that kind of publicity was widespread in the west. I believe that farmers have been told things in the west that are not true. The notification is covered in section 5. It says:

A local authority shall, within 14 days of the receipt by it of a copy of a classification list compiled under section 4 (f) (i) of this Act—

(a) publish a notice in a newspaper...

and

(b) send by post or give to each owner or occupier of an agricultural land holding, or part of such a holding,...

It is covered clearly there, the payment system within 14 days. I had not time to keep up with Senator O'Toole in all he was saying. Section 11 (3) (b) says:

The Minister may make regulations for the purposes of paragraph (a) of this subsection and such regulations may, without prejudice to the generality of the foregoing, make provision for all or any of the following: (i) for enabling farm tax to be paid in instalments, (ii) including the specifying conditions (including the specifying of conditions by a local authority) subject to which a person may pay farm tax in instalments under this subsection and the conditions which may be so specified,...

Many of the points made by Senator O'Toole must have been made in a mischievous manner. They do not stand up to reality at all. It is unfortunate that we have so much discussion on this Land Tax Bill which has led to a lot of divisiveness and which, of course, should not have arisen because the things that are said have not been factually correct at all.

We have a serious problem in that tax for most people is something that is very upsetting. Every income tax payer feels that he or she is paying far more than he or she should pay. We say that somebody else should be paying a lot more tax than they are actually paying. This brings us to the serious position that the tax system creates division. The PAYE people — I am one of them — are undoubtedly paying through the nose. To say they are crucified does not exaggerate the situation. That does not mean we should lose our cool and go completely to the other extreme in overtaxing farmers. If a reasonable line is taken, then the country in general benefits. We cannot have a situation where one group keeps shouting too much about the other.

There is a divisiveness in politics as well, because we have political speeches being made about the farm tax which do not help the situation, because the reality is that somebody has to pay tax. The PAYE people can hardly continue to pay more than they are paying. The farmers cannot afford to overpay tax, because it is an industry that needs a share of investment. At the same time the system that is being introduced under this Bill appears to me to strike a fair balance on the whole. Statements are being made that another party will remove this when they go back into power. The other party has made many free offers, but they will have to get in money under some guise. They will certainly have to get to the reality of the situation. There is no point in fooling people that things are free, that water is free and the garbage collection is free.

I have a lot of respect for the farming community, being the son of a farmer. Many comments that are made by people who should know better are completely out of touch with the reality of the farming scene. Today in the Seanad our Independent Senator from Cork made a silly comment that you can judge the amount of wealth in the farming community by looking at the cars outside Cork Greyhound Track. There is many a Senator with a car far bigger than he can afford. There might be many a Senator wearing a suit of clothes that he could not afford either. If you go on those kinds of frivolous signs, you can finish up with all kinds of wrong readings on the issue.

Farmers have a difficult time. We are in here worried about the weather today and whether or not it will affect our holidays. Many a farmer might be worried about the effect the rainfall will have and, later on, we might think that rain in September would not do any harm. One night's heavy rain can do untold damage to farmers. Their crops can be fine up to the last minute. There are people who drive along, see ten cwt. bullocks in the field, do a quick mental calculation and figure out how much money the farmer will get for those — and of course they will calculate that he is making a fortune. They are obviously under the illusion that the bullocks grow like mushrooms overnight, that they do not have to be replaced, that they do not have to be bought in, or that they do not die from diseases. We have a lot of myths about the farming scene. Even if we go back as far as Grey's Elegy long ago, which speaks of "the lowing herd winds slowly o'er the lea". It is a marvellous scene of peace and tranquility, as the herd walks in. Many a farmer walking behind them might know in his heart that the next test will show up that many of these graceful cows making their way home to the milking parlour will be full of TB or he might be wiped out with brucellosis.

The outward trappings of farming do not always conform with the real scene on the farm itself. Farmers, generally, are the world's worst advocates for themselves. A lot of the talk on television or radio or even in articles written in their own magazine do nothing to explain the difficulties they have to face. For instance, in dairy farming a farmer is tied down all his life. He might as well have a baby in the home to be fed every day of the week, because it does not matter whether he goes to Mass on Sunday or goes to a match in Dublin, someone has to milk the cows. We are all free at weekends and we can go where we like. If I go to the seaside as long as there is milk in the fridge or in the shop on the way back, I am OK. Farmers are very curtailments ed. I have never yet heard farmers depicting the kind of life they have to lead, the kind of hardship they have to put up with and the compensation that should be allowed for it. Many people are working on Sunday but they are getting double pay. Many of the people who are working where the farmer is concerned are getting double pay. He is not. These are the kind of things they should be arguing about.

It becomes boring to repeat many of the things that have been said already but I want to refer to a few things. The adjusted acreage will be much more in favour of the farmer than people are anticipating. There is a long list regarding the quality factors of land that will be taken into account when it comes to adjusting the acreage. When the job is done and farmers find that they are not cut back as much as they had anticipated they will be happy. I grew up thinking that the west of Ireland was full of small farms. Having listened to Senator O'Toole today I am convinced that they have huge farms in the west. Twenty-five adjusted acres is a big farm. A reassessment of the west would have to be carried out if all the farmers there are to be liable for farm tax. A couple of acres will become an adjusted acre in much of the west so the adjustments will lead to fairly big farms. When the improvements are considered the adjusted acreage situation will not be a problem.

I hope the benefit of the doubt will be given to farmers. If there is a toss up between 40 or 38 adjusted acres the farmer should get the benefit of the doubt because if he is happy with the adjustment it will lead to a lot of goodwill and it will also lead to a cutback in the number of appeals. A lot will depend on the inspectors. Some say they will be sitting in an office in Dublin. That was great propaganda perhaps when speaking to some groups of people. It was never intended that they would be sitting in an office in Dublin. A lot has been said about the Land Tax Bill but it is hard to justify the stance taken by certain people.

Garda stations were mentioned in an effort to suit the farmers if they wanted to see the list. I am delighted that that was removed from the Bill. I was one of those who asked that that change be made. However, there was no justification for the outcry. They were not being labelled as criminals. One farmer said to me that he did not see why he should be labelled in the Garda stations on the same wall as noxious weeds. That proposal caused a lot of ill will because people choose to pretend that the farmers were being criminalised by having their name up and the amount of money they owed made public but that was never the intention. The list was intended to convey the adjusted acreage.

I am glad that the £10 provision is written into the Bill. No matter how one tried to assure farmers that the rate per acre would be £10, one failed but now that the figure is written into the Bill, it does not change anything except perhaps to stop people pretending that the rate will be £20 this year or £30 next year. All that is good if you have a group listening to you who are going to cheer you but the reality is so different that it defies understanding why anybody would spread that kind of propaganda. The farmers are entitled to protest about any new income tax system but I have found from talking to farmers that they are delighted to be getting rid of farm accounts. This has swayed me in favour of this Bill. I would be against a flat rate of tax because it does not take many factors into account but having got the response I have got from farmers under 80 adjusted acres I am confident that this rate of tax is justified.

Our present code of income tax does nothing to encourage people to work. This has been highlighted by other speakers here. People do not want to do overtime. Sometimes they abuse the system and go sick. We should not continue that system into any new farm tax system. This new tax will give a big advantage to farmers in the 60, 70 or 80 adjusted acres who are dealing in farming like dairying where they have not got high borrowings. They will come out of this well and they readily acknowledge that. Some people object to it. They ask why should they come out making more money than others and pay so little tax. It is no harm to reward hard work because many of the farmers in that category work extremely hard seven days a week. If we say we have not got an incentive to work because the taxation system is so high, I welcome the introduction of this new system where a section of workers will be rewarded for working hard because the country will benefit from their hard work. Farmers should be encouraged to work. As they produce, despite the levies that are there and despite the barriers and difficulties, the country benefits. I welcome the idea that in that section they will be encouraged to work hard and if they get away with a few extra pounds, more luck to them. They deserve it. They work hard and more of us might work harder, too, if we could have the same benefits.

I welcome the Bill but I regret very much that it has caused so much divisiveness in the country. I regret that some of it has been distorted deliberately. I do not know why Senator O'Toole said it would not be enforced during the present Coalition's term of office. I did not meet too many people looking for a general election down the country because a lot of them are very sceptical of what political parties are doing. In the coming two and a half years, Senator O'Toole will be looking across at us talking about the income that has come from the farm tax and how well it has worked out. It is my wish that this Bill will help to heal a lot of the ill-will towards farmers on the part of the PAYE workers, some of which is ill-founded but there is a certain amount of bitterness over the taxation system. I hope the farmers will be happy with it and that PAYE people will see that it is a reasonable effort to bring equality into the system while at the same time not hitting the farmers too hard. They need money to reinvest in their farming activities.

Mr. Ellis

Perhaps we should not read this Bill at all. The Minister has tabled about 60 amendments to the Bill as introduced, so one begins to wonder how knowledgeable the people who drafted the Bill were with regard to the position of farm tax.

I believe that this Bill was drafted with great haste without an in-depth study of what it would mean and of what it purposes were. It was a hastily conceived Bill which came to life before the local elections to try to rescue the Labour Party from the wrath of the urban dwellers who had seen them sucked up as a political party into Fine Gael, having lost their identity and having lost whatever working class support they had to The Workers' Party. They decided they would be seen to have achieved something by forcing the Government to introduce a farm tax Bill.

If anybody looks at farming at the moment and at the net income of farmers they will find that farm prices are declining rapidly. One has only to look at recent beef deals which have been negotiated on behalf of our farmers to see that the prices are now much lower than they were 12 months ago and will remain much lower in the years ahead. The net result is that whatever hope there was of farmers reinvesting in agriculture to improve productivity and output will now disappear. Under the new systems operated within the EC, for example, the super-levy situation, means that dairy farmers can only expand in a very marginal way. If they are not to be allowed expand in any sector, where do they go? You can kill whatever initiative there is there for them to expand because nobody will produce something to sell it at a loss. That is what is being portrayed at the moment.

The land tax, as proposed, is again seen as a confrontation between the PAYE worker and the farmers, which is wrong. Everybody realised that each section of the community are entitled to earn a just wage for the amount of effort and work they put in. The average dairy farmer will work seven days a week. In fact, all farmers will work seven days a week, 52 weeks of the year. Are they not entitled to receive some type of compensation over and above what will be received by the five-day week PAYE worker? This is one of the myths that exist at the moment between the two sections of our community.

What Senator Browne said about the man from the town going out, looking across the ditch and seeing the man with 20 or 30 bullocks was very relevant. He automatically takes out his calculator and says they are worth £60 a cwt. and they are 10 cwt. each, so that is £600, and 30 of them are worth £18,000. But what will the net yield be to the farmer from those livestock? What will his net income be from the gallons of milk sent to the creamery, or what will be his net income from the cereals he will sell and hope to get paid for at the end of the year?

Remember also that the elements play a big role as far as farming is concerned. It can be seen this year with the rather bad summer that certain sections of farming are going to take an awful hiding when it comes to making up their accounts at the end of the year. In that element a little education as far as urban dwellers and PAYE workers are concerned would be of great benefit to both the farming community and the PAYE worker. After all, the one thing that everyone wants to see in this country is tax equality. That is agreed among politicians. It is agreed among workers and if we are to achieve that, we have to realise that we will have to balance the situation. We have here a Bill which is being introduced which I hope will never become law and I say that without making apologies to anybody because it is more of the type of tax law which is not equitable or fair to anybody.

It is less easy to point out where the anomalies in it are. You are paying by the adjusted acre, and I will have something to say about that later on. You are paying irrespective of your ability to pay. While we may have hardship clauses in the Bill, it does not clear the issue. Is Jack, who has 40 adjusted acres and only himself and the dog on the farm to end up paying, as under this Bill he will, the same as Joe who may have a wife and three or four children on his 40 adjusted acres? That is a very simple way of showing the anomalies in this Bill. If we look through the 29 sections in the Bill, we could all stay here from now until 1 January 1990 teasing through the Bill and finding the loopholes that will be found at a later stage in the courts, because much of the Bill is taken from what is in the Act with regard to the Griffith Valuation.

The Bill provides for the calculating, levying and collection of a new farm tax. One would think that farmers were not paying any tax. There is nothing about the VAT they will pay on their imports to their farms. There is nothing about the VAT they will pay and never recover on the oil they use in the tractors, on the machinery they buy and on the various inputs they have. Yet we see in the Minister's speech a reference to a new farm tax. The tax will be determined on the basis of the number of adjusted acres in each farm, and the smaller farms, those below 20 adjusted acres, will be exempted from the tax. How can the Minister come up with a fair system under the adjusted acre? Take two farms side by side in the one townland. Jack, a progressive farmer who may have used the farm modernisation scheme and used the various incentives that were there for him for the past 20 years to bring his farm to the maximum production, to bring his land to its best, will no doubt find that his 40 acres will, when adjusted, be much greater in adjusted acres than his neighbours who may have the same type of land, have the same acreage but has allowed it to go to wrack and ruin and who has allowed it to deteriorate to a serious condition. The progressive man will find that he has to pay twice the amount of tax being paid by his neighbour.

You cannot come up with a uniform system of an adjusted acre. Take an acre of land in County Leitrim and an acre of land in County Meath. I could take the Minister or the valuation officer who will be concerned to County Leitrim and show them parts of it where 20 acres would not be as useful as one acre in County Meath. What critieria are being used? There is mention of soil, soil content, climate, shelter and so on throughout the Bill. Those are matters which might seem very simple to determine but if the valuation officer arrives on a farm in the month of December he will find it much different from when he arrives in the month of June or July if there has been good dry weather. In fact, if he arrives in December, in many cases he could find that rather than being a farmer, the man concerned could have half his land flooded, which means that that land is of no use. Therefore, while the Minister may feel that the system of the adjusted acre solves the problem nobody is going to be in a position to actually determine what should or should not be an adjusted acre.

The Bill also provides that tax will be levied and collected by the local authorities. How is that going to work out with regard to local authorities who will find they have a very low base when the survey is carried out and when the valuations have been fixed?

I wonder how counties like my own will fare under this proposed system? While it was originally envisaged and was suggested by many people on the Government side of the House that this money would go towards supplementing the coffers of the local authorities along with what would be provided from the State, it now appears that what is intended here is that it will be used as part of the income of the local authorities. Rather than being used as originally suggested to boost the finances, it will now be included in the finances that will be available to the local authority. It will be considered as part of the process of settlement of the account as the rate relief grant for each year at the appropriate time.

That means that local authorities are now back to the situation in which we are the rate collectors in another form. It means that the Bill, which is here before the House, will not be pursued through the courts by the Minister but will be pursued through the courts by the members of the local authorities and by the local authorities themselves to see to it that these collections are made. I feel that the local authorities will have a lot to say themselves when they get time to study fully the provisions of this Bill. It is apt that it should have come at a time when they were in slight disarray due to the local elections, and that this Bill should be put upon the shoulders of incoming councillors. They should have powers but I do not think that they should be doing the dirty work of a Government which is not supplying the necessary funds for them to run local services.

In regard to the proposed Commissioner of Valuation with a staff of 200, could the Minister tell us — and this might be more appropriate on Committee Stage — what will be the cost to the State of having this revaluation carried out? Could he tell us will it be a cost to the State? Will our farmers be paying tax to repay what it may have cost to implement the evaluation? I do not see anything in the Minister's speech which states that it will cost X, Y or Z pounds to have the country revalued. I feel the public are entitled to know. I hope that when it comes to the Committee Stage of this Bill next week the Minister and his officials will be in a position to tell us what the cost will be of having this revaluation carried out.

Section 17 states that the commissioner's staff will have the right to enter the land and to receive a reasonable level of co-operation from the farmer for the purposes of satisfying or dealing with appeals. What is a reasonable level of co-operation? I hope the Minister will know that for us next week. Suppose a man, woman or the owner is not in a position to provide any co-operation, because they happen to be invalided, sick or for any other reason were unavailable, what will be the position? I hope people who find themselves in that position will not be dealt with severely.

The Minister stated that there is a penalty of up to £1,000 or six months as a guest of the State for those who do not give the amount of help that is required. Why is any help required? If somebody is sent out to do that job, they should have a land map showing everybody's farm. If they have to get the farmer to show them the boundaries and to show them what is his, in my opinion they are not capable of doing the job. I can understand the Minister having the power to make sure they are allowed on to the land but after that the fact of a reasonable level of co-operation is not required unless they are removed from the land or asked to leave.

I am very sceptical about the farm commissioners going to see the land. The people who do this revaluation may not be in a position to understand the amount of product which can come from some of the land they will be surveying. Land can look very good today and can appeal to many people as being very good land, either for the production of beef, milk or anything, but often it can be found that while it may look good it is not in a position to produce in accordance with what it may look like. Indeed, the Minister stated that the process will commence at the larger farms in all counties. I feel that he is again getting himself into a very knotty problem. If that is the case, it will be a long time before he gets to my county, because the number of farmers in excess of 60 ordinary acres will be very small. If any of them are entitled to pay tax on an earned income, I do not believe that any of them will have any hesitation in doing it as far as the farmers in the west are concerned.

When I further look through the Bill I am convinced that while some Members on the far side of the House may state that this will do away with the needs of farmers to keep records or accounts, are they going to be allowed for their health contributions and the youth employment levies under this, included in the £10 as proposed? They are still going to have to keep them. Senator Lennon may smile if he likes, but it is a fact that they are still going to have to keep records to prove that they may or may not be entitled to pay health contribution levies or youth employment levies.

The position as regards appeals is, in my opinion, very wrong. It states here that costs against unsuccessful appeals will be awarded against the person who appeals. That is meant to deter small, poor farmers from appealing against what may have been the valuation of their land with regard to adjusted acres. Would it not be more beneficial if the Minister was to put a nominal figure of, say, £50 as the amount that they should put down in order to be allowed to appeal against it? Remember, the cost of processing those appeals will be quite sizeable. It could mean that in some cases farmers might not be able to meet those costs as awarded against them. This could mean that they would have to sell a portion of their farm to meet the costs that might be levied against them, should they lose those cases. There is no upper limit on the amount of costs that can be awarded against a farmer who appeals unsuccessfully against the valuation which may be placed on him. I feel that another amendment to the 60-odd that are there to that effect putting a maximum limit on it would be in the best interest of the farming community.

We note that the farm tax tribunal proceedings will be private and that the tribunal will be empowered to call witnesses and to award costs against unsuccessful applicants. Regarding the award of costs, if is only fair that the applicants should be told how much costs they may have to pay if the case goes against them. Remember, there have been cases in this country in another area — with regard to libel — where people have won their cases and have been awarded small sums and yet have had to pay their costs which were of such an amount that it put them in the poorhouse.

The Bill, as proposed, is totally wrong. When you look at the collection procedure you see that you get two weeks notice. We used to have a six-day notice under the old rating system and it took a number of months before you were sent that notice. Now the Government are so short of finance that the farmers are going to be put on the rack when it comes to this and the Government are going to screw them as hard as they can in order to take money from them which they are not in a position to pay. This two-week notice to pay is wrong. While there may be a period of grace before the person concerned will be taken to court, this two-week notice I think is wrong. The talk of adding on interest after two months, at the rate of 1¼ per cent per month, as applies to other taxes, is also wrong where the cases are under appeal, where there are genuine appeals with regard to hardship or with regard to non-ability to pay. We should have provided some mechanism in the Bill which would allow these situations to be dealt with.

The fact that the proposal to put up a "wanted list", as I would call it, in the Garda stations has been withdrawn is nothing but an admission by the Government that the proposal to publish those lists was wrong. The Government at the moment are publishing other lists in regard to which, I believe, they will find themselves in court at a later date — somebody will find that he has been wrongly listed as a tax evader and will take the Government to court.

That somebody has to pay before he appeals, and may not be in a position to make that payment, is wrong. I hope that the Minister, if he is to impose this Bill on the farmers of this country, will adjust this section to allow for some mechanism whereby they would not be forced to pay the full amount while it was under appeal.

The marginal relief is like throwing buns to an elephant because it is not going to have a great bearing one way or the other, the Minister has said that he provided adequate powers of enforcement, and that the interest provision should act as an incentive to early payment of the tax. When it comes to local authorities pursuing local people through the courts, I am sure any of us who are public representatives will find that we will be visiting the country manager on a regular basis with genuine hardship cases and trying to get them sorted out. The proposal that they would become charges on the land is dangerous.

The rate of tax, at £10 per year per adjusted acre, is also dangerous. The specified amount is £10 and it is supposed to be linked to the CPI. I have no doubt that next year it will not be £10. It will be more like £8, because the farmers' incomes are going to drop so much in the next 12 months that they will not be in a position to pay that £8 which will be demanded of them.

The Bill has a large number of anomalies. If the Minister looks at section 1 he will see that the big investment institutions are let off the hook. Woodland investments are gone. Private afforestation groups in this group will not pay tax. It is regrettable that farmers should be forced — and will be forced — off marginal land in the west to give way to private afforestation. They will be forced to pay tax on this marginal land whereas if it is planted they will not have to pay any tax because it will become exempt.

Right through the Bill there are many anomalies. That is shown by the fact that a Government Bill has had over 60 amendments put down to it in the past week after it had been debated. I predict that it will be challenged in the courts and found to be unconstitutional. Remember, these things have been tried before and we know where they have finished up.

I would hope that the Minister, between now and Committee Stage, will lay before the House the type of cases he would class as hardship cases. It is only fair that before any legislation is passed one should be told what is a hardship case. What may be a hardship case in my eyes might not be so in the eyes of the Minister. What may be a hardship in the Minister's eyes might not be so in the eyes of the county manager. This is the sort of situation you are in. The Minister is not in a position to state what will or will not be a hardship case. In his speech the Minister states, in regard to the charges against the land, that small sales of land will be exempt from this provision. What is a small sale of land? A small sale of land to a man with 500 acres could be 50 acres; a small sale of land to a man with 20 acres could be a rood of ground. Could we have a designated amount as being a small area of land? Could we have it as a percentage of the farmer's total holding or could we have a fixed maximum amount put down as a small area of land.

The Minister stated that:

once the initial classification has been finally determined and circumstances, such as land sales or arterial drainage, cause the classification to require revision, then the farmer or local authority can request the commissioner to revise the initial classification.

Does that mean that the valuation, once placed on land, can again be readjusted? Does it mean that, if a farmer whose land may not have had access to the road should acquire a portion of land adjoining it which would give it extra value in the eyes of the valuation people, he will have it revalued? Does it mean that a farmer whose land might adjoin a main road and who may be forced to sell it due to hardship circumstances will have the value of the rest of his land which does not adjoin the main road reduced as a result of having to make a sale?

This is another example of the type of legislation we have come to expect from this Government. I have said this on a number of occasions in the past two years. It is legislation of the gunshot type, legislation which is not thought out and not pre-examined. I would hope that on Committee Stage the Minister would be in a position to deal with this point as well. One looks at section 14 of the Bill in regard to the commissioner. The commissioner shall be appointed by the Minister for Finance and he shall hold office under certain conditions. What are the criteria for appointing the commissioner? What will his background knowledge be? Will he be somebody who has a knowledge of farming and a knowledge of land use, or will he be somebody from the academic world? Or will some other political hack be appointed for a period of three or five years? It is only fair, since we are debating this legislation that we should know what type of person will be appointed as commissioner and what the basic criteria for the appointment will be. Will it be, as has been the position on a number of occasions, that somebody who can be "handled" by certain individuals will be appointed? If that is so, we should be told before this Bill goes through the House.

We should know the standards and qualifications that will be required for a commissioner. Will they be the same as those required for appointment to the Land Commission? Indeed, some of the appointments there down the years have left a lot to be desired. If you were a failed politician and the right Taoiseach was in office, you were sure to be appointed.

I feel, Minister, that the best possible thing that could be done as far as this Bill is concerned is to send it on the same route as a number of Government Bills have been sent in the past few weeks. Send it to the icebox, because in my opinion it is another attack on farmers who are hard-pressed at the moment. At the same time there are a number of farmers who are well entitled to pay tax. There is only one way that you should pay tax and that is that you should pay tax on your net income and not on the notional system that is suggested here.

Therefore, I appeal to the Minister and to the Government who, no doubt, know what the rural community feel about their tax Bill through their answer in the ballot box in recent weeks, that they should now re-examine the position and decide that this Bill should be confined to the icebox. It is putting farmers in a position where they will go out of business due to taxation which smaller farmers are not in a position to carry. Let nobody be under any illusion that 80 adjusted acres is meant to be and is suggested as the threshold for the payment of tax by farmers. They will still have to keep their accounts to identify the amounts payable with regard to hospital charges and with regard to youth employment levies. Let nobody try to tell them anything else.

Mr. J. Higgins

I know that it is the obligation and the role of an Opposition to oppose. Seldom have I heard more puerile, facile or simplistic arguments put forward in support of an Opposition case than have come from the Opposition benches today. We have had the full range of colourful adjectives ascribed to the Bill — punitive, penal, anti-farmer, anti-family, unworkable. From having listened to some of the contributions — and I exclude Senator Ellis from this — one can only assume that members of the Opposition, some of whom have spoken today, did not even go to the trouble of reading the Bill.

I take particular note of the fact that three of the Senators who contributed today were western Senators. I am surprised that Senators Hussey, O'Toole and Ellis should be sent by their party into the front line in order to fight the case for the larger farmers of the south and the east. As a western Senator, I genuinely feel that the farmers of the west who are purported to be represented by the three Senators in question, have absolutely nothing whatsoever to fear from this legislation.

Senator Ellis accused this Government and this party of anomalies in relation to the Bill. He has been guilty of a number of anomalies. I note that he states that with the anticipated "decline", á la Senator Ellis, in farm incomes next year the rate for adjusted acres will be down to £8. He seems to be running counter to his party line on that, because during the local elections we heard nothing from Opposition spokesman outside church gate to church gate, would-be candidates and county councillors, except that next year it would be £14 per adjusted acre. We have had quite an array of colourful descriptions from the Opposition. Again, from Senator Ellis, we had the old hysterical, whipping up of emotions in an attempt collectively to mobilise ignorance. We had emotive terms like the “six-day notices”. It sounds particularly hollow coming from the Opposition the Leader of whom, as Minister for Agriculture back in the sixties, sat for weeks in his Government office while the farmers from the south, the east and the west marched in their droves through the high roads and the by-roads, sat outside the Department of Agriculture with rugs, blankets and hot water bottles to keep themselves warm and were not invited in to participate in discussions, and some of whom were jailed by the subsequent Opposition Fianna Fáil Minister for Agriculture.

I note that Senator O'Toole said he was surprised at the IFA having taken such a trenchant step in opposition to the Fine Gael Party whom he saw largely as being allies heretofore of the Irish Farmers Association. I never regarded the IFA as being allies of the Fine Gael Party. I recall that in the period 1973-77, when we had one of the finest Ministers for Agriculture that we ever had, Deputy Clinton, we were under constant siege from the then president of the IFA, Mr. Paddy Lane. I recall that not so very long ago the deputy president of the IFA, Mr. Alan Gillis, went to Libya, together with the Leader of the Opposition Party, in order to grab credit for a deal that had been clinched practically a month beforehand.

I am surprised, therefore, that western Senators should be put into the front line. I do not accept that anybody in my county, County Mayo, or anybody, indeed, in County Leitrim, will be the victim of punitive tax, the tax as laid down and specified and designed within the context of this Bill. Furthermore, there has been an attempt to use the farmers of the west of Ireland and the small farmers as an umbrella and a shield for the larger farmers to hide behind.

Senator O'Toole said that the tax as designed and envisaged would be a disincentive. If one takes the trouble to examine it in detail, one will see that the true principle and the true intention of the Bill is quite the reverse. By having a flat rate tax it is the direct opposite. Farmers, within the scope of their capacity will be permitted to produce to the maximum, knowing full well that irrespective of how much they produce they will be getting away with simply £10 per adjusted acre. It is a sensible and a workable Bill. It must be made to work because the Government cannot simply capitulate before such forces as are marshalled against them. In such a confrontation, where an organisation or a vested interest group, take on Government, in that situation there can and must be, for the sake of democracy, only one winner.

Recently I was speaking to a farmer in County Mayo who was one of the few farmers in the county who would be in the 200-statute acre category. I asked him what rates he paid in the year prior to the striking down of the agricultural rate. He said £3,000. I asked him what will his 200 acres adjust to approximately? He said he will have approximately 80 adjusted acres. In that farmer's case his rate bill of two to three years ago of £3,000 will now by virtue of the introduction of this fair and equitable tax system be reduced to a mere £800.

There has been a lot of emotional talk again about the differences likely to emerge between the interpretation of what is a hardship case as regards the Minister for Agriculture and his Department as distinct from what a county manager might view as a hardship case. I have absolute faith in county managers. I do not think anybody can say that, in the use of their discretionary right and power to exercise waivers in relation to water charges and refuse collection charges, county managers have been anything other than fair. They have in all cases been magnanimous, humane and have used their discretion fairly and equitably to the mutual benefit of both the system and the people who are being pressed for the particular payment in question.

What amuses me about the Opposition in relation to their attitude to this Bill is that they have tried to be all things to all men. One notices the conflicting attitudes, policy statements and general propaganda that was portrayed and put about during the local elections. In Dublin the popular line was that they were against this form of taxation because it was not enough: it was unfair to the PAYE taxpayer and Fianna Fáil saw it as being a let-off for the farmers. Down the country it was the direct opposite. We had all the emotional adjectives that I have ascribed to their contributions. It was too punitive, aggressive, anti-farmer; it was anti-family. One cannot have it both ways. One simply cannot ride the bicycle like that without falling off.

I would say furthermore that the farming organisations in this case have not helped their own cause in that both of them have taken diametrically opposed views. Far be it from me to lecture the farming organisations, but to me as long as you have two farming organisations representing the same farmers in this country, with basically the same aims going in two different directions, then it is very hard for the Government to take the conflicting arguments of both sides seriously. The ICMSA are to be complimented on their very responsible attitude in this matter. Again, when it came to fighting the case of the small farmers who had been, what we felt in the west of Ireland, hard done by in relation to the introduction of the factual assessment for qualification for the small farmers' dole, again the ICMSA were the people that came to our rescue as legislators from the west in order to try to impress upon the Minister for Social Welfare the need for new streamlined criteria and regulations to be introduced. Again, in relation to support for the farmers in the west of Ireland the IFA was found sadly lacking in that regard.

I will finish by saying that in my opinion it is a humane, good and sensible Bill. Certainly, it is not punitive; it is fair. Anybody with under 20 adjusted acres, that is presumably in the west of Ireland 60 acres of reasonably good west of Ireland land will not be expected to pay. Anybody over 20 adjusted acres will only come to the full £10 per adjusted acre when they reach 25 adjusted acres because a sensible buffer zone of marginal relief has been introduced in the meantime. The £10 adjusted acre guarantee is given that it will only increase or decrease in relation to the actual fluctuation up or downwards in farm income or prevailing tax. In my opinion nothing could be fairer than that.

I welcome the Bill. It is workable. In the future, possibly in one or two years time when we come before this House to review its workability we will see that it has worked and has done what it was designed to do, that it was not punitive, that it was fair. Above all else, the Opposition arguments have proved to be a facile false and negative.

Mr. Fitzsimons

My contribution will be a brief one, but having a distinctive rural background and coming, as I do, from an area which is noted for agriculture, it is only fair that I should express my views. Also, I like other Members of the House, have been canvassed by the IFA to oppose the Bill. In no instance was I approached by any individual or organisation to support the Bill.

In large measure, the previous speaker was carried along on the impetus of some rhetoric and I will certainly avoid that and keep to facts, I believe that this is a selective fine on ownership of land. It is the rates in another guise. Senator Lennon stated earlier today that to some extent it was the rates by the back door. I do not think it is really the back door. The Minister in his speech clearly told us that it was a substitute for the rates. He said land is probably our most important national resource and its value as taxable property was recognised in the system of agricultural rates which farm tax will replace. It could not be put more plainly.

The rates were inequitable, particularly domestic rates. That was the reason that all the parties were opposed to the rating system. For example, you could have a situation where a father and mother and a number of children were living in one house with perhaps three or four of the children working. They had a good income. They had a certain rate to pay. One could have an elderly couple living in the same type of house in the same street and they would have to pay the same rate. That was clearly inequitable.

The rates had some facets and some angles that are not included in this farm tax. For example, the rates encouraged employment. There were rebates for and concessions made to farmers who employed workers on their land. I believe that not enough people are employed on the land. At a time when we have this chronic unemployment it is wrong that any tax which is introduced does not attempt to encourage employment. Clearly, this is an area where an attempt has not been made to deal with this problem.

The greatest objection to this farm tax is that it is inequitable. It does not take into consideration the capacity of an individual to pay. That is clearly wrong. It has been highlighted earlier in the House and I am not going into it in any detail. In this modern age accounts are very important in industry, in business, in any set-up. Over the years grants have been provided for farmers; courses have been held, seminars have been organised in order to help and encourage farmers to keep accounts. Early this morning we had a Senator on the opposite benches saying that now 92 per cent of farmers will not have to keep accounts. He stated that this will be a considerable help. Later on he stated that we should all encourage farmers to keep accounts. Now, this is a clear contradiction and a paradox as far as I am concerned. I believe that with all the incentives that have been used over the years we were reaching the stage where, by and large, farmers had come to accept that accounts had to be kept and kept properly. Now, at one stroke this is completely undermined. I understand there is nothing in the Bill that will prohibit farmers from keeping accounts. I believe they must do so in order to be successful as a business concern, but I think it is wrong that this Bill should undermined the whole system of keeping accounts.

I accept that income tax from farmers has been on the low side. We have been told that this was due to rebates because of investments which farmers had made in the past ten years, that we were coming to a stage where these investments were almost extinguished, and that farmers would have to pay a considerable amount of income tax, perhaps as much as will be collected under this Bill. They did invest to a considerable extent and investment was needed. If as a result income tax was reduced, at least the country as a whole benefited, because that investment is still there. There is no incentive in this Bill for investment. Also, it is obvious that the increase in tax will come from small farmers, including those least able to pay.

Under the Bill the farm tax commissioner will be appointed in the Valuation Office with a staff of 200. This will cost a considerable amount of money. It will result in more bureaucracy and, taken in conjunction with the income that will be secured from the Bill, I believe that to increase the staff of the Revenue Commissioners would be far better, because a staff of 200 will cost a fair amount of money. The increased bureaucracy that will ensue will come at a time when we really need to reduce or eliminate bureaucracy. A reasonable level of co-operation is expected from the farmers and I have no doubt that it will be forthcoming. The fine of £1,000 and six months imprisonment seems very heavy.

It is no harm to recall very briefly that the fine maps we have in the Ordnance Survey were produced as a result of Griffith's valuation. These maps, which were to a scale of six inches to a mile, were completed between the years 1825 and 1846. They were the basis for Griffith's valuation of 1854, Sir Richard Griffith, as he became afterwards, and whose marble bust is in this House. Indeed the previous survey compared with the Ordnance Survey, although it was the first scientific survey, did not achieve the same standard. Because the survey carried out by Sir William Petty was for the purpose of confiscation, the surveyors were not welcome in any area and he had to rush through it fairly quickly.

There will be a problem in regard to adjusted acres in making a comparison against a theoretical acre. Earlier, County Meath was mentioned. I believe that in areas of County Meath we have the best land in the country. Equally, in County Meath we have considerable tracts of inferior land. One of the advantages which will come from this survey is that it will show that County Meath did not fare as well as it might have done in regard to disadvantaged areas. I made that case before in this House.

If this farm tax is successful it may do what the Land Acts and the Irish Land Commission never completed and that was to break up the land into smaller areas. To some extent, I am intrigued by the term "full time farmer". I can understand the situation where a farmer is entirely dependent on the income from a farm. I understand such a farmer would be termed a full time farmer. There are many instances, I believe, where a farmer does not derive all his income from farming. He could have an investment of one kind or another. He could work part time, for example, as a temporary postman. Would such a man be entitled to be called a full time farmer? I would be very doubtful that a farmer who owns in the region of 20 or even 30 acres would be able to live with his family on the income derived from that area of land.

People may take conacre. A small farmer with 25 or 30 acres could have conacre of a couple of hundred acres. What is the position in that case? In this Bill there is no incentive as regards leasing and that is something that might have been included. If this farm tax is to be as attractive as Members of the other side of the House say, would it be possible for a professional person in some other area, for example, a doctor or an engineer, to purchase an area of land and to cease to operate in his own professional area and become a farmer? What is the criterion for a farmer? I would like to know, for example, if somebody without any experience in farming feels that there is some betterment to be got by moving into farming, can that person become a farmer overnight?

With regard to hardship, which was covered by the Minister, I must say that it is not much relief, in my estimation, simply to forego the interest on the amount outstanding. I do not think that this will help people who are in hardship, such as a person who is ill for a long time. In such situations where people are genuinely unable to pay, there should be some provisionn in the Bill to reduce the amount of tax or to eliminate it completely. I understand that the £10 rate will be increased only in relation to the increase in income of the farmers. The ceiling, however, could be reduced from 80 acres, to 60 acres, to 40 acres. This would have a detrimental effect.

Farmers are in a very special category. It is not easy to relate them to other professions. They work very long hours and whatever area of farming they are in, investment is very high. If they are, for example, producing cattle and sell at a very high price, the reinvestment is very costly. It is a high risk area as regards losses. All this should be taken into consideration.

Horticulture is something which is discussed very often. People wonder why Ireland cannot be more productive in this area and why so much has to be imported. I have seen many people trying to enter horticulture and they were not successful. A good friend of mine, ten or 15 years ago, erected a very large glasshouse in which he grew a marvellous crop of tomatoes in the first year. He could not sell them and as a result has not produced anything in the glasshouse since. Another friend of mine had a great crop of cabbage and he brought two loads to the Dublin market but could not sell them. He had to dump the two loads. Another man, in my native town of Kells, had an acre which he intended to cultivate but he found that it was not workable. He had to go to the Dublin market to buy vegetables, bring them home and sell them. At present, taking into consideration the high rates of pay, it is not possible to enter this area successfully, certainly in a small way. This is an area the Government should have a look at.

There are many other aspects which I could go into but they have been covered and there is no point in repeating them. In conclusion, this tax is a selective fine on land ownership and it is inequitable. It will stifle enterprise. Above all, it is a negative measure at a time when positive measures are required.

Mr. McDonald

It is most unfortunate that the introduction of this Bill coincided with the local elections. I regret very much that the IFA decided to play politics and fall in with the rather simplistic Fianna Fáil opposition to this measure because this has clouded to a great extent many of the matters involved in the Bill.

In my own experience, I had much the same people complaining bitterly on this occasion as in 1976 when the then Minister for Finance introduced farm income taxation. It was rather difficult to accept some of the arguments. When I reminded one complaining farmer of that fact he said that his wife liked to keep accounts now. I do not accept that kind of basic argument. I believe that every farm should have the benefit of management accounts as an aid to good farm husbandry. The IFA have, by their sustained campaign and opposition to every type of taxation, done the farming industry a great disservice as we farmers are now seen as willing to make absolutely no contribution to the national coffers.

The old cliche is often repeated by the IFA that farmers are prepared to pay their fair share in taxation. This sounds hollow when you look at the record and see that in the last two or three years only 22 per cent of farmers in the midland counties got around to paying the one per cent health levy. The IFA's excuse for that is that it was being assessed on their gross incomes and not on net incomes. In reality it was based on a self-assessment. There was no one looking over their shoulders to see on what they were assessing the one per cent. They found a way of not paying that levy. That is difficult to accept when one considers that health and social welfare are costing over £2,000 million this year, which is almost one-third of the entire tax take from all sources in the country.

We must be realistic about it. Personally, I am not enamoured of this type of taxation but it is going to be easier on the vast majority of farmers that I represent because they will certainly fall into the under 80 adjusted acres category. Many of the older farmers in my county found difficulty in trying to tackle the system of keeping accounts for taxation purposes. I can readily identify with their problem and this measure will be more acceptable to very many of them.

I do not accept the argument that this type of taxation will contribute to agricultural production or boost output in any way. How can one support that argument when we know that all farm produce is now entirely controlled by quotas and contracts, with levies and super-levies and, indeed, as far as the beet industry is concerned the non-payment for beet in excess of the quota. We must be realistic about this. The only hope I see in the future of boosting farm incomes is for the IFA to devote more of their time to trying to relate in some way the spiralling costs of agricultural inputs with the reducing and diminishing rate of prices for agricultural produce. We have had over the last number of months the same organisation producing quite a number of leaflets in support of their stance and including in those quotes from different sectors, mainly sectors of the community that are against this land measure.

I would blame the IFA campaign entirely for the provisions in section 21 of the Bill which provides the farm tax to be a charge on land. This is not unnecessary in the light of the undertaking repeated by the farm organisations that they are not going to pay this whether it is law or not. I do not accept that they speak for the majority of the paid up members of the IFA when they undertake that. The farming community have always, in my 25 years experience of Laois County Council, returned 97 per cent, 98 per cent and 99 per cent of the rates charged on land over the years and in years that were much more economically difficult than at the present time. We should be realistic about that.

It is sad to read section 21 of this Bill which makes the farm tax a charge on land. Who is going to suffer? We have across this country a small number of farmers who are confined to a psychiatric institution or who are indisposed in one way of another, perhaps due to a disease breakdown on their land or a difficult income situation. Urban people do not realise that there is a very narrow line between profitability and loss making on a farm. If a farmer is not able to get more than two tonnes per acre of barley he is in a loss making situation. If he is not able to produce 20 tonnes of beet per acre he is making a loss on that crop for the year. We have only got to read the newspapers to see the precarious situation vis-a-vis the beef industry and the fact that the super-levy on milk amounts to 100 per cent of the price of milk which is being produced. With the expansion of the European Community should there be a drastic change in the price export system, the beef industry can very readily and easily suffer a major setback.

The profitability of Irish agriculture is certainly nothing. I do not hear anybody saying that it is rosy or that the prospects in the immediate future are any better. For that reason I would have preferred that a responsible agricultural organisation would have been in there not in blank opposition but trying to improve the situation in the interest of their members.

Therefore I hope that next year or the year after we will see drastic changes in section 21 of the Bill. I do not accept that it is reasonable to have a situation as we have at present in which the Government are contributing to the farm rescue package with one hand in an effort to bring farmers who are in financial difficulties back to a healthy and profit-making situation and at the same time having a different sector of the state organisation, such as county councils or the tax commissioner, putting a charge on the same land in respect of farm tax. That is an anomaly.

I hope that the Minister will be able to give us an undertaking that as soon as the system comes on to a regular situation that he will look at that section and amend it. If there is a waiver of this tax made after consideration by the county manager it should be waived for that year, full stop. It should not carry on. It is not possible with the very slim profit margin on land to carry on and have a charge like that accumulate. I cannot see how the Government advisers on the section could have come to that conclusion unless they had access to forward projections for agricultural incomes that have not yet been published and are more promising than the rest of us can foresee.

This measure is going to be welcomed by the vast majority of farmers because it will be easier for them to provide for their farm tax. They will know at the beginning of the year how much is required and will be able to budget for that. In addition everybody knows of the demographic picture vis-a-vis farms throughout this country. It is quite clear that so many thousands of farmers have experienced great difficulty in preparing farm accounts to present to the Revenue Commissioners to prove that they did not have in some cases taxable incomes or indeed to prove their income. It is going to be an ease to them and they will welcome it. Many people have been misled and are fearful because they have accepted the simplistic arguments that have been put forward by the IFA. I hope that by the passing of this measure we will be able to get back to a situation in which the farming community will be seen to be making their solid contribution to the financing and running of the State.

Mr. Kiely

I am opposed to this measure. That is not to say that farmers should not pay their fair share of tax but I would like to see the tax levied on their ability to pay. The production of this legislation which proposes that land should be taxed at £10 an acre irrespective of whether that farmer has the ability to pay or not — he still has to pay it — is most unfair and definitely not right. As I have already said, farmers are prepared to pay their fair share of tax and definitely will pay it if it is based on their profits. This legislation suggests that farmers pay £10 per acre on adjusted acreage. I understand adjusted acres will be decided by officers of the Land Commission who have been instructed to carry out the work. How long will it take these officers of the Land Commission to decide what adjusted acres are? Also, if adjusted acres are decided on for a particular year and if the land deteriorates or improves, will that adjusted acreage remain? Will these Department inspectors visit farms to ensure that the adjusted acres are those they determined when they visited the farm in the initial stages?

Under this Bill the tax could be £10 this year. Farmers with over 80 adjusted acres are liable for income tax. While the farm tax will be £10 in one year, it could be £20 in another year. The ICMSA say they got a fair deal by getting £10 written into the Bill. That does not mean that £10 cannot be raised in another year to £20, and farmers who could not pay would have no alternative other than to sell their land.

Deputy Mac Giolla in his contribution in the Dáil stated that the land of Ireland is for the people. It is for the people and, if it is utilised for the common good and benefit of the country, it should be left in private ownership. There is danger in this legislation that the land will go to private ownership and will be nationalised. That is my fear. The rate per acre could be raised to satisfy PAYE workers. I have sympathy for them, but PAYE workers pay tax in accordance with their income. In this legislation the farmer has to pay irrespective of his ability to pay. That is a penal taxation on people who are doing their best to farm their land.

In farming various things can reduce a farmer's income. They are not taken into account in the legislation. You could have disease eradication or have to borrow money to ensure that the land is developed to such an extent that it will produce to its capacity. There might be problems in trying to meet these payments. Irrespective of the demands on them, they have to pay a fixed rate of taxation which is most unfair. A fairer system of taxation would make farmers pay in accordance with their ability to pay. There is a danger that farmers may have to sell out. If farmers are not in a position to buy land, the land will go to non-farmers.

I was in Clonakilty recently at the presentation of an award for quality milk to Donal Walsh and I listened with interest to a speech by Deputy O'Keeffe, Minister of State at the Department of Foreign Affairs, with responsibility for foreign aid. On that occasion he had the honour of presenting awards to the wives of farmers who had won awards. Deputy Hegarty also presented awards to those who were successful in the competition for quality milk. Deputy O'Keeffe congratulated the wives and praised the farming family unit. If this Bill is passed today it will end farming as a family unit. He has visited foreign countries and seen the land farmed, not in the family unit but by semi-State bodies, and the farming was inferior to the farming done here in Ireland through the family unit. That is the greatest danger in this legislation. We will kill farming as we know it. It will be successful if it is allowed to continue in the family unit.

The Government have not treated dairy farming with the care with which they should have treated it. I am referring to the milk-superlevy and the mix up in the gallonage presented in Brussels. Senator O'Leary said that heads should roll in the AIB because of a bungle they made recently. The bungle made in the Department of Agriculture was more detrimental to Ireland and especially to the farming community.

Mr. McDonald

That happened a long time ago.

Mr. Kiely

I am pointing it out. This is having an effect on the farming community. Why should we not be consistent? If we are disappointed with the bungle in one area why should we not be disappointed with the bungle in another area and be as vociferous in saying heads should roll? No heads rolled, licence was given to make mistakes and the farming community are suffering. I oppose this legislation because it is an unfair system of taxation. Farmers are prepared to pay their equitable share of taxation, but it should be based on their ability to pay.

Minister of State at the Department of the Environment (Mr. F. O'Brien)

First, I wish to thank the Senators who have spoken here today. I will respond to the main points made on matters which arise directly from the proposals in this Bill. As I said in my opening remarks, one of the achievements of this measure will be to improve to some degree the contribution of the farming sector to national taxation. Land constitutes a major part of the natural resources of the State and it is important that taxable property is recognised in the system of rates on land which the farm tax will replace. It is widely recognised that since rates on land are no longer in use, the tax contribution from the farming sector has been reduced.

The provisions of the Bill represent a simple but effective mechanism for correcting that situation. The Bill also represents the first attempt in over a century to put up to date realistic values on land for tax purposes. The concept of an adjusted acreage will stand for the future as an equitable definitive assessment of the productive capabilities of land in the control of the farming sector.

Farm tax will be collected by the local authorities and will form part of their current revenue. It will be available to each local authority for the purpose of providing local services, including county roads, from which the local community, including farmers, will benefit directly. Senator Smith is now advocating what he thinks will bring about equity in the taxation system. We have to face facts. We can look at this tax as a replacement for rates on agricultural land and as a contribution towards the cost of providing local authority services. Rates were a property tax unrelated to income. The farming community are now paying about £35 million in income tax. In 1980 they paid £64 million between rates and income tax. In present money values, that represents about £108 million.

It is reasonable to accept, given that type of money, that what we are asking here is that the farming community, like everybody else, should make reasonable contributions to the tax system. The new arrangement represents a rationalisation of the situation for farmers contributing a more realistic sum of tax and hopefully at a good deal less administrative cost. People talked about the bureaucratic set-up of this, but it will be very unbureaucratic, particularly for the adjusted acre once it is done. Nobody can argue that, irrespective of land tax, it is not a good idea to have a look at all the land in Ireland and examine its productive element. I believe that it will have a tremendous benefit in the long term for a lot of good productive reasons — apart from the reason for which we are doing it now — and it merits the cost, as there obviously will be a charge on it. I do not think anybody could argue against this type of survey. It should have been done years ago to know exactly what our land is capable of and how it should be used to the best advantage. Do we know that at the moment?

Mr. Fitzsimons

We do from the surveys that have been carried out.

Mr. F. O'Brien

Not as effectively as we will in this survey that is being done. Senator Smith is also deeply concerned about the difficulties of adjusting and referred to what happened in the past with the Land Commission. The difference now is that for the first time a very real conscious effort is being made to identify and set down a criterion to be followed and these criteria are to be enshrined in this legislation. I do not claim that the basis, no more than any other basis of taxation, will be perfect but I am satisfied that it will be fair and equitable and it will be uniformly applied across the country.

Senator Smith also seemed to be suggesting that this was not a fair system and that there should be a farm tax waiver, that if there are problems the tax should be waived. The principle is right; we are establishing it on an adjusted acre and what that acre is capable of yielding. That is a very fair way of doing it and that land because it is adjusted should, and has, a certain economic yield and, if used in a normal way, should yield a financial return which would enable the farmer to make this contribution towards the tax system. If we introduce waivers on the basis of hardship it will only cause trouble. But where there are hardships, local authorities may have a stay on payment and, as indicated in my Second Stage reading, there will be no interest accruing on that stay.

Senator Hourigan said that this farm tax will prove to be an incentive to farming and I could not agree more. There is little doubt in my mind but that farmers will become more efficient. Now a farmer will not have to be looking over his shoulder, particularly if he has 80 adjusted acres or less, if he improves or gets more efficient or earns more money. He can do that quite freely knowing at the end of the year exactly what he has to pay, and he can budget accordingly. That is a positive incentive to any person and indeed any person in business would like to be afforded the same type of set-up — to know that if he increases his productivity, increases his profits, gets a greater yield he does not have to pay additional money to the taxman. Nobody could argue against that.

Senator Hussey was critical of a number of the aspects of the Bill. If I understood him correctly he seems to be suggesting that future Ministers could increase the tax irrespective of the provisions in the Bill which index the tax changes from income. Of course that could not be done without a change in the legislation and that would have to come before both Houses of the Oireachtas. He talked also about the hardship clauses which I have covered.

Senator Ferris rightly pointed out that the collapse of the rates on farmland means that there is no direct contributions from farmers to the provision of local services. That is an important point. The money goes back directly to the local authorities for whatever use they want to make of it. That is a step in the right direction. Senator O'Toole said that local authorities will not have a greater source of financial income from this but it was never intended that this land tax was going to be the main source of income for local authorities but it would form part of the funding to local authorities. In the fullness of time, elected councillors will see that this will be of benefit to local authorities, giving them greater latitude and autonomy over how they spend the money.

Senator O'Toole was also worried about the adjusting of acres and how it will be done within the fragmented holdings in Mayo. The Senator may be overlooking the fact that the tax will apply to 20 adjusted acres and Senator Jim Higgins from County Mayo indicated quite clearly that about 95 per cent of the farmers there had less than 20 adjusted acres. Senator Ellis was talking about Leitrim and he was more or less implying the same thing. There will not be any great charge on the type of land or on the size of the holding but the quality of land and the actual basis when it is brought down to an adjusted acre. Counties in the west will not indeed buy the thrust of this.

Mr. Ellis

On a point of order, if that is the Minister's feeling he should exempt disadvantaged areas from the Bill entirely.

Acting Chairman (Mr. Daly)

That is not a point of order.

Mr. F. O'Brien

I want to assure Senator O'Toole, who referred to the threshold, that the limit of the threshold is to be fixed at £20 in the Bill. Again any change would have to go through both Houses of the Oireachtas. On the question of drainage and incentives. Senator O'Toole seemed to imply that, if a man spent a considerable sum of money on bringing land into his existing holding by draining it or clearing it of rocks or whatever, he would be charged on that land. He will not. If he spends over and above what is normal, that is accepted as being outside the adjusted acre and will not be included. That is an incentive for people doing this and not a disincentive.

Senator O'Toole raised the question of staff with some agricultural experience being recruited. As you are aware, 100 of the staff are from the existing Land Commission and there will be 100 recruited temporarily. They will be Batchelors of Agriculture. They will all have a particular background in the whole area of agriculture.

Senator Ellis mentioned the number of amendments in the Dáil and, indeed, draws all kinds of conclusions. Several of the amendments were of a very minor drafting nature. None of them changed the real thrust of this legislation. The Opposition spoke in diverse tongues on this all day today. I have to say that the feeling was that we were lumbering the farmers with additional taxation or proposing a tax that they may not be able to afford and that it was causing some dreadful hardship. On the other side of the coin, for the local elections, or con job on the PAYE worker, in other words, the Coalition land tax exempts farmers from paying tax. On the one hand, we are talking about the unfortunate farmer and the way he is being downtrodden and, on the other hand, here we have a piece of literature. I have no doubt that that piece of literature did not go around Senator Hussey's constituency, Senator Ellis's constituency, or Senator Kiely's constituency.

Mr. T. Hussey

We do not do that sort of thing in the rural areas at all.

Mr. F. O'Brien

It is not a question of dividing the city from the country.

(Interruptions.)

Mr. F. O'Brien

I just want to highlight the ambiguity in all of this. I know the ICMS are reasonably happy. I think the IFA have become very muted in the last number of weeks with regard to this. I believe that they have the good sense to see what is behind it. It is not a question of dividing the city from the country. That is the kind of thing that does that and gives the feeling that everybody, both in the urban and in the rural areas are making a reasonable contribution to the tax take. That is what brings unity. Having anything else in my view has the opposite effect. I ask the Opposition to accept this and to see it working. I believe that when it is working it will prove to be a unifying force and not a dividing force. I believe farmers will see it as a form of incentive by developing their holdings, by getting greater productivity and not by being penalised by more.

Somebody said it will cut out the need for keeping books. I would not recommend that course of action. Any efficient business, whether it be farming or any other, should have books and should keep them in order to know how they are doing, how they are operating and where they see the loss and profit situations. I believe wise and prudent farmers will do that.

I have covered most of the points raised. I would like to thank Senators for their contributions and I accept the points raised in the spirit in which they were raised. I understand Opposition views on these. I believe what we are doing here is right and will be seen to be right. I want to assure the Opposition that there will be no drawing back on this legislation. It will be coming into force in October 1986. It will make a useful contribution, in the fullness of time, to local authorities.

Question put.

The Seanad divided: Tá, 27; Níl, 16.