Seanad Éireann debate -
Wednesday, 17 Jul 1985

Vol. 108 No. 17

Farm Tax Bill, 1985: Committee Stage (Resumed) and Final Stages.

Question again proposed: "That section 2 stand part of the Bill."

Mr. Kavanagh

Senator Smith makes the point that farms have often attached to them quotas under which the milk super-levy system applies and that this will affect the production of the farm while other farms have not got that facility. Let me point out that the adjusted acre system is designed to reflect the potential productivity of land for agricultural purposes. It would destroy the logic of the system if factors extraneous to the land itself were to be taken into account. Decisions taken in Brussels are extraneous to the quality of the land because there is, for example, the age of the farmer and the level of his ability as a farmer. If we introduce these factors we will destroy the whole concept of the adjusted acre. While on this subject, while milk production is the present target for EC production limitations, it is reasonable to assume that other forms of agricultural production may be the subject of other EC measures in future years. Clearly, if the adjusted acre concept is to stand up for some time, as we confidently expect it will, then it cannot be constantly changed to reflect the year to year decisions from Brussels.

In considering the graduates — Senator Smith has paid a tribute to me as being a reasonable person and I know him to be a reasonable person also — the 100 inspectors of the Land Commission with their wide experience as well as their qualifications, supplemented by 100 graduates who will be trained and supervised to ensure that adequate and consistent adjustments will be made, should give confidence to the farming community about the type of adjustments that will be made. There will be a useful fusion of the fresh ideas from the graduates and the experience from the experienced officers. They will all be dealing with the concrete process of adjusting the acreages following the visits to and on the spot examinations of the various pieces of land. Experience will bring about the right result. I think some Senators are concerned needlessly about the ability of graduates from college to make the assessments. As I say, the fusing of the experience of the people from the Land Commission with the knowledge and recent experience of the graduates will, I am sure, result in a very good job being done in the adjustment of the acreages.

Mr. Fitzsimons

Many of our farms include ancient and historic monuments. In the east, for example, they are mainly Norman motte and bailey, ring forts, crannógs and souterrains. Provision should be made in this section for a generous allowance where these are concerned because in the past we have lost many of those monuments due to farmers trying to maximise their holdings. Quite apart from the area involved in the monuments, these are open to the public and there is considerable trespassing. In the interest of preserving these very valuable monuments some generous concession should be made in this section of the Bill.

Mr. Kavanagh

Undoubtedly we all have the concern that Senator Fitzsimons has for land which contains such monuments, and they occur throughout my county and his. A matter that will have to be taken into account when land is being adjusted is whether a portion of the field wherein the monument lies is viewed regularly as a means of getting to and from these places or building of historical interest. This is a point that must be taken into account if the land is not used for agricultural purposes around the area of these buildings, crannógs, or whatever. If land has to be set aside for entry into that area it can be taken into account quite easily by the inspectors in the performance of their duties when arriving at an assessment of that piece of land.

Mr. Fitzsimons

Some of these monuments, for example the ring forts, are on land which is perfectly arable. Cattle can graze over it. Farmers can plough over it if they want to and some of them have, unfortunately. It would be comparable to the rest of the farm. There are visits by the public to these monuments, some of them on quite a large scale. In the interest of preserving those valuable monuments which are very important to our culture and our heritage, provision should be made in this Bill. This would be the appropriate section to include that provision.

Mr. Lennon

On the question of adjusted acreage, perhaps one of the matters most often raised with me in the past few weeks is the timing of the visit of some of these graduates. If one drives around most of Ireland at a certain time of the year all land looks in reasonably good shape. At other times of the year, for perhaps half of the year, the best of land can look very bad. Will decisions be reviewed by any of these people at a different time of the year? The landowner knows exactly what his land is capable of producing. In the months of April or May all land looks very well. In the winter or the autumn it can look in terribly bad condition. Has the Minister any thoughts about some type of an appeal before a final decision is made? I know that final decisions must be made, but it is just a question of viewing the land at different times of the year. From my own experience as a farmer I know that the poorest land can look reasonably good at certain times of the year, but at other times it can look as if it is not capable of producing anything.

Mr. Kavanagh

The purpose of this whole exercise is to adjust acreages according to their agricultural production. That is the basis of the Bill. If the farming community use the land around a monument for agricultural purposes, that land must be adjusted according to its agricultural potential. An appeal could be made under other legislation to preserve a certain amount of land around a national monument under the control of the Office of Public Works. That is the answer I have to give under the terms of this Bill.

I have already dealt with the point about a review being done at different times of the year. I said that at different times of the year land looks differently, even to somebody like myself who is not an expert. We are talking about people who are expert and who have been working with land through all the seasons of the year and have in the vast majority of the cases grown up on the land. People who are going to do this inspectors' job know what they are about. They are not going to farms as sightseers; they will be there as experts who will make their judgment on the basis of their scientific knowledge and expert qualifications and, I hope, with the full co-operation of the farmer and an ACOT official, or somebody else if the farmer feels he wishes to have another expert opinion. Basically, the inspector will not be coming down two or three times a year to see if things have materially changed from one season to the other. He will make his decision on the basis of his visit to the farm. That can be with or without the co-operation of the farmer involved.

Mr. Ellis

The Minister states that his idea of an adjusted acre is to adjust an acre to its maximum ability to produce. Senator Smith earlier raised the point about the income per adjusted acre from beef as against milk, cereals or sugar beet. The net result is that the incomes as produced by An Foras Talúntais from the various sections of farming are totally different, yet the Minister tells us that he is adjusting it to the maximum benefit or use that can be made of that land. If one follows that on, the maximum use at the moment would appear to be from milk production which is limited under the EC with super-levies and quotas.

Mr. McDonald

Everyone does not want to be in milk production.

Mr. Ellis

I am taking the situation as it can arise and it is up to the individual farmer to decide what he wants to with his land. As the law stands he is handicapped in that he cannot enter milk production, which is the most lucrative type of farming, without having a quota. Can the Minister tell us how this proposed tax can work equitably for each person or for each type of farming operation in view of the fact that the income levels are totally different?

Mr. Kavanagh

I dealt with this subject at a much earlier stage when I said there were different land uses and that this would have to be taken into account. We had the question of land which could be used for one particular purpose and might not have the quality to be successful in another area of agricultural production. Of course, there are other lands which are much more versatile in that they can produce grass or cereal crops or otherwise. These must be adjusted to a different level. We are not dealing with the income of farmers; we are dealing with the ability of land to produce and the various criteria which are mentioned in section 2 (2) of this Bill. We have given the example of where the most suitable acre might be found and every other acre that does not measure up to that must be adjusted downwards. If it is only suitable for one form of production, it will not be adjusted at the same level.

We cannot get into the argument of whether we are getting more from milk or less from cereals at the moment. There is not a good price for beef at this time of the year. We are adjusting the acreage to provide us with an even guideline on the ability of farmers to produce. I thought we had dealt with that at an earlier stage. It will have to be accepted that if even the best land has limitations in regard to location or climate it must be adjusted downwards.

Mr. Ellis

The Minister stated that the ability of the land to produce is taken into consideration. If that is so it must be taken in conjunction with what it can produce. Its production is being hindered by existing quota systems and, therefore, it cannot be measured by its ability to produce because it cannot be used for milk and sugar beet production.

Mr. Kavanagh

We are now in a circular argument again. I had fully dealt with that item when I answered Senator Smith's query on a similar point. I told him that on that basis we would be changing the basis of the adjusted acre every time Brussels decided that there was an oversupply of any particular commodity. At present there is an upper limit or a downward production in cereals and perhaps that would happen in some other area next year. That would mean that we would have to do the whole adjustment again on the basis of decisions which are made for different reasons in Brussels. I cannot accept that argument. I want to arrive at a basis where land is adjusted on its quality to produce. We must assess the most versatile and productive land and work back from that in adjusting acreage.

Mr. Ellis

Will quotas or contracts held by farms be taken into consideration by the people who assess the value of the land?

Mr. Kavanagh

No, they are extraneous to the Bill.

Mr. Ellis

The Minister stated that those quotas will not be of any benefit so we can take it that milk quotas are no longer of any benefit to a farm. The Minister also stated that the people whom he will be recruiting are graduates. What will be the minimum length of practical knowledge required by those people who will be recruited before they can be appointed as assessors? The Minister stated that they would have practical knowledge.

Mr. Kavanagh

I have dealt with this point. I said that there would be a mixture of very experienced people on the Land Commission, that there would also be graduates, some of whom might not have a great deal of practical experience but there would be a mixture of experience and academic qualifications and perhaps the newer graduates would have greater expertise than somebody out of college for a longer period of time. They will be working under the farm tax commissioner who has guidelines in section 2(2) of the Bill which he will apply to the adjusters in arriving at the adjustment of acreages. I cannot lay down in this Bill the length of service which one should have before being taken on as an adjuster and inspector in this process. There will be a selection process and I am sure that knowledge and experience will be of benefit to the candidates.

Mr. Ellis

The Minister said 15 minutes ago that all the people recruited would have practical experience in this field. I do not want to cast reflections on anybody leaving college and seeking their first job but I do not believe that somebody straight from university has practical knowledge.

Mr. Kavanagh

There is a practical side which applies to agricultural science degrees and someone even one day out of college would have some practical knowledge in this area. I accept that many other people would have practical knowledge as most would be from a farming background and would have practical knowledge and experience in farming as well as the academic knowledge acquired through achieving a degree in agricultural science.

Mr. Ellis

If we follow the Minister's argument through we will see that he thinks people who come from an urban area may be at a major disadvantage as far as this is concerned. I still feel that the people who should be used in this are those who have worked as ACOT advisers in their areas for quite a number of years rather than people who are fresh out of college.

Mr. Kavanagh

Not at all. We had a debate on the abilities of other people in the Land Commission and now we are having a debate on the ability of people coming out of college. I have faith in academic qualifications and experience which these people have. I do not think Senator Ellis should make a judgment in that regard. People who come out of agricultural science colleges are very experienced and have the best qualifications anyone can get in any country, because we have a more varied agricultural system in this country than anywhere else. I think he should have a little more faith in the people who are being educated in this country at third level colleges.

Mr. McDonald

If people are in the milk business that will not stop them getting quotas.

Mr. Ellis

Section 2(2) states that regard shall be had to the range of uses to which land can be put for the purposes of agricultural production. As the Minister knows, those purposes are limited. The quotas will mean that a farmer who may have the best land which could have very high output as far as milk is concerned can now come in and make a case under subsection (2)(a)(1) that the purposes for which his land can be used are minimal.

Mr. McDonald

A year and a half ago he would have had a quota. There was nothing to stop him getting it up to then.

Mr. Kavanagh

Senator Ellis wants to have it both ways. He said, by implication, that milk is more profitable.

Mr. Ellis

One can say that about sugar beet also.

Mr. Kavanagh

The Deputy may say that as milk seems to be the more profitable activity in agriculture those involved in that type of farming should pay more tax. In the same breath he is saying that milk is hindered by levies and quotas. I do not know where we are on this. I am discounting the whole argument about quotas and levies. I have not accepted in the Bill that Brussels should say today the level of taxation farmers should pay under the Bill and tomorrow decide something different. That would be ridiculous and I do not think the Senator believes that is the way we should proceed under a Bill that is trying to achieve an adjustment of acreages on the basis of ability to produce or otherwise. I reject that argument. I rejected it before and I do so again.

Mr. Ellis

The Minister admits that it is the ability of the land to produce that is involved but the ability of the land to produce is hindered by outside circumstances beyond the control of the Minister and farmers. What will the legal position be if some farmer decides to challenge in the courts, as he is entitled to, this section on the basis that the ability of his land to produce is hindered by the quota system? I am thinking of two identical farms alongside each other, of 40 adjusted acres, one in milk and the other in beef. Both will be levied on 40 adjusted acres at the same amount per acre. The ability of the land to produce is not the same. The beef farmer, in my opinion, will be in a position to prove in court that the ability of his farm to produce is less than that of the dairy farmer who is beside him.

Mr. McDonald

I do not think Senator Ellis in all fairness is doing the farming community a service because what I take him to be asking for is a different adjustment for each type of husbandry. If he is advocating that those in milk or those in beef should pay a higher land tax than those who are, perhaps, in beet or barley production, that is rather dangerous. Is the Senator asking that each farm should have a special certificate and the crops one grows will reflect the rate of land tax? That would not be welcomed by the farming community. The margins in farming, as everybody knows, are restricted and are getting tighter each year. The farmer takes a conscious decision as to the line he wants to be in. People with milk quotas have them because they were in milk up to one and a half years ago. There were no quotas before that, there were no restrictions. By and large people in milk have been traditionally in that area. Similarly with beet. The beet restrictions are only two years old. I do not welcome them. It is nice to have the flexibility to move in and out and improve one's rotation by sowing beet but the market seems to want to consolidate the production and know exactly how much tonnage will be produced. The Bill is setting out to classify the quality and potential of the land. Farmers will be happy enough with that but if we are to have a different certificate for each crop it will be disastrous.

Mr. Lennon

Senator McDonald has made the point I was about to make. Senator Ellis made the point that in the case of three neighbouring farmers with the same type of land but in different lines of production, barley, cattle and beet, we should have a different charge for each one. Quite honestly, that case is weak because if the margin of profit from milk is higher than that from beef the farmer will have known that for quite a long time. He has not to wait until now simply because a £10 land tax is put on him to decide whether to produce a certain crop or get involved in milk or beef. I do not think he is going to make any other decision than staying in the line he is in simply because there is a £10 land tax. The farmer will have made his own judgment. It could be that milk production or barley production did not suit him. Every farmer has his own line of business that he feels he is best or happiest in. The weakest part of Senator Ellis's argument has been the case of the three farmers with land of equal productive quality.

Mr. Ellis

I am trying to point out that the tax as proposed is totally inequitable without regard to the ability of the farmer to pay. After all we have been talking about having equality of tax here for the past 20 years. This tax legislation is creating more anomalies than we had before. The Bill is another sad and botched attempt to have a fair taxation system which has gone the wrong road. The Minister must accept that this is the position.

Mr. Howlin

Senator Ellis speaks of equality. The PAYE sector would certainly love to see some of the equality reflected in legislation. The facts are that in 1983 £32 million was the tax paid by the farming community out of a total of £1,660 million collected. That is the sort of equality that the Bill moves towards. With regard to the specifics under discussion, it is clear that the Minister is trying to accommodate the views expressed but the weakness of the case is evident to any neutral observer.

An Leas-Chathaoirleach

May I appeal to all Senators to deal with the section. We have swung into Second Stage speeches from Senators who were not present for Second Stage.

Mr. Howlin

There should be an incentive for people to move into productive lines. It is a free country and if one particular line of production is more profitable, then a farmer can choose to go into that line.

Mr. Ellis

They cannot. Senator Howlin should be educated on this. Farmers cannot move in due to the restrictions already there in the various sections. Senator Howlin has indicated his lack of knowledge when he stated that they can move at will. With regard to the term, the adequacy of the water supply to the land, may we take it that lands which are adjoined by a group water scheme or have access to it will be at a higher rate than lands which have not access to a group scheme?

Mr. Kavanagh

This is the old problem of which way one looks at it. Land which has not got a water scheme will, obviously, be at a disadvantage and, therefore, should not be considered as productive. That is reasonable. All water schemes are sponsored by my Department and grants are given to bring them about. If any area has not got a water scheme they should get in touch with my Department to see if we can help them.

Mr. Ellis

May we take it that lands which adjoin towns, or which adjoin roads which may be of use for building, will not have this position taken into consideration when the land is being assessed?

Mr. Kavanagh

Obviously we are assessing agricultural land, and land near a town has some benefits. We are not talking about development land or anything like that; we are talking about being near suppliers etc. It would obviously be of some benefit to have a farm in that position. But, on the other hand, if like many people in my constituency, one had sheep on the land and lived near a town it might not be such a benefit because people living near a town may abuse farm land. All these factors are taken into account. I would not be in a position to say whether it was an advantage for a farmer to be near a town. It would depend on the line of operation he is in.

Mr. Ellis

Judging from the Minister's reply, we can take it that the fact that land may be adjacent to a town and may have development potential will not be considered when it comes to evaluating its agricultural use.

Mr. Kavanagh

I hope I made it clear that the potential for building land, commercial activity or something like that is certainly not taken into account. It is being valued on the basis of its ability to produce. That is what this adjusted acreage is trying to achieve.

Mr. Ellis

Most of the proposed guidelines are taken from the guidelines used for the Griffiths valuation. Is that right?

Mr. Kavanagh

No, these guidelines have come about in the light of experience over the last 100 years.

Mr. Ellis

How many relate to the Griffiths valuation guidelines?

Mr. Kavanagh

They have nothing to do with the Griffiths valuation.

Mr. Ellis

We can take it that the guidelines laid down here will be the definitive guidelines as far as the valuation of land is concerned, and that land which may have potential for development or which may be alongside proposed schemes at a later date of which the Department are aware, will not be penalised when it comes to assessing their agricultural value.

Mr. Kavanagh

That is correct.

Mr. Ellis

I hope the Minister remembers what he said because he has now committed himself. In future he will find that people who appeal the high valuations placed against land due to its potential will be in a position——

Mr. McDonald

It is agricultural potential.

Mr. Ellis

It is agricultural potential which can also be guided by the services that are provided. Remember, if a person has land which does not have water on it but which at a later stage is served by a group scheme——

Mr. McDonald

The problem is that there can be too much water.

An Leas-Chathaoirleach

Senator Ellis without interruption, please.

Mr. Ellis

——the value would be increased by those developments. Yet, the Minister assures us that until such time as those developments take place any intended developments by the Department of the Environment will not be taken into consideration.

Mr. Kavanagh

The Department of the Environment and their policies for particular land will not be taken into account in this Bill. We are still dealing with the Farm Tax Bill and adjusted acres on the basis of agricultural production.

Mr. Ellis

Paragraph (c) (VII) reads: "the provision of machines (including Farm machinery) for use on the land, or in respect of other similar matters." What type of machinery will the Minister be taking into consideration? Is it agricultural machinery, or drainage machinery?

Mr. Kavanagh

No, I will not indicate the type of machinery. The inspector doing the adjustment will consider what type of machinery is appropriate under this section.

Mr. Ellis

I presume the Department will issue those officers with a list of machinery which can be considered as agricultural machinery. In fairness, this House should be told what will be considered agricultural machinery.

Mr. Kavanagh

It will be for the farm tax commissioner to advise the inspector what farm machinery should be considered when they take this criteria into account.

Mr. Ellis

The Minister said it would be a matter for the tax commissioner. No doubt he will be issued with guidelines by the Department prior to taking up his appointment. Could we please have them?

Mr. Kavanagh

They are already part of the Bill, section 2 (2).

Mr. Smith

Is it envisaged that each farm will be visited by these selected graduates or will samples be taken? Secondly, in excluding from consideration for the purposes of determining adjusted acreage in relation to roads, farm roads, the national road net-work——

Professor Dooge

On a point of order, I must protest at Senator Smith coming in and asking a question that was answered ten minutes ago.

Mr. Smith

I am very sorry the Leader of the House should raise this matter because it is most unbecoming of him. I came here at 2.30 p.m. and remained here until I went for a cup of tea. If during the time I was absent some matters were dealt with, it is very unbecoming for the Leader of the House to say that these were answered in my absence when I was only out for a few minutes during the full day's debate while he was not here.

Mr. Ferris

In fairness to the Leader of the House, who cannot defend himself, he was attending an Oireachtas Joint Committee meeting and he cannot be in two places at one time. I accept what Senator Smith said, but to be fingering the Leader for his absence on other Oireachtas business——

An Leas-Chathaoirleach

Let us keep our cool.

Mr. Ellis

Subsection (2) (c) reads:

(i) the application of fertiliser or other substances for improving the land for agricultural use,

(ii) the levelling and general reclamation of land,

(iii) the clearance of boulders...

What is the position of a farmer who, due to economic circumstances, is not or has not been in a position to improve his land? Will he be penalised because of an inability to improve his land in comparison with his neighbour?

Mr. Kavanagh

Again we get back to the subject we referred to earlier. If he had not been able to apply a reasonable level of investment to a farm which would have resulted in greater production, and therefore a bigger return to him, that means that the adjudication by the inspector will probably be higher on the basis of his lack of investment potential, or energy or whatever, and the level he may have to pay in farm tax may be higher than if he had applied what we regard here as a reasonable level of investment to the land. If the opposite is the case, if somebody applies a far higher level of investment and goes beyond what would normally be necessary to produce a reasonable income from land, that too would be taken into account and the adjustment would in that case be lower than what otherwise would be regarded as a higher rate of return from that particular land.

Mr. Ellis

Would the Minister class those as weaker farmers?

Mr. Kavanagh

I am not prepared to classify farmers.

Mr. Ellis

They are weaker in the sense that, due to their financial circumstances, they are not in a position to develop their land. Therefore, they could be classed in this case as being a weaker section of farmers.

Mr. Kavanagh

All I can say is having eliminated all farmers of one particular type, for example, the small farmer with about or below 20 adjusted acres, we have assumed that, having applied the criteria in this section to other land which produces adjusted acres above that, there is a potential there for a reasonable income to be made and therefore a reasonable level of tax to be paid. That is the whole basis of the Bill. It is not for me to say whether a farmer is good, bad or indifferent. My job in this Bill is to deal with the potential of land and to say if potential of land over a particular acreage is earned, not beyond 80 acres, then that land will attract farm tax.

Mr. Ellis

What I am trying to extract from the Minister is the position of people who have not been in a financial position to develop their land. They may be beyond the 20 adjusted acres. Can the Minister tell us if these farmers who, due to their financial or their family circumstances, may be much weaker financially and resource-wise than their neighbours will be treated in the same way?

Mr. Kavanagh

I just do not know. If I give one reply once I suppose the second time emphasises it. When it goes on to a third and fourth time, I am just repeating myself.

An Leas-Chathaoirleach

Minister, in fairness to me, I am only chairing this House and you have made reference to repetition a few times. If people would stop repeating, it would make it easier for me to chair the House. I have to say that because you have made several references to repetition.

Mr. Ellis

I might just point out to the Minister that Article 45.4.1º of the Constitution states: "The State pledges itself to safeguard with especial care the economic interests of the weaker sections of the community." What is the position of these sections under this Bill?

Mr. Kavanagh

They are excluded from this Bill.

Mr. Ellis

So we can take it that a farmer who can prove that, due to his financial circumstances, he is in the weaker section of the community will be exempt from the Farm Tax Bill, 1985.

Mr. Kavanagh

If he can prove hardship — I think we are moving to a different section now — then he can approach his local authority and have that considered by his county manager.

An Leas-Chathaoirleach

We would want to be careful now, Senators. We have jumped ahead to section 11 now. Let us get section 2 out of the way.

Mr. Ellis

I do not want us to go to section 11 as the Minister has done. Under section 2, a certain section of farmers will be in a position to prove themselves as being weaker financially and resource-wise and, therefore, they will be able to claim exemption under section 11 on these grounds.

Mr. Kavanagh

Section 2 deals with adjusted acres and under this section they cannot prove that they are in straitened circumstances. We are dealing now with the land which will be adjusted, and how it is to be adjusted, and how to arrive at the acreages which are being adjusted and fall into the category which will attract tax. We are not dealing with the individual farmer-occupier of the land. We are simply dealing with this section and how the inspectors are to arrive at an adjustment of acreages throughout the country. When time allows, we will probably deal with the farmer himself and his ability to pay.

Question put.

The Committee divided: Ta, 28; Níl, 16.

Tá

• Belton, Luke.
• Browne, John.
• Bulbulia, Katharine.
• Burke, Ulick.
• Cregan, Denis (Dino).
• Daly, Jack.
• Dooge, James C.I.
• Durcan, Patrick.
• Ferris, Michael.
• FitzGerald, Alexis J.G.
• Harte, John.
• Higgins, Jim.
• Higgins, Michael D.
• Howard, Michael.
• Howlin, Brendan.
• Kelleher, Peter.
• Lennon, Joseph.
• Loughrey, Joachim.
• McAuliffe-Ennis, Helena.
• McDonald, Charlie.
• McGonagle, Stephen.
• McMahon, Larry.
• Magner, Pat.
• O'Brien, Andy.
• O'Leary, Seán.
• O'Mahony, Flor.
• Quealy, Michael A.
• Ryan, Brendan.

Níl

• Cassidy, Donie.
• de Brún, Séamus.
• Ellis, John.
• Fallon, Seán.
• Fitzsimons, Jack.
• Hanafin, Des.
• Hillery, Brian.
• Honan, Tras.
• Hussey, Thomas.
• Kiely, Rory.
• Killilea, Mark.
• Lynch, Michael.
• O'Toole, Martin J.
• Ryan, Eoin.
• Ryan, William.
• Smith, Michael.

Tellers: Tá, Senators Belton and Harte; Níl, Senators W. Ryan and Séamus de Brún.

Question declared carried.

Professor Dooge

In line with our previous discussion as regards a break, I propose we now suspend the sitting until 7.30 p.m. and resume the debate then.

Sitting suspended at 6.40 p.m. and resumed at 7.30 p.m.

SECTION 3.

Mr. Smith

I move amendment No. 1:

In page 7, between lines 34 and 35, to insert a new subsection as follows:—

"(4) For the purposes of this Act and the Income Tax Acts 1967 to 1985 whenever in any given year farm tax is liable on a taxable farm of not less than 20 and not more than 80 adjusted acres, income tax shall not be liable on the owner, occupier or such other person in respect of the said farm in that year".

On the Second Stage the Minister indicated that the intention with regard to farmers who had fewer than 80 adjusted acres is that they would be exempted from income tax when the new farm tax is in operation and we are endeavouring in this amendment to have this provision included in this section.

Mr. Kavanagh

The proposal in section 3 is that farms of between 20 and 80 adjusted acres will be exempt from income tax. The Government propose to grant an exemption from income tax for farmers of fewer than 80 adjusted acres according as they are deemed to be in the farm tax net. It is appropriate to provide for this, not in the farm tax legislation, but in the Finance Acts under which income tax is payable. The Finance Bill, 1986 will contain the appropriate provision.

Amendment, by leave, withdrawn.

Section 3 agreed to.

Sections 4 to 8, inclusive, agreed to.

SECTION 9.

Question proposed: "That section 9 stand part of the Bill."

Mr. Smith

Is it intended to revamp or increase the personnel in the Central Statistics Office in order that we can have an absolutely reliable basis for the section covering estimated level of farm incomes? Secondly, can any provision be considered which would take account of the differing incomes and the different enterprises in farming, bearing in mind what I said earlier, that it is possible to have an overall increase in farm incomes for one year over another and have contained within that individual groups of farmers who actually suffered losses on the previous year?

Mr. Kavanagh

Reluctantly, I must say no on both counts. On the first count there is no reference to the CSO in this Bill and the complemental persons in that section of the Taoiseach's Department. I cannot give that guarantee but I can indicate the Senator's concern to have additional staff there and indicate to the Taoiseach the reasons that might be necessary. If he agrees I propose to act accordingly.

On the question of considering the incomes of various classes of farmers on the basis of the types of farming they are involved in, we considered this at length in section 2 and I said then that I could not take on board any proposals such as this that would differentiate between farmers having adjusted acreages which may have an assessment of equal value. The rate is set at £10 per adjusted acre in this section and that would have to be the level for 1986 for all acres adjusted within the 20 to 80 acres provision. I would not be able to depart from that figure for any category of farmers.

Question put and agreed to.

Section 10 agreed to.

SECTION 11.

An Cathaoirleach

Amendment Nos. 2 and 3 may be discussed together. If No. 2 falls, No. 3 may not be moved.

Mr. Smith

I move amendment No. 2:

In page 20, between lines 14 and 15 to insert a new subsection as follows:—

"(8) The Minister shall by regulations made under this Act specify the conditions under which undue hardship, in regard to the payment of farm tax, can be met, and in a case where any of these conditions are met, the charge to farm tax shall be waived in full by the local authority concerned."

This, again, is one of the more contentious aspects of this Bill. Numerous attempts made, prior to the passage of this Bill in the other House, I understand involving meetings with the Cabinet, by individuals in the farming community and the farm organisations to try to have a clause included in the Bill which would cater adequately for what might be considered undue hardship. In my Second Stage contribution I said that there obviously would be situations where the land tax might not be capable of being paid by the present occupiers of holdings but where there would be a justifiable reason for mortgaging the property in the context of land tax and having it remain to be paid at some stage by a beneficiary of that estate. But the real situations we are trying to get at here are those of individual families, taking into account the death of a parent, where there is handicap or incapacity, continuing illness, even animal disease or disease in crops. One can think of a variety of examples where individual farmers for one reason or another would be incapable of meeting their liability to the land tax. That would apply to all sizes of farm holdings.

To propose to allow the land tax to be a continuing charge is a very extreme proposal. It would be like a creeping mortgage, paralysing individuals and could be considered to constitute a gradual confiscation of the property. Under all systems of tax to date it has been possible to include a proviso where by such cases could be dealt more sympathetically. The Minister will have to go some way down the road to cater for the kinds of situation I am outlining. We have the farm rescue package, with its different clauses. We have had representations to the Department of Agriculture by groups who have been left out of the milk quota provisions and who could have been considered. Various hardship cases have been put forward. Where the incomes being derived from farming are such as to leave no tax liability whatsoever the Minister is insisting that land tax would remain a continuing charge. That individuals who through no fault of theirs are unable to meet their liabilities have to meet the land tax the charge as a creeping mortgage is an extreme and heavy penalty. It should be remembered that if one does not reach the income tax threshold one would not have to pay tax. Clearly that would be the position in the instances I am outlining. I must ask the Minister to consider this amendment very seriously giving somewhat more sympathy to individual farmers who may find themselves in such circumstances.

There is another group also who, because of borrowings, find themselves in extreme situations. Regrettably, these are to be found in every county at present. Many of these could also fall into this category. I am not anxious to open the floodgates or bring about a situation in which farmers who would not be justified in claiming this relief would do so. However, it is absolutely essential that there be a scheme available to cater for the genuine cases that every public representative in both Houses knows exists. Therefore, I am putting forward this amendment.

Mr. Lennon

I should like the Minister to take another look at this part of the Bill. Perhaps it is introduced on a trial basis. In the months or year ahead, however he might take a more sympathetic look at this. I cannot put a number on them but there is at present a certain section of farmers who would be in what is known as the rescue package category. On the face of it, it would seem that these people are unable to pay any additional moneys because of being stretched to their limits. While I accept that there is in the bill a hardship clause giving power to county managers to perhaps postpone the date of payment which in the final analysis, whether it be in six months, 12 months or 12 years, will be a charge on their farm — I always felt — and I stand to be corrected on this — that in the old days of the rates, when the council or the managers had power to waive rates in cases of people who were unable to pay, they were waived for all time. I do not mean every year but perhaps in a particular year, if somebody found themselves unable to pay and it could be proven to the county manager that they were a hardship case, the county manager had the power to waive the rates in those cases. In one particular year — perhaps not every year — in my lifetime in the council the managers had power to do so. In relation to the numbers of farmers in the rescue package category, these people are stretched to their limits at present, and there are a great number of them.

If we take, for example, a man with an acreage of around 80 acres. That man has to be in accounts at the moment because he is in the rescue package and must produce accounts. For that reason he will have an additional burden of perhaps £800 dependent on whether he has 80 adjusted acres. No doubt that would have to be another £800 borrowed and he would incur interest on top of that. While the council manager would have power to postpone payment of the tax, that is not going far enough. I would request the Minister to take another look at this, perhaps giving managers power to waive these liabilities completely rather than merely postponing the evil day. When this tax is implemented it will be well known to every farmer who unfortunately cannot pay. It is bad enough to be poor and unable to pay without everybody in a council chamber and everywhere else knowing it. Perhaps most of us are poor but we do not want to talk about it. We do not want to let anyone know we are as poor as we are.

I am appealing to the Minister on this. The Minister may well make the case that we could be opening the floodgates. I appreciate that. There are many people who could be described as being hardship cases. But I am specifying the people in the rescue package category. I could not put a number on it, but I know many of them because I happened to be a member of the ACOT board when the people from ACOT carried out this survey to find out how many farmers were in difficulties. The number we came up with may not be correct, because people are not that fast to say they are in financial difficulties. They wish to keep this sort of trouble to themselves. I know from discussions with the banks that some of these people are incapable of being rescued. I appeal to the Minister to take another look at this and take my views into consideration as my information is that these people will not be easily rescued.

Mr. Kavanagh

In amendment No. 2 Senator Smith proposes that it be written into the Bill that the Minister will be required to make regulations specifying the conditions in which undue hardship can be met and providing for the full waiver of farm tax in such cases. This amendment cannot be accepted. It would not be practicable or possible to specify hardship conditions in advance. The central factor must be that where hardship is claimed an evaluation of the circumstances of the individual should be made. The Bill already contains the necessary provisions in the section as it stands. It is more sensible to allow local authorities to evaluate each case.

The amendment also provides for the waiver of farm tax liability in full. This is not justified where there is an asset of the nature of farm land over 20 adjusted acres. I agree to issue guidelines for specific categories of farmers in difficulties to local authorities, where a waiver of tax may be granted and carried forward until better times arrive. No interest will apply to these waivers and in exceptional cases either the local authority or the farmer can apply for a mortgage to set against the property. Amendment No. 3 is consequential on amendment No. 2 and is, therefore unnecessary.

Senator Lennon mentioned the rescue package for farmers. The farmers who qualify for the rescue package are ones who, due to heavy borrowings, have difficulty meeting their repayments. The problems are usually temporary. In these circumstances the provisions in the Bill would allow for the collection of the tax to be postponed until times improved. The build up over a period of three or four years in respect of farm tax would not be very big, in the light of the size of the farm and its capital value. I therefore reject both amendments.

Mr. Lennon

I was really asking the Minister to take another sympathetic look at these people. We are introducing land tax on the productive capacity of land, but we should look at the capacity of people to pay land tax, especially people who, for reasons outside their control, are in financial difficulties. Having met some of these people and discussed their problems with the banks, I know that some are borderline cases. Some of them are on the point of sinking and the banks have grave doubts as to whether or not some of them can be rescued. It is an added burden on these people to think that if they do not pay this year they will have to pay the next year or the year after. I appeal to the Minister to have a further sympathetic look at these people.

I appreciate the Minister's difficulty and I know that we can find hardship cases other than those recognised under the rescue package. Down through the years under the old rates system councils did not pressurise hardship cases to a great extent. As far as I can recall, in one year the manager of the council got power from the Minister of the day to waive the debts in that year. This was a year in which farmers suffered great losses and were unable to pay their debts. I would appreciate it if the Minister would be a little more encouraging and tell me that he is prepared to look at it again.

Mr. Smith

I am extremely disappointed with the Minister's reaction. I had sought in the amendment to ask the Minister to lay down the conditions where this waiver could arise. In a variety of schemes operated by the local authorities and the health boards, individual Ministers laid down conditions under which certain allowances are payable. In this instance I thought that we had better have national criteria which would apply in every local authority and that the local authorities would have the guidance of the Government Departments in operating the schemes.

We are talking here about a small minority of cases, individuals who have always paid their way, who have tried not to be in debt. What we are now saying to those people is that, under the income tax laws, they have no tax liability because of their financial circumstances, and that we recognise that they have subsistence living standards, but this law is such that under no circumstances can it be waived and it is therefore a gradual mortgaging of the property. I can give an example. In my locality a farmer fell into very poor health. His young family were unable to manage his farm and he was in poor financial circumstances. How can anybody stand up and tell that individual that he must have a continuing mortgage put against his assets over the next I do not know how many years? It will run into thousands of pounds over nine or ten years. Does the Minister consider that a fair imposition on people who genuinely would have no liability under the income tax code?

Mr. Kavanagh

The Senator is perhaps expressing the most extreme situation that could be found. Therefore, I must repeat that I will be issuing guidelines for specific categories such as he has outlined where the local authorities can consider a waiver for that situation in which that farmer might find himself. That means that that individual is relieved of paying any tax in that year and if that situation continues for a number of years and the case can be made again and again, then that waiver will continue but the sum will undoubtedly mount up over a period. What was done in the old rating system for a person who was unable to pay his rates because of lack of income basically, whether he was in a house, a business or anything else, will be the gist of the system that will be used in this situation. It may get to a stage where the sum would be relatively large and in that case a mortgage could be taken out on the holding which would remove it as a debt from the books of the local authority, and it would stand there until eventually either the person was in a position to remove that mortgage or even the property was sold. I have sympathy for people in that situation, but we must always consider that there is there an asset which has been adjudged by the inspectors as having a potential for delivering an income to that family. Therefore, whether it was the old rating system or this system, that would indicate a level of taxation for each year, and that can be relieved only by it being paid or by being waived for a period of years or a year until the person is in a position to pay.

Senator Lennon mentioned that he recalls that under the old valuation system certain uncollected rates were not just waived for a year but were regarded as uncollectable and written off. Of course, that is quite true; that happened in very exceptional circumstances. I can tell the Senator that that usually happened when the asset itself had gone into total disrepair, whether it was a house or a business. If it was a factory that simply went out of business and became derelict nobody was ever going to pay the level of rates that attached to it as a going concern, and in circumstances like that it was possible to write off rates as uncollectable. The value of a domestic dwelling which was let run into total disrepair and disuse could not be got back from the person who was the rated occupier or likely to be an owner in the future because the place had no value. However, in this case the land has value and will continue to maintain its adjusted acreage valuation. That is the difference between those uncollected rates in the past and this situation here. There was a time around 1980 when a regulation or perhaps a letter issued from the Department of the Environment suggesting to managers that they should take a lenient line on the collection of rates from farmers. That depended on each manager and the state of his balances at the time. Some managers accepted that as a direction and ordered their rate collectors so to carry out their collection. Others thought that they could not afford to carry out that direction. I think it was overtaken by the High Court decision and the situation did not apply any further, and those rates that were not paid apparently will never be paid.

Again I must say that we are making arrangements in this Bill to take into account a category of occupiers or farmers and they can have a waiver of a temporary nature over a period of time if their situation requires it. I would say that we should see how this works for people over a period of years and if real hardship emanates from it, but initially tonight I must say that I have to reject the amendments. However, I have sympathy for the case being made and we should see if this situation that is being put forward tonight by both sides of the House becomes a reality in the future. Then I, or whoever is in this Department, will have no hesitation in coming in again and perhaps bringing forward an amendment to the Act.

Mr. Smith

I am conscious that the Minister's latter statement is not as entrenched as his early contribution was, nevertheless I must insist on my point where the land tax remains chargeable against the State. I want the Minister to try to put himself in the position of somebody such as I have described. The Minister says that I picked the extreme cases. They are to be found everywhere. It could be brought about by the sudden death of the farmer or any one of a variety of handicapping features which place an individual, through no fault of his or her own, in a position where he or she has no income tax liability and, therefore, should not have this as a continuing mortgage on his or her estate. The Minister said that land is a resource and that it has been evaluated with having a certain value for the purpose of this Bill and for the payment of farm tax, but any resource is only as good as the individual who has to operate it for the time being. God between us and all harm, we never know what can happen with accidents and what have you. To have an individual facing up to the kind of circumstances that I am talking about, a charge which is against the estate and growing all the time pressing in on top of him, is an added, unacceptable burden in those circumstances. In my time on the county council dealing with problems of that kind the charges, even if they were held against the estate, were held for only a limited time and eventually were written off and these uncollectable, written off rates were brought before the council year in year out. This is one amendment which gets down to the guts, the root of this whole tax. Most people accept that it is inequitable and that consideration cannot be given to the difference between incomes that can be got for different enterprises in farming. Nevertheless, there is a broad acceptance that farmers must be seen to pay more than has been paid up to now and to carry their share of the national burden of taxation so that no sector will feel that they are being left to carry an undue burden. There is a broad acceptance of all of that. This may be a crude way of doing it but it is probably one way of getting a reasonable tax income from the farming community. Leaving aside all the other problems that are in it, all the inequities, in this one area the Minister must give way. I go so far as to say that it is immoral to press a person who has no tax liability whatsoever, because of his individual circumstances, and force him to have this charge laid against his estate as a growing, increasing and gradual mortgage of the farm to the State. That is totally unacceptable and I cannot see why the Minister, in contemplating making changes in a few years' time, could not now once and for all treat that minority of cases the same way as one would treat any other group in society who do not have the resources to meet their liabilities.

The Government will be paying unemployment assistance in some of those areas. The Minister for Agriculture in some of those cases will be paying a rescue package. At the same time another element of the Government's arm insists on a continuing charge on the estate of somebody who is qualifying for assistance of the nature I am talking about. Is it consistent for the Government on the one hand to accept that they should have a medical card, that they should have some other assistance and at the same time to place that charge against their estate?

I do not want to hold up unnecessarily the proceedings of this House. We have debated a lot of other issues for a long time today, but I have to say that this is a fundamental crux with this Bill. We have tolerated a fair level of inequity throughout the whole of it, but I cannot stand by and see individuals I know placed in a most extraordinary position vis-a-vis any other taxpayer in the community. We are talking about a small minority of people, a group of people who would pay if they were able. Because of incapacity of one kind or another they may not be able to meet their liabilities under this Bill. They will face that mounting charge year in, year out against their estate. Theoretically it could reach the position where the State would own the farm, not the individual.

Mr. Ferris

I have much sympathy with the point Senator Smith is making. If we were to apply waivers in the same way as we apply waivers in any of the existing local authority schemes — for instance, for water charges — they would be waived for the year and forgotten about. The next year is taken as it comes. I would have interpreted the word "waiver" to mean ad infinitum in respect of that year. The number of people Senator Smith talks about is probably small, but because it is so small a provision might be abused if it were written into the Bill. I feel there is a way out of this dilemma. The Minister has touched on it and stated that he could look at it. The amount of money that would probably be involved is £700 or £800 a year at the top end of the bracket, while at the lower end of the bracket it might be £300 a year. The county manager might decide, because of some catastrophe — wiped out by a flood or some tragedy on the farm — that there was not an income as such, but there is still the asset of the farm. In principle we are talking about a type of resource tax as a replacement for income tax, but also as a contribution to local authorities based on the assets or earning capacity of the farm. I would prefer if the charge could be properly waived and forgotten about, but I could see a situation where there would probably be abuse of it because there would be so many people looking for waiver of tax that nothing would be collected in any year.

I would be prepared to accept the Minister's commitment to look at the section again if there was an ongoing degree of hardship which would continue from one year to another and which a farm could not carry. If there is an anomaly here it will only be seen during the operation of the legislation over a number of years and the Minister has stated that he would be prepared to look at it again. I have sympathy with the amendment, but I can also see some problems in it. The Minister has been reasonable in his attitude.

I do not think it is a good section. It is a concession that was given following representations from farming bodies, particularly the ICMSA who made a very strong and reasonable case on the basis that any taxation would have to be seen to take into account a person's ability to pay. The Minister has conceded that unlike other taxpayers who owe money and have to pay interest on it, at least in this section he is not expecting a person to pay interest on the amount owing. He will want to review it each year. If he realises after a number of years that undue hardship is being caused by a debt accruing against a small farm which cannot carry it, I suppose a readjustment could be made. The acres could be adjusted downwards because of the tragedy, whether a flooding or otherwise.

I take it therefore that the level of tax, which is now decided at £10 per acre, is subject to fluctuation up or down in the event of anything going wrong. It certainly is agreed that if farming incomes increase the rate per acre will possibly increase. In the event of some peculiar situation in the Community in which farming incomes might drop out of all proportion, obviously the rate of tax would also drop. I can see nothing wrong with the principle of readjusting acreages in a situation where a whole farm could have been wiped out by flooding — and 100,000 in the Suir Valley are wiped out by flooding every year. Senator Smith knows this. There will be a period or readjustment in situations like that. That will probably assist the continuation of a waiver or the writing off of a liability under this section.

Mr. McDonald

This is the section that gives me as a farmer the most trouble.

An Cathaoirleach

We are on the amendment, not the section.

Mr. McDonald

I am heartened by the fact that the Minister has agreed to look at the position in a couple of years hence. One of the problems here was that the IFA said even before the Bill was published that they were not going to pay or co-operate with this kind of taxation. I assume that the rather peculiar portions in this Act are possibly to offset that. My concern is totally for the small numbers of people who, for various reasons, find themselves with no income. Each year — I will take my own county — there are one or two massive breakdowns in animal disease, whether due to brucellosis or TB, and a whole herd is cleared out. That means that the cattle are sold off at a fraction of their cost, perhaps a quarter or a third of what would otherwise be their marketable cost. It is very hard to get urban people to appreciate that one can have absolutely no income. People who are working for a wage may perhaps get sick, but at least there is unemployment benefit or sickness benefit coming in.

In some farming situations not one brown penny comes in. I am not saying there are very many. In my 30 years on Laois County Council up to 1977 we always returned — if my memory serves me correctly — a rate collection somewhere in the region of 97 to 98.9 per cent year in, year out. There were a very small number of hardship cases. In the collection of rates the team of rate collectors — we had 18 — knew every individual family personally in their area and that was common throughout any county. If a rate or portion of it was waived, that was the end of it. It is too strong to have that put as a mortgage on the holding.

Last week the Minister for Transport offered an extra £30 million to a semi-State company because they did not get a sufficient subsidy for the last three or four years. Agricultural margins are not only low, but are shrinking. We are dealing with people who for one reason or another are unable to make a profit. It could be due to lack of expertise, husbandry, the particular line they are on, a crop failure or the incorrect application of a spray. Unless one gets up to an optimum yield in tons or gallons one is not making money and there is nothing to fall back on. A small number of unfortunate people will be caught by this subsection. Every family has its ups and downs but the tradition here has always been charitable in regard to people who meet lean years. I hope that the Minister will amend this section at the earliest opportunity.

Mrs. Honan

I have not discussed this amendment with Senator Smith but he is asking the Minister if there will be an allowance for serious illness. I have made no comment today on this Bill, but I want to make it quite clear that I believe in everybody paying their fair share of tax. There are cases to which this amendment is relevant. It is all right to talk about bringing in an amendment to this Bill at a later stage when we find that there are cases that should have been dealt with here tonight, but it shakes me that there is now waiver for a farmer with an illness. I agree — and I rarely agree with Senator Ferris that it could be abused, but it is frightening that we are not making any allowance for serious illness in a farming family. I say this because it is relevant to the amendment and is partly what Senator Smith is saying. We have all gone through rough periods in life. It would be frightening to know that you may not get well and the debts are accruing on the farm and that eventually you might die leaving those debts hanging over the heads of your widow and children.

Mr. Lennon

I welcome the assurance from the Minister that he will take another look at this, although he did not say when. I ask him to be a little more explicit and to say if it will be within the next year. The Minister has already said that this can be postponed from year to year and that perhaps they could mortgage this against their farm. Some of these farms are already mortgaged and the decision as to whether they sink or swim is very often in the hands of the bank manager, who might well decide that an additional £800 or £900 is too much for the farmer to pay. However, I repeat that I welcome the Minister's assurance that he will look at this aspect.

During the first year of operation of the Bill county managers will see the number of people — hopefully small — who will come before them and satisfy them and their officials as to their genuine inability to pay. When the Minister has the numbers from the different counties of the genuine cases who are unable to pay, perhaps he will take a fresh look at it. The Minister is a very reasonable man who does not want to do anything which will adversely affect any section of the community. I believe he will come up with something that will satisfy the needs of all sides of this House and those of the unfortunate people who find themselves unable to pay. Most farmers want to pay and find it embarrassing if they are unable to do so. It is very embarrassing to have to say to a rate collector that they are unable to pay and it is merely postponing the evil day of reckoning.

Mr. Fitzsimons

I agree that this can be a cause of great embarrassment, but there is more to it than that. Those of us who come from country areas can recall many instances where farms had to be sold due to the serious illness of a parent and the fact that this contingency is not provided for is a serious defect in the Bill.

Mr. McMahon

I am not encouraged by what the Minister said because any legislation should be looked at in a few years to see how it has worked. I ask the Minister to take an immediate look at this situation. While I welcome an attempt being made to have farmers like everybody else pay their fair share towards the running of the State, there are cases of hardship in all walks of society and they have been amply outlined here tonight.

You, a Leas-Chathaoirligh, took the line that I had intended taking, that not only can you have the destruction of crops, or a failure of crops, or failure of a herd, or disease in a herd, or whatever, but you can also have a continuing illness in the family or in the main worker on the farm. A son or a father and husband could be ill for years. This mounting burden would not help him to get over his illness. Indeed, he might have the sympathy of the county manager whose hands are being tied by this section of the Bill. The Minister said it can be looked at in a couple of years. I ask him to have an immediate look at it. If he gave us that assurance we could get on to the mext section.

We all appreciate the position in which we find ourselves. The Dáil is in recess. The Bill has gone through the Dáil and we have to get it passed. We want to ensure that hardship is not caused for the less fortunate in our society who may fall ill or find themselves in financial difficulty. Even one individual is worth fighting for and it is worth the Minister's while to have a look at the section sympathetically and give this power to the managers. The Minister said there was a waiver of rates under the old rating system in cases of hardship.

I am not sure that we should call this a waiver. It is only a postponement of the collection of rates. It is only a postponement of the normal collection of rates from year to year. Indeed a person could be sick for five years or even ten years and eventually die and put an added burden on his family which could push them to the point of having to dispose of their property. I do not think any county manager would want to impose a charge on a family who had been in the area for centuries to the extent that they would have to sell the property.

It is as serious as that. There may be only one case as I said. Others said the numbers may be small. We do not know how small or how large they will be but that is irrelevant. We should not place a county manager in the terrible position of having to impose a charge in the knowledge that, by imposing that charge, he was pushing a family out of business and forcing them to dispose of property they may have held for 100 years, or even hundreds of years. If the Minister can give us an assurance that he will have an immediate look at it, then we can agree to pass on to another section. I appeal to the Minister to tell us that he will have an immediate look at it and see if he can bring forward some amendment to the legislation in the next Dáil session to give power to the manager to waive the rates.

The Minister dealt earner with the normal waiver of rates under the old rating system. In many cases that waiver was not temporary. It was for all time. The following year's bill would arrive on the manager's desk and, if the hardship was still there, he would judge the case on the information before him. In many many cases in my own county where there was hardship the manager had power to waive the rates. We should give county managers that power in this case.

Mr. Magner

I listened carefully to what Senator Smith said with conviction. I have a great deal of sympathy for his amendment and his intention to ensure that hardship is avoided. There is a perception in the urban population that there are no such beings as farmers in financial difficulties or in distress on farms. That is a perception that neither I nor the Labour Party share. We are very conscious of the fact that there is extreme financial hardship in large sections of the farming community and, in particular, among small farmers and, because of the markets and the economic situation and, indeed, our own financial situation, among some middle sized farmers as well.

I am reasonably satisfied that the Minister's commitment to issue specific guidelines to deal with those hardship cases should, in large measure, meet the reservations voiced by Senator Smith. If they do not, and if we have some hard men or hard women as county or city managers, we may have to come back to this House with an amendment which would protect those people completely. As the Minister said — and I think this is a reasonable approach — you have to see how the legislation works in practice. I share the concern voiced by Senator Smith, but I accept the Minister's assurance that these people will be protected in so far as he can ensure that they will be.

Mr. Ellis

I should like to express my support for the amendment put forward by Senator Smith. The owner of a farm could be ill for five or ten years. If this tax had been allowed to roll over for ten years eventually the bill might be as much as the farm was worth. After the farm was sold there would be nothing left for those who sold it. We must accept amendments that are fair and reasonable, and we must guard against hardship cases. It is all very fine for us to say we can have a look at the Act in two or three years' time. If we decide to look at it in two or three years' time we may find that a number of anomalies have arisen. The Minister should accept Senator Smith's amendment in view of the fact that once this Bill leaves this House, the chances of amending legislation coming in the near future are very slim. The Government may want to put quite an amount of other business through both Houses. Senator Smith's amendment will not hold up the process of commencing the work the Minister wants to do.

This Bill as proposed is intended to extract more money from the farming population. We all want to see every section paying their fair share and what they are justly entitled to pay. In hardship cases may people may be asked to pay what they are not entitled to pay and what they would not have to pay if they were in another sector. It goes back to what I believe should have been the position. There should have been a threshold fixed for farm tax, a dividing line, above it, tax would be paid on an account system, the same as for other businesses. That is my main objection to the Bill in its entirety. It is an unfair type of taxation and here is a case where that has been proven. I honestly believe that the Minister, in his wisdom, and the Government should accept Senator Smith's amendment. Perhaps if both Houses had had more time to debate this Bill, especially the other House, we might have come up with better legislation. The Minister should accept Senator Smith's amendment.

Mr. Kavanagh

I have to repeat the reasons why I had to reject this and the consequential amendment and to remind the House what I said at the beginning of this debate. I said it would not be practical or possible to specify hardship conditions in advance. The essential factor must surely be that once hardship is claimed an evaluation should be made of the circumstances. We are being asked to specify hardship in advance and to put it in a Bill. That just cannot be done. I am saying that honestly and fairly to the proposer of this amendment. I have gone some way to meet his difficulty and we will specify categories of difficulties to the local authorities and ask them to postpone the tax for a year or a number of years — as long as difficulties continue. I cannot accept the amendment, which asks me to set out a list of hardships and to specify where out tax would be waived entirely.

Earlier in the day Senator Ellis was telling us about the difficulties of a wife who received nothing from her husband. Would it be a hardship if, unfortunately, that poor husband died and she suddenly found herself in possession of the whole farm? That might be a benefit. How could I write into the Bill that the death of a farmer would be a hardship for a wife when Senator Ellis has already given an example of where this would not be so? It could be very difficult to write that kind of thing into legislation.

Senators will recall that under this Bill 200 inspectors are going out to make assessments and that will take some time. I hope the earlier assessments will be made by the middle or the end of this coming year. I have been requested to bring in something next week, but that would not be of any great benefit because I would not be aware of the problems that would arise as regards hardship until this Bill has been in operation for some time and when we will see what difficulties arise.

I believe the circumstances mentioned with such great heat and fervour by many Members from both sides of the House will not be a big issue. If one person is in difficulty his case should receive maximum consideration. I have agreed that if a family is suffering hardship help will be given immediately, but that does not mean the difficulty will be written off, simply that it can be postponed again and again if necessary. If it is proven that there is a need for a write-off, then I certainly would not have any hesitation is asking that the Act be amended at that stage. I hope Senators will accept this as a genuine move to meet their case. I am asked to list individual cases but I might leave out some case that might result in far greater hardship as time goes on and so that would be an additional problem. In any event, I cannot accept this amendment for the reasons I have stated. I have made arrangements for the difficult cases and if the difficulties mentioned here today manifest themselves in the future, I will come back with an amendment at some future date.

Mr. Smith

I do not know how much longer we can discuss this amendment, but each time the Minister contributes he comes further down the road to meet us. I am at a loss to know why the Minister and his officials, who seem to be totally unaware of what is happening throughout the farming community could not combine their resources to anticipate the difficulties which might arise, bearing in mind that we bring very comprehensive legislation before this House every year, in particular the Finance Bill, and arrange a complicated set of procedures anticipating difficulties on all fronts. I regret that the Minister and his officials did not have the ingenuity to anticipate such difficulties and I am sorry that that seems to be the Minister's position in the context of this amendment.

What I had in mind was that we would have a uniform set of conditions throughout the whole country rather than having power given to the county managers and maybe having a different interpretation of the Act in different areas. I am prepared to accept the Minister's statement on this, and I want to thank Senators on all sides who have supported this amendment. I am not claiming that I and Members on this side are the only people concerned about individuals in this situation. Many Senators are familiar with the instances I referred to and I will be very anxious to see what the future holds.

This Bill will not be law very long before representations of the kind I am talking about are made. I will instance one final case which has just been brought to my notice. A young farmer, with five children, had a heart attack about a year ago. Yesterday I was informed that his herd had been decimated by brucellosis. That sort of thing keeps happening. They are only a minority of cases, but there will be no trade union or farm organisation shouting about the individuals I am referring to. They have nobody to support them. There are individuals behind the trauma and the difficulty of family circumstances and I do not want to see them unduly penalised. I would like to think that any law passed here would have enshrined in it the kind of sympathy we sought in this amendment.

Amendment, by leave, withdrawn.

Amendment No. 3 not moved.

Section 11 agreed to.

Section 12 agreed to.

SECTION 13.

Question proposed: "That section 13 stand part of the Bill."

Mr. Ellis

With regard to the amount which may be available to a local authority, some local authorities may end up getting very small amounts of revenue from the land tax. What will the position with regard to their capitation grants from central funds? Will an overall percentage be made available by the Department to the various local authorities annually? What would be the position with regard to counties which would have a very small income from the proposed land tax?

Mr. Ferris

Before the Minister replies, I wish to say that on my Second Stage speech — The Minister was not present but the Minister for State was here — I advocated with regard to farmers in the upper categories of 80 adjusted acres and over who would be paying both land tax and income tax that the amount of land tax that those people would pay be retained fully by local authorities in view of the fact that the Central Fund will also have a direct benefit from income tax. I want to ensure, as a member of a local authority, that as much money as possible would remain with the local authority for use at their discretion. I hope the Minister will consider this. It does not need amendment to the Bill, but it is a matter for ministerial order in the future as to how much money will be retained by the the local authority for their own use and how much would be remitted by them to the Central Fund. I am asking for a total retention of the amount of farm tax paid by the farmer with 80 adjusted acres and over.

Mr. Smith

One of the arguments that have been consistently put forward since the abolition of rates on agricultural land has been that there have not been sufficient funds to repair roads and to attend to local authority schemes of that nature in the way that we should. I do not want to labour this point, but the Minister is well aware that, in particular, the county road network is crumbling. I was terribly disappointed when this Bill was introduced to find a statement in tandem with the introduction indicating that for every £1 that would be taken up in land tax, collected and kept by the local authority, they would be reduced £1 of the normal rate relief or grant given by the Exchequer. I am not going to tell the Minister what he should do, but it is clear that if he wants to sell the notion of this tax it is crucial that the benefits from it begin to be seen in some of the neglected areas of local authority activities at present. To collect this at local authority level and to subtract pound for pound from the Exchequer grant to local authority is a retrograde step. It may be possible to give the whole grant, but the Minister should indicate that the local authority funds are going to be enhanced in some way by the introduction of this tax.

Mr. Kavanagh

What we have said in this Bill is that the full amount of the rates collected will accrue to the local authorities and there will be an adjustment made, obviously a reduction, in the rates support grant. That having been said it is a separate issue, not part of this Bill. What we have said is that the whole tax goes to the local authority but in regard to the rates support grant there will be an adjustment which will take into account some of the income from the farm tax in adjusting the rates support grant, so that it remains with the county that has collected it to help them to attend to some of the problems that have been mentioned by Senator Smith. In that way, there will be an obvious benefit to the county. What I have not put into this Bill is what that amount should be. It is not part of this Bill. It is part of the general estimating procedure that takes place within the Department and that will be decided in consultation with Cabinet colleagues.

It might be wrong if a particularly large amount of tax accruing to one county were allowed to remain with that local authority, while another county would have a very small amount left with the local authority. If that were the case, the wealthier counties, those with the larger amount of adjusted acreage, with the benefit of the tax would do proportionally far better. I hope the Senators will see and understand the reasoning behind the methods being used. If we did not do this and allowed the whole amount of tax to remain with the county collecting it certain counties would be much better off and the poorer counties that collected very little would get very little back.

Mr. Smith

I am not arguing with the Minister on the basis of the formula used in allocating these funds vis-a-vis the different counties and their different needs. One has to accept that a clear formula has to be worked out on a fair basis throughout the whole country. What I am concerned about is whether the proportion of the total tax yielded from this source will ensure that the total grants to the local authority from the State, including this one, will be considerably increased from what they are at present, in other words that the lion's share of the tax yield, once the national formula is worked out, will reside with the local authority. I understood originally that there was a statement from the Government Information Bureau to the effect that when this tax would be introduced it would be raised by the local authorities and used by the local authorities but account would be taken of the fact in the total grant allocation to local authorities. I understood that to mean that for every pound the local authority would gain from this they would actually lose a pound from the Exchequer grants to them. I now understand the Minister to say, if not in so many words, that the local authorities can expect, through the implementation of this tax, a fairly sizeable increase in their allocation, bearing in mind the national formula for the individual county needs.

Mr. Lennon

I like every other member of a local authority, I am sure, would like to see a greater allocation of money for local authorities as a result of what we believe will be more money collected. I take this opportunity to tell the Minister that many people who paid rates down through the years did not enjoy much of the services. What I mean by services is sewerage, water and road schemes. I am prompted by the councillors in my area to make this appeal to the Minister and I hope he will take note of it. In recent times the allocation of money for Louth LIS schemes has not been reduced but absolutely cut out altogether and the roads in Louth are as important as the roads in the west or in any other part of the country.

Mr. Smith

They are just shorter.

Mr. T. Hussey

And wider.

Mr. Lennon

As a result of our smaller allocation of money down through the years the work takes longer now. The amount of roadway we have to repair is far greater because our allocation of money from day one is much smaller. Seeing that the farming community will be coughing up a large amount of money into the Exchequer, I hope these people who are going to pay the piper get some value for their money and that money will be allocated for LIS schemes.

Mr. Kavanagh

The grants which the Department give to the local authorities will be adjusted in line with yield from the farm tax. If the yield is small the adjustment of these fees will be small. Local authorities will not have their grants given pound for pound of the amount of the farm tax collected. It is my intention to ensure that there will be an incentive to local authorities in that particular matter. This does not arise on this Bill but it is nevertheless the intention that the incentive will be given to local authorities to collect this money. That is important to get the work done efficiently. As regards spending this money, now that we have all agreed that it is going to be collected, that remains for another debate.

An Leas-Chathaoirleach

It took a while.

Mr. Kavanagh

It would be my intention to see that my Department will obviously be the beneficiary. Naturally all the money will stay in the local authorities but the adjustment is made to the appointment of rates, not necessarily on a pound for pound basis.

Mr. M. O'Toole

In connection with the equalisation of rates about which we have heard for some time past, I am sure the Minister knows the imbalance that exists from county to county. In my own county the rates are £30 in the pound while in other parts they are in the region of £50 to £80 and less. Will the Minister take steps to ensure there is an equalisation so that each county may pay their fair share? We in the west are penalised in regard to what is happening. It is not fair for a person living in the west and especially in Mayo, to have to pay £30 in the pound while residents in other counties can get away with much lower rates. What the Minister is proposing will militate against us because of the type of land we have in Mayo. There will not be the same yield from this farm tax as in the case of counties with better land. It will widen the gap and there will be a greater imbalance when this Bill is implemented.

Will the Minister make available a substantial grant-in-aid from the Department of the Environment to help counties like Mayo, Kerry and Donegal who are at a disadvantage as against the midland counties where they have higher valuations and their recoupment values are greater? There should have been some recognition in this Bill of this fact. It is a serious situation. We have been penalised for many years. Many times we have looked for equalisation of rates and it has not happened. All previous Governments have failed to tackle this problem. Now that the Minister is bringing in local government reform it would be an opportune time to deal with the matter if it cannot be adjusted in this Bill.

Mr. Ellis

With regard to local authorities, will the total gathered by the local authorities and submitted to the Minister include the cost of collection, or will the local authorities be allowed to deduct the cost of collection when they are making their submission of collection?

Mr. Kavanagh

They will not submit the rates collected to me. They will be holding this money themselves and the cost of collection will fall on the local authority. That is why I said earlier that an incentive will have to be built in when we are considering in regard to the rates adjustment how much will be allowed for collection, plus an incentive to collect this kind of money in a particular area. What Senator O'Toole is suggesting does not form part of this Bill. While I might on the one hand have sympathy with him that we will not be getting the same level of farm tax from his county that we might look forward to in counties like Kildare, Kilkenny and Wexford, on the other hand one must assume that the farmers there will not be levied with that level of tax either. The equalisation of support for each county is something that does not fall within the preview of this legislation.

Mr. O'Toole

I am not happy with that. If there is a great difference in recoupment as between various counties the gap will be widened even further. The ratepayers in Mayo will be penalised while their counterparts in Meath and in the richer counties will have their rates reduced. The Minister said that because of our poor land the farmers will not pay and that is so but the ratepayers will suffer. Counties such as Meath, Tipperary, Wexford and others will be able to recoup more as a result of this farm tax. That will finance the services within those counties and reduce the rate considerably, whereas in Mayo the rates will be higher because the farmers will not be paying as much due to the bad type of land. The Minister has not said there is going to be any grant-in-aid from the Department of the Environment to remedy this anomaly.

Mr. Smith

Ní raibh mé ag éisteacht leis an Aire nuair a dúirt sé to raibh Fianna Fáil ag cuidiú leis an mBille seo. I was not listening perfectly to the Minister when he said he was getting acceptance from Fianna Fáil that this Bill was going to be a reality. We are taking him at his word that he intends to stay in office for a little while. We take our responsibility seriously and since we do not have a majority in either House we are trying to improve the Bill as much as we can, much as we might dislike it.

Mr. Ellis

With regard to the collection of this money by the local authorities, it is envisaged that this would become the work of the rate collectors who are employed by those local authorities and doing very little work for the past number of years, or is it intended that there would be another means of collection by the local authority?

Mr. Kavanagh

The local authorities will have to work out with their staffs how this can best be collected. They are at present negotiating with rate collectors in some of the counties about the situation and about how their work can be expanded into other areas as revenue collectors. The unions, local authorities and managers association are considering that. I am not certain as to the level of success that has been reached in that debate but I would expect that this would be the type of work that rate collectors could do. On the other hand, it might be possible to set up revenue collectors and offer the redundancy package to the rate collectors. That would be a new situation and one that is not included in the Bill.

Mr. Ellis

I agree with the Minister in many respects but it would possibly have been a good idea to have included a further subsection to section 13 providing that this would be the responsibility of the present rate collectors without their negotiating further charges, which they are doing at the moment, for this collection. The cost of collecting rates in every county at the moment is ridiculous in comparison with the yield. It may be time the Minister looked at the possibility of rates being collected directly by the local authorities without having tax collectors or rate collectors involved. The bills could be sent out the same as the water charge bill is sent out at the moment rather than having another tier of administration taken into the scheme which is going to take away further moneys from it.

Mr. Browne

The big snag about water charge is that there was a bill sent out and there was no personal contact. The point was made to me that the same would hold if bills were sent out for the farm tax and nobody called to collect the money. With the personal touch of somebody reminding the person that there was a bill due there would be much more hope of getting the money in than merely sending out an impersonal letter.

Question put and agreed to.

Sections 14 to 29, inclusive, agreed to.

Schedule agreed to.

Title agreed to.

Bill reported without amendment, received for final consideration and passed.

Mr. Kavanagh

I thank everybody who helped me in putting this Bill through and who helped in having the work started in this area.

Professor Dooge

Since it is now past 8 o'clock, in accordance with our order made earlier today we will not take up No. 2 and I propose that the House adjourn until 10.30 a.m. tomorrow.