Special Committee on the Finance Bill, 1992 debate -
Wednesday, 13 May 1992

SECTION 179.

Mr. Noonan (Limerick East)

I move amendment No. 129a:

129a. In page 190, before section 179, but in Part IV, to insert the following new section:

"179.—(1) In this section ‘property' means agricultural land and includes such farm buildings and farm houses as are of a character appropriate to the property.

(2) Stamp duty shall not, subject to section 4 of the Stamp Act, 1891, be charged on any instrument to which this section applies.

(3) This section applies to an instrument, being a conveyance or transfer operating as a voluntary disposition inter vivos, where the instrument contains a certificate by the party to whom the property is being conveyed or transferred to the effect that the person becoming entitled to the entire beneficial interest in the property (or, where more than one person becomes entitled to a beneficial interest therein, each of them) is a qualified person.

(4) In this section ‘qualified person' means a person in respect of whom it is shown to the satisfaction of the Revenue Commissioners—

(a) that he was under the age of 30 years on the date on which the relevant instrument was executed, and

(b) either—

(i) that he is the holder of a certificate issued by Teagasc certifying that he has satisfactorily completed a ‘Certificate in Agriculture',

(ii) that The Farm Apprenticeship Board certifying that he has satisfactorily completed the course under the Farmer Apprenticeship Scheme of the Board or the course under the Trainee Farmer Scheme of the Board, or

(iii) that he is the holder of a university degree, or equivalent university qualification, in agriculture,

and

(c) that the property will be used for the purposes of agriculture.

(5) This section shall have the effect with respect to any instrument executed after the date of the passing of this Act and before the expiration of two years after that date.".

This amendment is on the back page of the second sheet which was circulated. The purpose of this amendment in my name is to restore a section of the Finance Bill, 1984 and to give exemption from stamp duty to certain young farmers whose parents are transferring land to them. I want them to be exempt for the present year and for the two years after the passing of this amendment, if the Minister accepts it. It begins by defining property as agricultural land. That includes farm buildings and the farmhouses which are appropriate for the property. It goes on to say that the conveyance will have to be voluntary and it will have to be inter vivos. It is a scheme which was brought in originally to encourage farmers to transfer land to their children at an age when they would be active and young. The qualified person who would avail of the exemption would have to be under 30 years of age and would have to have established expertise in farming, either holding a certificate from Teagasc after completing a course, or alternatively, the Farm Apprentice Board Certificate, or a university degree in a relevant discipline. Of course, the property would have to be for the purpose of agriculture. It would have effect after the passing of this Act. It would cover any transaction carried out in accordance with the section before the expiration of two years from that date. I am talking about transactions carried out anytime within two years of next Friday, when the Bill will have been completed in the Seanad. Most Deputies are familiar with it. It is restoring something which was there before, and is still necessary as there is a reluctance by aged parents to transfer to children, and the stamp duty is onerous.

Mr. G. Mitchell

On a point of order, there is an amendment in my name. I do not have a copy of the supplementary list. I did not realise it was coming up. It has been passed by when I was not here because it is not on the list which I have.

Mr. Roche

It is on a white list.

Mr. G. Mitchell

I am wondering if, in those circumstances, it is possible for me to resubmit it at Report Stage?

Mr. Noonan (Limerick East)

It is on the second list.

Mr. B. Ahern

It is in the second sheet.

Mr. Noonan (Limerick East)

You promised that you would come back at Report Stage?

Mr. B. Ahern

Is that all right?

Mr. G. Mitchell

Yes.

Chairman

There may be a difficulty with it. If a Deputy has an opportunity to move the amendment, but does not do so, it goes by the board.

Mr. G. Mitchell

That is the point. I did not have an opportunity because I did not have the list. I have been looking for the list. It is only when Deputy Noonan referred to a supplementary list which I now have that I realised there was an extra list.

Mr. Noonan (Limerick East)

Is it not moved when it is circulated? Is it not technically moved when it is circulated?

Chairman

There may be a difficulty. We will clarification but apparently amendments on Report Stage must arise directly as substantial issues raised at Committee Stage

Mr. G. Mitchell

They were raised. It is on the Order Paper, but I do not have the Order Paper. I thought I had all the amendments.

Chairman

We will endeavour to get clarification.

Mr. G. Mitchell

There were similar amendments in my name. They were moved, so the subject matter is the same and the Deputy is in order to come back on Report Stage.

Mr. D. Ahern

I would like to empathise with Deputy Noonan on the amendment he proposes. Most people would be familiar with the idea behind this which is to provide an opportunity for young people on the farm to have the farm transferred to them. It was a useful device. It enticed ageing farmers to transfer to their sons. It follows along the line of existing legislation, both in capital gains and in capital acquisition tax, where there is an incentive to transfer on to a son, daughter or somebody engaged on the farm. I would like to concur with Deputy Noonan and to ask the Minister to look at it in the coming weeks or months. I appreciate that he may have a problem as regards this Bill, but perhaps he would look at it in the Finance Bill 1993. It follows on from the idea of enticing ageing farmers to transfer their farms for voluntary consideration to a family member. Every assistance should be given to them.

Mr. Roche

I would like to support the point. There was a problem with this provision previously. I remember writing to a previous Minister for Finance about it. It was costing the Exchequer money, and for some reason it was not working well. As the two previous speakers have said, the issue of getting big farms transferred is socially desirable. It is something which, in equity, we should try to assist. I would go along the lines suggested by Deputy Dermot Ahern. It is time for the Minister to commit the relevant unit in the Department to giving a full and thorough examination to how the age package and tax issues inter-relate. A second Bill is promised later this year. It will take some time to get it right, because the issues raised have been around for some time. A number of Ministers for Finance have tried to correct it. It seems to slip backwards and forwards. It is time it was resolved. I would agree with the main principle that Deputy Noonan is arguing. It is important that we get it right. The cost cannot be great and the benefits would far outweigh the cost to the Exchequer. I would accept the principle Deputy Noonan is putting forward and the solution which has been suggested by Deputy Dermot Ahern. Putting the two together, we should be able to resolve the issue once and for all.

Mr. Finucane

I would like to support this amendment. I know that it is difficult in many cases, having spoken to farmers, to get them to transfer the farms to their children. We should give them every incentive. The criteria Deputy Noonan has outlined specifies parameters which come very close to satisfying the criteria for the installation grant. The installation grant of £5,600 has given an incentive to many farmers to transfer their farms to their sons or daughters. I support this amendment.

Mr. B. Ahern

The amendment seeks the re-introduction of the provisions of section 93 of the Finance Act 1982. This was enacted to encourage the immediate transfer of farms to trained young farmers and to ensure that maximum impact, the provisions, as originally enacted, were to apply for a two year period only. That was the concept back in 1982. They were subsequently extended on a yearly basis until they lapsed in September 1987. The cost of the exemption for 1986, the last full year of applications, was estimated at £5 million. This is more than double the 1991 cost of Young Farmers' Installation Aid Scheme of the Department of Agriculture. A study done at the end of 1986 by the economic unit concluded that it was not an effective method of encouraging lifetime transfers. That opinion came from the Economic Unit of the Department of Agriculture. A further survey has recently been published by Macra, which Deputy Noonan has probably been presented with as have I. I gave a commitment to them about two weeks ago to examine that study. I am familiar with this one because in the negotiations on the Programme for Economic and Social Progress the Minister for Agriculture was not available on the day. I took the session. It went on for about six hours. We gave a commitment to encourage lifetime transfers of farms as a way of improving efficency in agriculture. It is actually one of the clauses. Already transfers between related parties qualify for a special rate of duty, which is 50 per cent of the normal rate. Any further taxation initiatives which are undertaken, with the aim of encouraging transfers, will require careful research and consideration. This is borne out by the experience of the 1982 provisions. Relief or exemptions granted must be targeted to have the maximum, meaningful effect so that any loss to the Exchequer may be compensated by increased efficiency in the industry. The IFA has spoken to me about this. Macra has done a lot of good research on it. I have to commend the president of Macra and others who presented it to me in great detail. I have given them a commitment that we will look at it in full.

I am told technically — and I must go into it with the Department — that it crosses other schemes which need to be examined. To put it on the record of the House, I have requested my officials in the Department of Finance and the Revenue Commissioners to study the problem and see if we can do something in a meaningful way. Having listened to Macra, I fully understand the arguments they are making. If it is a question of the father transferring to the son, regardless of the commercial, economic, age or other reason and if there is an excuse that it costs a certain amount of money in tax, this was a great excuse to give "no" as an answer and that covers all the other points. That is the difficulty. I undertake to have this point fully examined to see if we can do something meaningful. It makes a lot of sense if it can be meaningful. If Deputy Noonan would leave it with me — and I would not have it ready for Report Stage quite frankly — I will examine the position. I will undertake to do so because I have given that commitment to Macra. I said I would not write to them or send anything to them until after this Bill had passed, but I will take up the suggestion of the committee and follow it through.

Mr. Noonan (Limerick East)

I would like to thank the Minister. It is a very fair response, and I withdraw the amendment.

Amendment by leave, withdrawn.

Mr. Martin

I would like to be associated with other Members. I did not get a chance to get in before the Minister replied but I, too, received representation from Macra. I am delighted with the Minister's response.

Section 179 agreed to.