(Cavan-Monaghan): Apart from the level at which relief is granted or taken away, as the case may be, is there any substantial difference between this Bill and the 1978 Act with particular reference to the linking together of ratings between one county and another?
Rates on Agricultural Land (Relief) Bill, 1980: Committee Stage.
SECTION 1.
Question proposed: "That section 1 stand part of the Bill."
There is one substantial difference in that this is a three-year Bill whereas the 1978 Act was for two years. Regarding the aggregation there was such provision in the 1978 Act but it was not put into force. It is spelled out in the aggregation of different holdings in different counties.
(Cavan-Monaghan): Is that being provided for here?
Yes.
(Cavan-Monaghan): Although it was included also in the 1978 Act, it was not put into force.
That is so.
I rise to emphasise the seriousness of the lowering of the limit for rates relief in the current year from £60 to £40 and to point out that this change will cause much undue hardship. Even at this late stage the Government should rethink their policy in this regard. I have never before witnessed such despair and lack of confidence and such a feeling of hopelessness as are evident now among the farming community.
This reduction in the level of rate relief will have serious consequences in the current year. On Monday last at a meeting of the county committee of agriculture in my county, speaker after speaker from both Fine Gael and Fianna Fáil, denounced the present state of agriculture. Assertions were made that many farmers, especially those in the £40 to £60 valuation bracket, are on the verge of bankruptcy. Never was it more inopportune to remove a relief which has been in existence for many years.
In reply to a parliamentary question on 4 March the Minister told us there were many thousands of farmers who will be affected by this reduction in relief. In my own county 673 farmers are within the £40 to £60 valuation range. These are the very people who are being hit hardest by the recession in agriculture. Many of them will be unable to meet their rate demands for 1980. I have before me a table of the rates they will be expected to pay because of the removal of this relief. The increases to be paid by those in the £40 to £60 bracket are enormous. A man with a valuation of £59 will have a rates increase of £389; a farmer with a PLV of £40 will pay an extra £300 rates. The actual rates to be paid will be considerably higher. A man with a valuation of £59 will have to pay a rates bill of £762 and a man with a valuation of £40 will have to pay £516 in rates.
The original intention of rates relief on agricultural land was to help struggling farmers, particularly those in the lower valuation bracket, but now all that has gone by the wayside. Not alone are they now liable for taxation, resource tax and levies, but they are being hit by the removal of rates relief on agricultural land. That could not have happened at a more inopportune time. I have never seen people experiencing such difficulties in paying their bills. In Ballsbridge today one will see that the people selling agricultural equipment——
The Deputy is making a Second Stage speech. I have given the Deputy every latitude but he may not make a Second Stage speeh.
With respect, I am entitled to——
The Deputy is not entitled to range over the whole farming issue on a Committee Stage debate on a section.
I am referring to the people in the £40 to £60 valuation bracket. Never have I seen such despondency, such inability to meet bills and but equipment and such despair for the future as at present. I do not know how anyone could introduce a Bill which would penalise the people in this category. In Dungarvan mart this week calves were being given away for nothing because of the depression in the cattle trade. The people in the calf trade and the trade for young cattle are mostly in the £40 to £60 valuation bracket. The collapse of the agricultural industry which is happening before our eyes is being accentuated by a depressive measure like this.
Deputy Fahey, Minister of State at the Department of the Environment told us last week that this Bill was to relieve farmers as regards payment of rates. I am saying it will have the opposite effect. This Bill penalises them. They are not getting something which was previously granted to them. To introduce this Bill this year is a retrograde step. The year 1979 was bad enough for agriculture when the figure was reduced from £75 to £60 but to reduce it further to £40 in 1980, a year of real depression, is the utmost folly.
With regard to this Bill——
We are not dealing with the Bill but with section in committee. That is all the Deputy can deal with.
I am more than thankful to the Leas-Cheann Comhairle for his guidance. This Bill is a grave mistake. The Minister is aware of the situation. This section provides for the continuation of primary and supplementary allowances for 1980, 1981 and 1982. Valuations have been reduced from £60 to £40. I ask the Minister to reconsider this matter because if this Bill is passed it will further damage the agricultural industry.
The Minister for Finance dealt with this matter in his budget speech. He pointed out that in 1979 farm incomes fell by about 4 per cent. That was an open admission by him. Other farming commentators said the drop could have been in the region of 10 per cent, 15 per cent or even as high as 20 per cent. This section will further aggravate losses already being suffered by farmers and if the Minister continues with it an already serious situation will be worsened. Is the Minister aware that if this section is retained, an even larger number of farmers will be involved? Is the Minister aware that the incomes of farmers in 1979 dropped by between 4 and 20 per cent? Sadly, it appears that that drop in income will occur in 1980. This is part and parcel of a method by the Government to bring in handy revenue. There is no difficulty about collecting such revenue, it is a mathematical proposition of multiplying out the method of bringing in the revenue. It is also very easy to collect such revenue.
The Minister is making a grave mistake. The farming community went through a bad year in 1979 but this section will affect them up to 1982 because the amount they will have to pay in rates will be substantially increased in coming years. This is part of a package designed to extract as much money as possible from the farming community in the handiest way possible. The Minister should withdraw it. A leading member of a farming organisation last weekend warned us that there would be a doubling of rates for farmers in this category. Is the Minister aware of the impact such an extraction of money from the farming community will have? We are all aware that some years ago if there was an increase of £1 in rates there would be widespread discontent in the farming community but this section means a doubling of rates paid by thousands of farmers. Under this all-embracing section those in possession of Land Commission holdings will be included. Extending the net to bring in additional taxation from farmers is unwise. We must bear in mind the changes that have taken place in recent years such as the 2 per cent levy, the resource tax and so on.
I will not permit Second Stage speeches now and the Deputy should deal specifically with the issue in this section.
This is a method to double the rates paid by farmers with valuations between £40 and £60. I am surprised that the Government are so insensitive not to recognise that this will lead to grave unrest in the farming community.
I should like to draw attention to the fact that there is not a single farming Member of the Fianna Fáil Parliamentary Party present for this debate, apart from the Leas-Cheann Comhairle who must be present.
There is only one farming Member present on the Opposition side.
There is not one farming representative or a representative from a rural constituency present on the Government side.
That does not arise.
They have absented themselves from this debate.
The Deputy is not the only Member who was born and reared on a farm.
We are dealing with section 1 and not with the presence or absence of Members.
The position may be conveyed to people living in urban areas that the withdrawal of reliefs in this case is the withdrawal of a relief that was being given to well-off farmers, those who can well afford to carry on without such a relief. It is important, therefore, that I should set the record straight as to the exact income position of those who are suffering a reduction of relief in this case. In doing so I will not be drawing attention to tendentious figures produced by the IFA or any other group that has the job of making a good case for the farming community. I will draw attention to figures prepared by the Agricultural Institute, a State-funded organisation recognised internationally as being scientifically dispassionate and not concerned with making a case for or against anybody.
The reality is that on average the people from whom reliefs are being withdrawn under the Bill, those with farm valuations of between £40 and £60, do not have increases of £8,000 or £20,000 per year. The average income of those with a valuation of £40 is £4,000 per year. The average income of people with valuations of £60 is £6,000 per annum. People on PAYE will realise that an income of £4,000 a year is not a large income; it does not put one in the category of being a rich rancher, or a rich farmer. Yet it is precisely those people in this income category who are having the reliefs made available to them under successive Governments withdrawn under this Bill. It is directly as a result of this Bill, and under no other budgetary measure, that I made the assertion, and make it again, that there are a very large number of farmers affected. The position is that the farmers so affected will be paying more tax, including rates and income tax, than their PAYE counterparts would pay on the same income. Therefore this Bill is introducing over-taxation of a certain sector of the farming community. I shall give figures to uphold this claim because it is a claim which most people, not familiar with the figures involved in this Bill, will find it very difficult to accept. Most people believe that the farmer is not paying his fair share and will not do so even as a result of this budget. I assert that the smaller farmers encompassed by this Bill will be paying not less than their fair share but more than their fair share.
The Deputy is now getting into a Second Stage speech.
I wish merely to draw the Minister's attention to some figures to illustrate what will be the impact of this section. Let us take a farmer with a valuation of £40, his average income on that valuation—based on farm management survey figures produced by the Agricultural Institute—would be £4,000. Assuming a rate in the £ of £11, which is about average, the total taxation he would pay on that income would be as follows: £484 in rates and £10 in income tax, making his total tax bill in the year 1980 £494. His PAYE counterpart with an income of £4,000, if married with two children—and this is the assumption in both cases—would be paying £245. In other words, as a result of this Bill, a farmer with a valuation of £40 will be paying more than twice the amount in tax, including rates and income tax, of his PAYE counterpart on an equivalent income.
The overall result of this Bill is that the burden will be borne much more heavily by the smaller than by the larger farmer. Let me cite the example of a farmer with a valuation of £100. His average income would be about £10,000. His total tax bill would be as follows—again assuming he is married with two children—£1,210 in rates, £350 in resource tax and £1,108 in income tax, making a total of £2,668. His PAYE counterpart—again married with two children and having an income of £10,000—would pay £2,243 in income tax. In other words, the farmer with a £100 valuation would be paying just about 19 per cent more than his PAYE counterpart, more but not that much more, whereas the farmer with a valuation of £40 with an income of £4,000 per year would be paying 102 per cent more, or more than twice as much as his PAYE counterpart. Even taking resource tax into account the gap between the farmer and the PAYE person on similar incomes, as a result of this Bill, will be far wider in the case of the smaller farmer. The smaller you go the larger will be the gap between what the farmer and the PAYE person pays. That is on the basis of income statistics published by the Agricultural Institute, not produced by me off the top of my head in order to prove a case. I believe that this is completely unjust. It should be borne in mind that the larger farmer probably will have an income against which he can set his income tax liability. Therefore he is not so badly affected. But the amount of income tax being paid by a small farmer with an income of, say, £4,000 or £5,000, with normal personal allowances, would be very low, because he does not have the income and will not be able to set off his rates payment against his liability. In other words, his rates payment will be far larger than the amount of income tax he would be paying under the normal code. Therefore, while the larger farmer will be enabled to avail of the concession under which rates can be set off against the payment of income tax—introduced as part of the Government's election manifesto of 1977—the smaller farmer affected by this Bill will be unable to avail of that concession, which compounds the situation for him.
The Chair must repeat that the Deputy is making a Second Stage speech that is not in order on Committee Stage. The Deputy must deal with matters in this section and nothing else.
We are concerned with——
The Deputy made all those points on Second Stage.
As a matter of fact I did not make any points on Second Stage.
That is no reason for doing so on Committee Stage.
I should point out that in my constituency of County Meath 1,425 farmers will be affected by the abolition of relief under this Bill. In fact it is the third most seriously affected county in the country—Cork and Limerick having a larger number of farmers in the category. Anyway, in County Meath 1,425 will be affected, or more than one-third of all the farmers in that county will, as a result of this Bill, have a doubling of their rates. That is a serious situation.
Obviously the removal of that concession will lead to a large increase in rates for the farmers concerned and this rate is based on valuations assessed in the middle of the last century by a gentleman named Griffith. Since then agricultural conditions have changed greatly but there has been no re-valuation of the land to take account of those changed conditions. Therefore it will be seen that the provisions of the Bill will operate very unjustly as between the different categories of farmers throughout the country. For instance, I am aware that there is one county where, on average, the incomes per head derived by the farmers are three times as large for each £ of valuation as they are in another county. Yet the rates are more or less the same, depending on the situation in a particular county. But a divergence of 3:1 in the actual income derived per £ of valuation is grossly inequitable. To increase a tax system resting on such an unjust base is to compound and aggravate an existing injustice.
I should like to ask what the Minister's policy is in relation to the valuation of land. Is he in favour of revaluing land? If there is to be an increase in rates, I would have thought that the farmer who has five children should get a larger relief against rates than a farmer who has no children. It seems completely unfair that a farmer with a large family will pay exactly the same rates as a farmer with no family at all and I would ask whether the Minister is prepared to introduce some form of personal allowance system to allow people, farmers or otherwise, who have large families to get some relief on rates to take account of the responsibilities they must meet from what they earn on the rated premises, as against people who have fewer responsibilities and for whom the increase in rates may be a minor issue.
(Cavan-Monaghan): The effect of section (1) of this Bill is to take away relief in respect of rates from all farmers with a valuation between £60 and £40. That relief has been enjoyed by these farmers since 1939. In fact, until the present Government assumed office all farmers enjoyed relief in respect of rates on agricultural land. In 1978 the present Government abolished that relief on all holdings having a valuation in excess of £75 and thereby saved £7 million in grants. In 1979 they abolished relief in respect of rates on agricultural holdings having valuations down to £60 and in that way they saved another £2 million, making a total saving of £9 million. I should like the Minister to tell us what saving will be effected by the further reduction of the qualifying valuation from £60 to £40 this year. I posed the same question on Second Stage but we were not given the information. There is a lack of confidence in the farming community and farmers do not know what the future holds for them. They are being attacked at home and abroad and it is deplorable that a further reduction in rates relief should be implemented.
The rating system has been acknowledged by all Governments as an inequitable and unfair system of taxation and we must bear that in mind when we are extending it fully to some thousands of farmers. The system takes no regard of the ability of the rated occupier to pay, whether he is a wealthy man or has only a small income. Secondly, the yardstick by which rates are collected is anticipated. As Deputy Bruton said, it is based on the Griffith valuation which commenced the valuation of land in 1850 and concluded in 1865. It is well known and accepted that it was antiquated and out of date before it was finished and that there is no relation at all between the earning capacity of the land and the valuation put on it. For example, one of the counties which I represent, County Monaghan, has one of the highest valuations in Ireland, equal to or higher than that of County Meath. The explanation given is that flax was grown in Monaghan about 1860 and the land was regarded as very suitable for the production of this crop. As we know, flax has not been produced in this country since the last war. That is an absurd system of taxation imposed on the agricultural community which is now being extended.
Why are the Government proceeding to extend rates on agricultural land at a time when they have set up a commission to inquire into agricultural taxation? Why not await the report of that commission? Before they have an opportunity of producing a report, the Government introduced this Bill to bring thousands more farmers into the full rating system.
Progress reported; Committee to sit again.
Business suspended at 1.30 p.m. and resumed at 2.30 p.m.