Deputy Matty Brennan is in possession.
Farm Tax Bill, 1985: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time."
As there are many speakers offering, I do not wish to delay the House. Having listened to the previous speakers who criticised the farmers for not paying tax—Deputies like Deputies Prendergast, Mitchell and Mac Giolla——
And Deputy O'Kennedy.
——one wonders if the farmers ever paid tax. I speak here for the small, rural farmers in the West of Ireland and, in particular, for the hill farmers who have many thousands of acres of mountain farms. I wonder how many acres of mountain land will be needed to represent an adjusted acre? When one is talking about the mountains in Counties Sligo and Leitrim, it would take many such acres to compare with one prime acre of Irish land. I represent the hill farmers and it is they about whom I am really concerned. I would like to tell their critics how many hours a week such farmers work. Farming is a family job and these farmers work between 90 and 100 hours a week. Anybody working that kind of hours is making a good job of it.
I am particularly concerned about those who have reclaimed land. How will their acreage be adjusted? Many reclaimed land which ten years ago was of poor quality but today those farmers, who got grants under the farm modernisation scheme, have land which might look good but certainly will need to be maintained periodically. That is why I am speaking on this debate.
How long will it take the Commissioner and his staff to classify the land of Ireland? It will take at least ten years before this farm tax can be implemented. As some speaker said, if we are to take roads and boreens, ditches and laneways into account, it will take a very long time, indeed, before the adjusted acres are classified. I can see no farmer paying tax on that basis for at least ten years.
I am disappointed that this Bill is before the House, because the best way for farmers to pay tax is as they have done in previous years, and that is what should be done. Farmers with over 80 acres will have to pay two taxes, on an account system and an adjusted acre system. Why single them out?
I want to welcome this Bill. There is absolutely no doubt in the minds of any persons outside the agricultural or farming sector that there is greater need for tax equity to ensure that the agricultural sector make a reasonable and equitable contribution towards meeting the national expenditure and adding their fair share to the tax collected. We have heard much in recent years about the need for tax equity. Everyone, including the farming community apparently, believes in that provided it does not mean they should have to contribute additional money in taxation.
I represent a constituency in which the majority of the people are PAYE workers. They regard themselves as overtaxed and, rightly or wrongly, they hold the view that the farming community are not making a reasonable contribution towards the expenditure of the State and are certainly not making a reasonable tax contribution. That is a feeling held not only by PAYE workers but by many self-employed people who run small businesses. In the throes of what is a deep economic recession they find themselves faced with tax obligations which many of them have to struggle to meet. They met those obligations but they see the farming community cocking a snook at people in other sections of the community and apparently adopting the attitude that they should not make any reasonable contribution towards the tax take.
Members on all sides of this House would like to see a reduction in the levels of taxation. All of us hold that aspiration. The difficulty that exists is in meeting the daily expenditure of running a country, a country that is spending a great deal more per capita than it takes by way of taxation on all fronts, not only by way of income tax but also VAT and other taxes. Taxation is a necessary, if unpopular, means of running a country and every section has a moral obligation to make a contribution. No group should abdicate that obligation on the one hand while, on the other hand, holding its hand out, roaring whenever a grant is abolished or changed. It should not hold out the begging bowl to Brussels while being unwilling to make a realistic financial contribution towards the running of the State.
Much has been said about the money collected by way of taxation and there are many myths about the amounts. Interesting figures are available which illustrate clearly that not merely have the farming community not made an equitable proportionate contribution towards the financial running of the State but that the tax paid by that sector has reduced at a dramatic rate and this at a time when all other sections have had increased income tax bills. I will give some figures relating to the PAYE sector in respect of their contribution by way of income tax. These tell their own story. In 1978 the PAYE sector paid by way of income tax the sum of £524 million; in 1979 the figure was £648 million; in 1980 it was £878 million; in 1981 it was £1,093 million; in 1982 it was £1,269 million; in 1983 it was £1,423 million and in 1984 the figure was £1,682 million. That figure needs repeating.
During that period self-employed people, excluding farmers, found that their contributions by way of income tax had increased proportionately due to the financial circumstances of the nation. As a sector in its entirety, the self-employed group is maligned. It is popular on the political hustings to condemn totally everyone in self-employment and presume that they are not making a reasonable contribution towards the tax take. Often we forget the many people employed in this sector and the fact that we rely on them to create new jobs. The figures in respect of self-employed persons, excluding farmers, were as follows: in 1978 income tax receipts were £50 million; in 1979 the figure was £42 million — there was a decrease here I do not understand; in 1980 the figure was £72 million; in 1981 it was £86 million; in 1982 it was £106 million; in 1983 it was £133 million and in 1984 it was £152 million. These figures show there was a clear increase in tax from PAYE workers and the self-employed.
What about the farming community? At a time when this State is deeply in debt, when each of us is faced with paying increased income tax necessitated by the level of indebtedness, what have the farming community done towards easing the burden on the State? What has the tax system done towards giving some degree of equity in the tax contributions from farmers and those received from the rest of the community? Again, the figures tell their own story. In 1978 the farming community contributed £36 million by way of total tax receipts; in 1979 the figure was £49 million; in 1980 it was £60.4 million. What did they contribute in 1984?. A sum of £35 million, £25 million less than was contributed in 1980. There has been an absolute reduction to the tune of £25 million at a time when every other sector of the community has had to make a higher contribution than they made in preceding years. I do not think anyone can suggest that that is indicative of an attitude or approach on the part of the farming community that they are willing to participate in this State to the extent of recognising the obligations of participation as well as the benefits of participation.
The farming community cannot simply regard the taxpayers of Ireland as always being there to assist in the provision of grants and services and to keep the State running while their major function within this country is to receive grants from Brussels and grants domestically through whatever Government are in power. There must be both the rights of being a party to this State and the obligations attached to it, and I do not believe that any person who finds himself within the PAYE net at present would regard as acceptable the current level of taxation contributed by the farming community.
I find extraordinary the comments of the Leader of the Opposition before the election. He is against tax of all descriptions. He is going to ease income tax, repeal farm tax, presumably change capital gains tax and relieve all of us of a massive tax burden while spending something in the region of £500 million on State services. This is a magical conjuring trick. He may have convinced himself he can perform this trick but I have grave doubts as to whether ultimately, when the financial implications of some of the things said by the Leader of the Opposition are examined seriously away from the brouhaha of the election atmosphere, any of what he said can be treated as a serious financial policy for this State. In ten days prior to the local elections he said, effectively, that, as far as he is concerned, the farming community was paying sufficient, and probably paying too much tax. We had the ultimate electoral charade being acted out in the days preceding 20 June with the urban members of the Opposition party knocking on doors and telling people, "If you elect us we will reduce the PAYE burden" and we had all the rural Deputies running around like hares on a spit telling the farming community, "In no circumstances will we permit a farm tax and if this Government introduce the legislation we will repeal it". That was the ultimate form of political cynicism and political dishonesty that I have seen in any election campaign. It would be a tragedy if the people of this country in the context of a general election fell for that sort of nonsense. The figures clearly give the lie to that sort of approach — £35 million contributed in total tax receipts by the farming community in 1984 when, in 1980, £60 million was contributed and when the self-employed in all other sectors and the PAYE sector were paying a greatly increased sum by way of tax.
There is little doubt there is a need for a form of taxation to ensure that the farming community makes an adequate and equitable contribution to the Exchequer. The need for tax reform in the area of farmer taxation is something that has been debated over the years. There has been a variety of different comments about the need to ensure that the farming community makes a reasonable contribution towards the tax take. There have been for many years complaints from the farming community about the type of tax system to which they found themselves subjected. We all know what the objections were to the system based on rateable valuation, which was found to be unconstitutional in our courts. That system operated in tandem with the accounts system which we have at present. Since the rateable valuation system has gone we have in this House received many representations from the farming community to the effect that the accounts system should be changed. We have heard a great deal about the need to provide an alternative type of system.
Joe Rea, the President of the IFA, made an interesting contribution to the debate as far back as 12 May 1979, when he was interviewed by The Irish Farmers Journal. It seems to be an interview that Mr. Rea has forgotten about in the heat of the public debate that has been taking place in recent weeks. He has been suffering from a form of political amnesia that does not do him credit and indeed, I would suggest, casts great doubts on the credibility of much of what he has been saying. We all recognise that Mr. Rea has to fight his corner as representing a sectional interest, but it is a curious corner he is fighting and it is a curious way he is fighting it when one looks at some of the comments that were made by him in that article. He was asked.
How can you ensure that a tax code will give the Government the yield they are looking for, while at the same time providing an incentive to farmers to develop their enterprises?
The yield, of course, being the yield of taxation which Mr. Rea at that time considered the Government would regard as equitable to be contributed by farmers. Incidentally, the yield he talked about in this article and seemed to accept was a sum of £100 million. In reply to that he said:
I consider that the system of a flat rate tax which I am proposing is an ideal form of taxation because it rewards the farmer who works. Agriculture is the oil of this country and it is in everybody's interest to have a prosperous agriculture.
He then goes on to talk about the simple flat rate formula he was proposing and says:
All I am saying is let us have tax — a flat rate of tax on an adjusted acreage basis. From the point of view of equity we do not want to bring people who obviously do not have a taxable income into the tax net.
He goes on to say that effectively a flat rate tax based on a concept of adjusted acres was the type of tax that he regarded as equitable, the type of tax that he thought should be supported, the type of tax that in 1979 Mr. Rea was proposing. Further on in the article he is asked whether he sees this tax as an interim solution leading to discussions on more comprehensive tax measures and Mr. Rea gives the historical comment that he did not see it as an interim solution at all, that he would see this as the final solution to the problem. He said:
I would see this as the final solution for the problem. I think it would give Irish farmers a unique opportunity in the whole European context in that they would have a better taxation base to enable them to compete on EEC markets with their competitors.
He goes on to say:
We would all love to have a taxation system under which none of us had to pay anything but it is quite obvious that this is not acceptable. So either we devise a system that gives the Government a sum which they consider to be a "yield in line" or what will happen — as it has already happened — is that they will devise a system which will hammer the industry.
Mr. Rea in 1979 acknowledged that it was not acceptable for the farming community to pay no tax or little or no tax.
He goes on to say that his system would give a farmer security in the sense that he would know what his tax bill would be and that it would "take the whole antagonism out of the tax debate as farmers would be seen to be contributing their fair share of tax". He goes on in the same article to say that we are an interdependent community and:
We want to remove the divisive force of tax from the area of national debate on development. I think that the majority of farmers will support my proposals when they are fully explained to them. Most farmers simply want to farm, not to be messing with accounts.
Mr. Rea was advocating a flat rate tax system based on the adjusted acre and explained all the reasons why the farming community did not want a system based on accounts. This measure will provide a flat rate system of the kind Mr. Rea specifically proposed for farmers with between 20 and 80 adjusted acres. Farmers with over 80 adjusted acres will be entitled to deduct the amount of money they would pay under this tax from any income tax liability over and above that.
I am speaking from a point of view which has no sympathy with farmers who have to do accounts and pay for the expense of so doing. Mr. Rea regards the type of system provided here as superior. This provision for farmers with between 20 and 80 adjusted acres will obviate the necessity to do accounts and to incur expenditure to pay accountants to certify accounts. Will the farming community not "cop on" to itself and realise that it is the only community that does not have to prepare accounts? A small businessman running a sweet shop on his own in a poor section of Dublin must keep accounts and pay an accountant to certify them. This is a normal business expense no matter whether one is a small shopkeeper or a multinational company. Keeping accounts is a means of ascertaining what expenses and income one has and what proportion of one's income is liable to tax.
This legislation extends a privilege to farmers with between 20 and 80 adjusted acres which many a small businessman would be delighted to have. I do not understand it. The brouhaha is not about the type of system but, to take Mr. Rea's words, many people — farmers in the context of this debate — would much prefer not to pay tax at all. We would all prefer not to pay tax but the problem is the State would cease to function. The Members of the Opposition are as aware of that as I am, though they would pretend this is not the case. Much of the hysteria surrounding the publication of this legislation is from the farming community whose contribution to Exchequer returns fell dramatically between 1980 and 1984. This is due to the fact that they would prefer not to have to make an equitable contribution towards the Exchequer. That is something which the House cannot support.
It is curious that the Opposition would oppose this Bill knowing that it would result in some degree of equity in the taxation system and would take a small portion of the burden imposed by tax on the PAYE sector off their backs. Apparently Fianna Fáil want to ensure that the PAYE worker is required to continue to pay tax at the current rate and want to increase the level of taxation they must pay in the future while providing the farming community with a protective mechanism and statutory exemption from making a contribution to the Exchequer on an equitable basis.
I hope the Bill will result in a greater degree of equity in the tax system. Like everyone else, I recognise the importance of the agricultural sector to the community. I recognise that a prosperous agricultural sector is essential for our prosperity and that farming efficiency is essential for the prosperity of agriculture. To that extent this Bill provides incentives to farmers who do not properly utilise their land to do so. I bear no ill-will towards farmers. I would not like my remarks today to be misread as suggesting any inbuilt antagonism. I am making the point that every other sector is making a contribution to the tax net of a nature distinctly different to the farming community. At a time of economic difficulty the farmers' contribution has dropped to a degree which is not acceptable to other workers.
I deeply regret that the debate on this Bill has developed the tone that it has as a result of Mr. Rea's contribution as opposed to the more responsible approach taken by the Irish Creamery Milk Suppliers Association and their involvement in constructive debate and discussion as opposed to hysterical public comment. I hope the Bill works and will not be perceived by any farmer as a form of threat. I deeply regret that, before the measure was debated and before we had scrutinised its contents, the Leader of the Opposition saw fit to announce that he would repeal it if enacted. That is creating an environment which suggests that, if people do not pay on foot of the Bill when it is enacted, on their return to office Fianna Fáil will have some form of amnesty in relation to any payments which may have been due from the time of the passage of the Bill until their return. When the majority of the electorate clue in to what Fianna Fáil are at, their return to office will be less likely than some Members opposite may think at present.
They gave their answer a few weeks ago in the local elections.
I hope we will have a responsible Committee Stage and that when enacted the Bill will achieve the result outlined by the Minister and will be seen by all sections in the community, including the farming community, as an equitable measure.
The only point with which I could express any level of agreement in any of the public comment which has been made is that I am somewhat concerned with the definition of an adjusted acre and how that is determined. I am looking at this as a lawyer and see great difficulties. It is a complex concept, as defined in section 2 of the Bill. I have no doubt it will be teased out on Committee Stage. For this legislation to work that is a concept which must be understandable and about which there must be no ambiguity. It is well explained in the explanatory memorandum which accompanied the Bill, but when one gets down to the nitty gritty of the concept one wonders what some of it means. On Committee Stage we may have to tease out that section to some extent in order to ensure that, on the enactment of this legislation, it does not provide a definition that is so amorphous as to render it impossible to make any sense of it or to apply it in practice. That is an area we must consider carefully.
I welcome the Bill in principle and I trust the Opposition will adopt a more responsible approach to it. If they are to continue on the line of simply pretending that the farming community are currently making an equitable contribution to the tax net, they should come clean on two matters during this debate. They should tell the farmers whether, Fianna Fáil in the event of their being returned to office and repealing the legislation, would envisage the income tax position remaining exactly as it is, or whether they would produce an alternative type of tax that would apply to the agricultural sector, a similar system but described differently. If, say, Fianna Fáil are returned to office within three to six years, will they enforce the provisions of the legislation or, if not, what line will be taken in regard to arrears that will have accrued?
The Deputy should be concerned only about his own party.
Is it the intention of the Opposition to create some kind of taxation anarchy whereby they give a wink and a nod in the form of saying to the farmers that even if the legislation is passed, they will not have to pay because in the event of Fianna Fáil being returned to office, there will be an amnesty? People in the PAYE category are very interested in hearing Fianna Fáil's replies to these questions. If Fianna Fáil take the view that this legislation is not appropriate, what kind of legislation would they consider appropriate to ensure an equitable contribution from the farmers towards tax receipts?
Is there any equity in asking people for something they have not got? The Deputy will find the answer to that question if he talks to people in the country.
Order, please.
It is easy for a party in Opposition to oppose and to appear to be all things to all men at different times. The Leader of the Opposition has now achieved the unique feat of appearing to be different things to different men at the same time, depending on whether he is talking to people who live in rural or in urban areas.
Another personal attack. The Deputy should concentrate on the job he is supposed to be doing.
We are arriving at the truth when Fianna Fáil Deputies start abusing us.
Deputy Byrne will have an opportunity later to make his contribution.
No member of the Opposition has yet outlined what alternative system they would devise should they be returned to office. They know, as every member of the House knows, that there must be some reasonable contribution by way of tax from every sector of the economy. As the debate continues, we will find people both within the House and outside having a great deal less credibility regarding the two pronged approach of Fianna Fáil, an approach which gives a wink and a nod to people in urban areas to indicate that in the event of Fianna Fáil being returned to office people in the PAYE category would have to pay less while, at the same time, telling farmers that they will not be required to pay any tax. The people opposite cannot have it both ways. They tried to have it both ways during the local elections and they may have fooled a few people, but this debate should bring them all out into the open.
The Deputy should mind his seat.
He is on his way.
The Chair expects Deputies to extend to other Members the courtesy of listening to them but anybody who does not wish to listen to another Member's contribution should leave the House.
(Limerick West:) In the light of the waffle we have had from Deputy Shatter in the past half hour, I could not find someone better than he should I seek someone to assist me in opposing this Bill. The Bill offers no assistance to those people about whom Deputy Shatter is so concerned — the PAYE sector. Indeed, the purpose of this Bill is the reverse, as I will illustrate during my contribution. The Deputy must have a very short memory because only two weeks ago his party, not only in rural Ireland but in Dublin city, were shattered at the local elections. Urban and rural people have abandoned both Labour and Fine Gael.
Fianna Fáil have spoken fairly and positively on their approach to this type of legislation. I agree with Deputy Shatter on the question of what is an adjusted acre and I shall refer to that later. When the Bill was published on June 7, I refused to comment publicly on it. The attitude of my party was already well known. It was stated publicly on many occasions since the Bill was first mentioned in Building on Reality. Building on unreality would be a more appropriate title. I found no reason to add to the statements made by us at that time, particularly in view of the proximity of the local authority elections because we did not wish the legislation to be debated in a city versus country context, the very approach that Deputy Shatter has adopted this evening. That approach will only create a further rift between city and rural people.
Fianna Fáil were telling people in rural areas the opposite.
(Limerick West:) I did not interrupt the Deputy so perhaps he will extend me the courtesy of listening to what I have to say. Apparently the Government had none of the kinds of reservations outlined by Deputy Shatter though, judging from the contributions of Government members so far, they encourage that approach. The timing of the Government's announcement seems to be a callous and cynical effort to create an impression among urban people that the Government are doing something about taxing the farmers. That ploy has backfired on them. Candidates representing both Government parties, but particularly Labour, were widely defeated not only in rural areas but in the cities. The question of the taxation of farmers is an emotive one especially in urban areas where the bulk of the country's PRSI taxpayers live. It suits some elements in society to fan these emotions from time to time. Among these I would include The Workers' Party, Labour Party Ministers, the trade unions and not least the Dublin dominated Labour-Fine Gael Cabinet.
And Fianna Fáil.
(Limerick West:) Time and again we hear calls for farmers to pay their fair share of tax, as if the farming community were engaged in a conspiracy to avoid their income tax liabilities. Of course, such calls are understandable in view of the huge tax burden borne by PAYE workers but do not take into account the real situation in farming today. The fact of the matter is that most Irish farmers earn far less than those on wages or in salaried employment and those who do pay their taxes.
Every year, since the taxation of farmers on the basis of annual accounts became law, the yield from the farming sector has increased. This year and next year, as more and more farmers are brought into the tax net, the yield will increase even further. Most experts agree with Professor Brendan Walsh in his assessment that the present income tax system, if still in force in 1986, will yield approximately £60 million. Why then do this Government insist on replacing that system with a land tax that is patently inequitable and is expected to yield no more than the figure I have just mentioned? Why introduce a retrograde tax, one that has no regard for enterprise, quotas, personal circumstances, ability to pay, for young farmers and for the state of development of our farms nationwide? If a similar system were applied to the urban population there would be a revolution. It is no surprise that farmers are up in arms about this land tax. I repeat, it is not their fear of being taxed. Their resentment is because this tax is not operable, is inequitable and unjust. That is why our farmers and the farming organisations are opposed to it.
Let me give the House some figures which will display the inequity of the proposed tax. For instance, a farmer in dairying on 70 adjusted acres, let us say, earning £185 per adjusted acre will be in receipt of a total income of £13,000. Let us suppose this farmer is married with three children and has no borrowings. Under the proposed land tax his liability would be £700. Yet, under the present income tax code, he would be liable to pay £3,115. To put that into perpective, the tax liability of a PAYE taxpayer earning £13,000, also married with three children, would be £2,805. Where is the tax equity in that about which Deputy Shatter speaks?
What is the complaint then?
(Limerick West:) The complaint is that it is an unjust tax, it is unworkable, that farmers are not afraid of being taxed but rather want to be taxed on their incomes. If some farmers are evading tax that is a matter for the Revenue Commissioners.
Then Deputy Noonan is suggesting just the accounts system.
We should not have interruptions. This is a confined debate.
(Limerick West:) I might give another example: a farmer with 70 adjusted acres, with an income of £13,000, married with five children and with borrowings of upwards of £50,000, will be liable to land tax at a figure of £700 whereas his liability under the existing income tax code would be £420. Where is the equity in that?
There is many a person in the PAYE sector who would love to have borrowings of £50,000.
(Limerick West:) A single farmer, without borrowing, earning £13,000, like his married conterpart, would be liable to £700 land tax but under the existing income tax code, he would be liable to £4,667. Where is the equity in that? I am talking about equity as between one farmer and another, whereas previously I spoke about equity as between farmers and other sections of the community. I could continue to list obvious examples that would demonstrate the inequity of the land tax but my point has been proven.
Anyway I doubt that equity was the aim of the Government in drafting this Bill. It is obvious that the land tax is an exercise in yield-targeting in preference to any attempt at achieving tax equity and yield-targetting is a dangerous and undesirable precedent to create. The ability to pay principle plays second fiddle to the objective of securing an overall revenue target.
The Government's economic advisers, the National Economic and Social Council in their report entitled "Economic and Social Policy Assessment" of January 1985 had this to say at paragraph 3.44 under the heading of Farm Taxation:
It is the Council's view that the adaption of yield targetting would be a unsatisfactory basis for designing tax arrangements and could set an undesirable precedent.
In the same report the NESC says that the existing system gives rise to practical problems in terms of administration, collection and of compliance by taxpayers, but argues that the Government should have sought to resolve these problems by identifying farmers' incomes within the income tax code. We and our party leader have said time and again: let us put resources into the deployment of the existing Revenue Commissioners and if there are farmers who are dodging income tax, let the Revenue Commissioners get after them. We advocated that a tax system such as is now proposed should not be implemented.
While criticising the Government for failing to make comparisons between the yield from the new land tax and the amount the present taxation system would yield in 1986 the NESC, in that same report, confirm their previously stated view that farming profits should be taxed on the basis of actual accounts based on the ability to pay principle. The NESC see the new tax as a hiccup in the system at a time when arrangements governing the taxation of farming profits have been moving toward a situation of greater equity within farming and the community as a whole. There is no need for me to add anything to that NESC Report. Their comments speak for themselves. Instead let me turn to the concept of an adjusted acre and to the question of the assessment of farms. I am sorry that Deputy Shatter has left the House because I could have given him a few lessons on adjusted acreage.
The Commission on Taxation believe that it would take up to 15 years to complete a proper soil survey on which to base valuations. The Taoiseach, Deputy FitzGerald, in The Irish Times of 12 June 1968 had the following to say:
This study of a microcosm of Irish agricultural land makes it quite clear that this 155-year old valuation.
—referring to the Griffith PLV —
...is completely unsuitable as a basis for taxation today, and that if rates on agricultural land are to be maintained, it would be necessary to organise a review of valuations around the country, based on a programme of preparation of soil maps and crop productivity, which is not in fact being undertaken at present.
What does the Deputy find wrong with that statement?
(Limerick West:) As no doubt the Taoiseach is aware, rates on agricultural land were found to be unconstitutional by Mr. Justice Donal Barrington. Yet the Taoiseach now persists in bringing forward a land tax Bill, which he refers to as a Farm Tax Bill, but which to all intents and purposes is merely the imposition of agricultural rates under a new guise. Will this tax not be found to be unconstitutional also? There is simply no way that the 100 redeployed Land Commission staff and, indeed, the other 100 land tax adjustors recruited for the purpose, could adequately survey every farm of 20 acres or more. On my calculations — by reference to the agricultural statistics compiled by An Foras Talúntais — approximately 154,000 farms will have to be visited, surveyed and assessed. That works out at 770 farms for each one of those unfortunate adjustors. Even if they were to work night an day for the next two years, they would not manage to fulfil that task. In the meantime, if this Government have their way, the Farm Tax Bill will be in operation by 1986.
As Des Maguire pointed out in his "Farm Talk" column in the Sunday World of 16 June 1985:
It will be perfectly in order, if this Bill goes through in its present form, for some faceless civil servant in Dublin to classify and levy tax on a farm in Belmullet or Limerick without ever walking the lands in question and assessing their productive capacity. So much for equity, fairness and balance — This is tax by remote control.
Imagine the outcry there would be if Government decreed that every employee in a manufacturing industry from the managing director down to the humble yard sweeper should pay a single level of tax on the basis of hours worked, irrespective of their earnings. That is why the farming community is up in arms about the land tax. It is a blunt instrument that hits everyone with equal ferocity, without regard to their ability to protect themselves.
Getting back to adjusted acreage, there is no scientific basis for deciding what constitutes the value or production capacity of land. The Minister did not outline this in his opening address and I doubt if he would be able to outline it in his closing address. Yet the Government are sending 200 unfortunate adjustors literally into the field to make such a decision. It will be purely their personal opinion that will decide the level of adjustments. The appeals system will undoubtedly be snowed under with cases. The courts are also likely to be busy with this incredible legislation.
Let us examine the history of this Bill and some of the fallacies upon which it is founded. The Land Tax Bill was formally announced by this Government in a book entitled Building on Reality at the end of 1984. That book might have been more aptly titled “The Pipe Dreamers HandBook”.
Chapter 2 of Building on Reality, page 31 tells us that
The central economic and social priority in the period of the plan is to tackle the unemployment crisis. Economic policies have been framed with the objective of securing the maximum growth in employment during the period to 1987..."
Looking at page 26 of the same book, one sees that in 1984 the number employed in agriculture is given as 186,000. At the end of the period of the plan, 1987 one will note that "employment growth" in agriculture will leave 177,000 employed in agriculture. This means a cut in employment of 9,000 persons.
It should also be pointed out that in 1971, the year prior to our EC entry, there were 273,000 persons employed in the agricultural sector. The source of that statistic is the AFT Dairy Herd Management, 1978, page 5. There were only 65,000 persons unemployed in 1971. In the first ten years of EC membership 71,000 full time farmers have abandoned agriculture. They did not do this because agriculture was profitable, but on the contrary. They were economically forced out. This process is still continuing, and will continue, as is acknowledged in the plan.
Do this Government expect the ordinary man in the street to believe that 9,000 full time farmers will stop farming over the next three years because farming is profitable? The stark truth is that relatively few farming enterprises are profitable and the Government's own statisticians, so beloved and oft quoted by the Taoiseach, continually endorse this fact. It is high time that the facts about agricultural incomes were given to the citizens of this State. It is also high time that the primary sources of misleading statistics regarding farming incomes were identified.
The Central Statistics Office publish annually a figure which represents "Income from Self Employment and Other Trading Incomes" in agriculture. In 1983 the CSO say that this amounted to £1,079 million. From this total national agricultural income, deductions for building depreciation and interest payments must be made. This would then leave something in the region of £700 million to £750 million for distribution between about 190,000 full time farmers and in the region of 50,000 part time farmers. Remember, part time farmers are being taxed via PAYE in their principal employment with their farming profits included. It can be safely assumed that at least ten per cent and maybe as much as fifteen per cent of the total agricultural income goes to the part-time farmers.
This would indicate that the average full time farmer in 1983 had an income of less than £3,500. In the same year, the average industrial wage was approximately £7,100, while the average public servant earned £10,600.
Even though our CSO compiled income data for all sectors of the economy, they never published an average full time farmer income value (in figures). They did not however restrict themselves from reporting in 1983 that farmers income rose by 14 per cent. Similarly in 1982 they reported a rise of 22.8 per cent and in 1981 a rise of 14.4 per cent. It is little wonder the ordinary citizen felt that farmers were doing just fine.
The other primary source of agricultural statistics is An Foras Talúntais but for some reason the CSO and AFT statistics for the same subjects show up glaring differences. In some cases this can be put down to selective use of certain data relating to basic farming input costs. For example, on Table 65 of the Farm Management Survey, AFT shows that the average full time only dairying farmer, farming 73.4 acres or 65.4 acres adjusted, would only require £1,097 to cover the farm portion of the cost of his car plus electricity and telephone. The Minister for Agriculture however, in answer to my Dáil question on 11 June last said that in 1983 members of his Departmental staff using their own motor on State business for say 4,000 miles received £1,972. One or other figure must be wrong.
A further example of questionable statistical accounting arises if one examines the depreciation charges given by the institute. On Table 63 of the AFT survey, the average machinery depreciation charge to the average 53.3 acre farm is £434. This works out at £8.14 per acre. However, the CSO data estimates the average depreciation charge to lie in the region of £20 per acre.
Thirdly, on the question of interest charges on farmers the banks say the average charge is £20 per acre whereas the institute say it is £9.40 per acre.
Fourthly, the institute state that a female can aspire to being only two-thirds of a labour unit at maturity. This obviously exaggerates the income per labour unit on farms. I tell the Minister that that is true.
I would not say that they are too lively at the moment.
(Limerick West): I am not saying it. I am just quoting from the survey.
Who introduced those acres the Deputy mentioned?
(Limerick West): AFT. The institute's average full time farmer income would, as a consequence of the above, lie in the region of £5,770 or £6,490, more than the CSO derived value of £3,500.
The anomalies in farm income values published by the AFT and the CSO have been the main cause of urban (PAYE) dissatisfaction with the income tax take from farmers over the last ten years. The lack of credibility in the official statistics could not have been ignored by the Department of Finance, when they found out in 1982, 1983 and 1984 that the tax yield expected did not materialise.
By mid-1984 it was abundantly clear that farm incomes had been seriously overestimated. By 1984 over 44,000 farms were on the Revenue Commissioners' files. These larger farms represented approximately half the farmed area in the State or 5.5 million acres based on the 1975 CSO census. It would also have been clear to the Revenue Commissioners that the tax yield per acre for 1983-84 would lie in the region of under £6.
The Minister for Finance obviously decided that it would be futile to proceed with the accounts system for the remaining smaller 90,000 farms. The stage of diminishing returns had been reached. A new approach was needed, and so we have the new Farm Tax Bill. Farmers' incomes were irrelevant; the Exchequer's tax appetite was all-important.
It is pertinent to remind the House of replies given by the Minister for Finance to several questions put to him by me on 11 June last as in the Official Report Volume 359.
Question No. 73 was:
To ask the Minister for Finance the estimated average income of the full time farmers among the 44,194 in the income tax net on accounts in 1983-84.
and No. 74 was:
To ask the Minister for Finance the actual average income found on accounts for the full time farmers among the 44,194 in the income tax net on accounts in 1983-84.
The Minister replied, taking both questions together, as follows at column 1004:
Mr. Dukes: Statistics are not available which would enable the information requested by the Deputy to be given...
In reply to Question No. 77 on the same date, 11 June, when asked to compare AFT and CSO data with that of the Department of Finance, the Minister stated at column 1006:
The Revenue Commissioners do not compile data on actual farm incomes. It is not possible, therefore, to draw meaningful comparisons between income assessed by the Revenue Commissioners in the course of tax collection and income data compiled by An Foras Talúntais and the CSO for other purposes.
On the same day Deputy Dukes in reply to Question No. 80 asking the number of full time farmers on accounts who had no taxable income for 1983-84 stated at column 1006:
The information requested is not available. As revenue records do not distinguish between liable and nonliable cases it is not possible to indicate how many full time farmers had no taxable incomes without examining each individual case assessed. Such an examination, which would involve more than 36,000 cases, could not be carried out without the expenditure of undue time and resources.
That was the official answer, yet the same Minister on 16 May last told a large group of farmers at the Red House in County Kildare that 12,000 of those same 36,000 farmers had no taxable income. When I asked him for the information in the Dáil he said the figures were not available. Where is he going?
Two other questions, Nos. 78 and 79, were answered by the Minister for Finance on 11 June. Question No. 78 asked for the "total acreage farmed by full time farmers on accounts in 1983-84" and Question No. 79 asked "the income per acre and the income tax yield per acre in 1983-84 of those full time farmers on accounts". Taking questions Nos. 78 and 79 together, the Minister replied at column 1006:
Income tax on farming profits has never been assessed by reference to the acreage of the land farmed. Accordingly it is not possible to provide the information sought.
If we summarise the answers given by the Minister, Deputy Dukes, on 11 June last, we have the following information: (a) the Department of Finance have no idea of the income per acre on Irish farms; (b) the Revenue Commissioners have not compiled data on farm incomes; and (c) the CSO and AFT do collect farmer income data, but this data is collected for purposes other than ascertaining actual farm incomes.
Notwithstanding the admitted incompleteness of their knowledge, this Government on page 123, Section 6.16 of Building on Reality propose a new method of taxing farm incomes based on a new concept — the adjusted acre. This the Government state will take equity into account. Equity will be achieved according to the plan at £10 per adjusted acre in 1986. Is it really necessary to point out the absolute stupidity of this proposal as a move towards tax equity?
The Taoiseach, Deputy FitzGerald, indicated some days after the plan was published that the land tax proposed would free farmers from the trouble and expense of keeping accounts and paying accountants. He advised that they, the farmers, should accept the proposals. He was saying to farmers, "You pay this £10 per acre and you will be left alone to get on with your business". In the US an organisation called the Mafia have another name for this kind of payment; it is called protection money.
There is a written Constitution in this State, which prohibits such bizarre concepts as are outlined in this Bill. The proposed land tax is alleged to be an income tax but income tax is a tax on income. Farm income can only be calculated mathematically using accounts for past events. This Bill is proposing that income can be prophesised in an equitable manner for 180,000 people and their families. It is an insult to the intelligence of fair-minded people. The Government seem intent to engage in a bout of asset stripping of farmers for short term political gain, even at the risk of jeopardising the nation's best prospects of working its way out of the recession. This is not good government but a recipe for disaster.
Paul Tansey, the economic correspondent of The Sunday Tribune, in his “Money Matters” column on 7 April last said the land tax proposal was nothing more than a Coalition solution to a Coalition problem. It was not so much a tax, he said, it was more a way of cementing the two Government parties together for a further three years. That is what it is. He went on to say:
the Labour Party, who like to tax farmers and the wealthy in principle, were satisfied that a farm tax — any farm tax — had been included in the national plan.
So this Bill is another sop to Labour to prop up this unpopular Government. The irony is that what is proposed is not a farm tax but a land tax, a revival of agricultural rates. It is not an income tax but a resource tax. No self-respecting Labour socialist could justify such a tax without hiding behind the monetarist cloak of Fine Gael. As the local elections showed, that is a very transparent cloak.
(Interruptions.)
(Limerick West:) I say to Labour Deputies that this is the time to declare their party's independence. It might suit the Tánaiste to hold on as long as possible to the trappings of power for he knows that Fine Gael are cultivating Senator Jim Deenihan to take his seat at the next election. As the current issue of Magill clearly shows, every Labour seat is under threat if they continue to support this immensely unpopular and grossly incompetent Government.
Except mine.
(Limerick West:) I said earlier that this was not a farm tax but a land tax. I am glad to note that the Minister for Agriculture, Deputy Deasy, shares my view on this. He made clear his objections to the proposed tax by refusing to allow his Department or his officials to be involved in the preparation or implementation of the tax. The Minister sees how it would inhibit him. He will also have seen how impractical the land tax is and how dangerous it is for Irish agriculture. He knows that the notion of capacity to earn varies, not according to the land in question but according to the enterprise engaged in by the farmer in question. He knows too that capacity to earn is now governed by production quotas on milk and cereals and is likely soon to be governed by a quota on beef.
(Interruptions.)
(Limerick West:) Let us examine how capacity to earn is governed by the enterprise involved. An adjusted acre of land for dairying is capable of providing an income of £161, on which the tax liability under the proposed land tax would be £10. The same adjusted acre of land, used for dry stock farming, will return only £64, of which £10 will also be charged for land tax, or perhaps the figure will be £25 next year. A hill sheep and cattle farmer can expect to receive a return of £41 per adjusted acre, of which he will be liable for £10 in land tax.
Taken as a percentage of gross income without any personal allowances, the dairy farmer will pay 6.2 per cent, a dry stock farmer 15.6 per cent and a hill farmer 24.4 per cent. In urban terms, that is like fixing an hourly rate of tax at the same level for an executive earning £25,000 per annum and a manual worker earning £7,000 per annum, on the basis that each worked 40 hours per week. Is that equity?
Who adjusted those acres for the Deputy?
(Limerick West:) The Minister should consult the data available and not come into the House blindly proposing something he knows nothing about.
The Deputy spoke about adjusted acres.
(Limerick West:) The Minister will soon find out what it is all about. He got a little of it during the local elections and he will get more of it during the next general election.
Not in my constituency.
(Limerick West:) He has been giving a warning.
(Interruptions.)
(Limerick West:) Deputy Dowling is vulnerable too.
We won a seat in our county. Fianna Fáil lost two.
We are dealing with the Bill, not the local elections.
Let Deputy Noonan tell us the alternative.
(Limerick West:) Is Deputy McLoughlin in favour of this measure? A sad fact of this proposed tax is that it discriminates against the poor farmer and actually helps the rancher type. Those are the people they want to tax. The poor small farmer is being hindered and the bigger farmer is being let off the hook. A typical farmer would farm, say, 48 adjusted acres in dairying or dry stock. Under the existing income tax code, he rightly has no liability for taxation at present income levels, yet he will pay £480 a year land tax.
Let us take the case of 82 adjusted acres mainly devoted to dry stock. The income return is below the exempted income tax threshold and there is no tax liability, but those 82 acres will carry an £820 land tax penalty. The hill sheep and cattle farmer will be hardest hit of all since his income, even from 125 adjusted acres, would not put him in the income tax bracket. He simply would not and could not earn enough from that tough and demanding way of life, yet he will face a land tax bill of £1,250.
On the other hand, a full-time farmer on 70 acres of good land with earnings over £11,000 per annum and currently liable for income tax will now be liable only at the same level of land tax as the farmer with a gross income of £2,800. Is that tax equity as between one farmer and another?
That is hypothetical.
(Limerick West:) All these examples have been calculated on the basis of normal circumstances without reference to anything that might inhibit production. In many instances where financial, health, labour and other factors restrict the operation of the holding, larger amounts of land tax may be demanded on lower levels of income.
Martin Ryan, a reputable agriculture correspondent of the Limerick Leader, recently pointed out that all calculations on land tax liability have been done on the basis of the tax being applied at £10 per adjusted acre and the acreage adjustment being applied on similar criteria to those used by the Agricultural Institute. He states:
There is no assurance that the rate of tax will be retained at £10 per adjusted acre. There is a concealed expression in the Government plan that the amount to be collected from the system will be dictated by `Government needs'. Knowing that Governments never have a surplus of cash and the current serious shortfall is not likely to change in the foreseeable future, such a statement must be viewed with extreme caution.
Bogeyman stuff.
(Interruptions.)
(Limerick West:) Please let me continue.
You may continue, without interruption. Deputy McLoughlin will be very quiet.
(Limerick West:) The IFA, in their answer to the Government's expensive “whitewash” advertisements paid for by the taxpayer, also picked up this point, highlighting the provision in the Bill that the Minister for the Environment will prescribe a rate of land tax each year, having regard not only to farm family incomes but also to the total tax requirement of the State. That is yield targeting again. As the IFA point out, the tax requirement of the State has increased by 307 per cent in the past six years. Does that mean that the rate will be more than £30 per acre in 1991? The built-in danger in this legislation is that farmers will not know what the tax per acre will be in 12 months, two years or five years from now.
We know what the levy in income tax will be.
(Limerick West:) I have already pointed out that this legislation will not help the people about whom Deputy Taylor and I are concerned, the PAYE workers.
(Interruptions.)
(Limerick West:) Our party have always been concerned for the PAYE workers.
(Interruptions.)
(Limerick West:) The Deputies will get their chance to reject this Bill very shortly——
(Interruptions.)
It is a national scandal that Government back benchers will not allow this matter to be debated. Deputy Noonan is entitled to the protection of the Chair.
(Interruptions.)
Deputy Noonan to continue without interruption.
Deputy Farrelly had a close shave on the Royal Meath plains.
(Interruptions.)
Will everybody please allow Deputy Noonan to continue?
(Limerick West:) This party are firmly of the belief that farmers must pay their fair share of taxation, related to their ability to pay, as is the case with every other section of the community. Administrative delays and difficulties which are preventing amounts of tax from not being collected from a small section of farmers should be rectified and the Government should see that this is done. Unpaid tax by some farmers is not the fault of the general body of farmers and should not be used as an excuse for the imposition of a new inequitable tax. A land tax was not implied or even mentioned in the Fine Gael or Labour manifestos in November 1982 and they have no mandate——
(Interruptions.)
(Limerick West:) The truth is bitter. Last week Deputy O'Kennedy and Deputy Calleary quoted Deputy Dukes as saying that it was most inequitable to tax farmers by any means other than on their incomes.
(Interruptions.)
Deputy Farrelly is being disorderly.
(Limerick West:) In November 1982, when Deputy Dukes was Minister for Agriculture, he declared Fine Gael opposition to any new form of capital taxation on farmers to replace agricultural rates when they were finally phased out. He also rejected the notion of a property tax on a productive asset and said that farmers should be taxed on the income they receive from their farms and that any subsequent profits should be taxed on the same basis as manufacturing industry.
In the chapter on taxation in the joint Programme for Government it is stated that in drawing up new tax proposals account will be taken of the cost of the care of dependent children. Does this land tax take care of expenses in connection with dependent children? In the 1983 budget debate the Minister for Finance, Deputy Dukes, said that public perception of tax equity demands that all income earners should be liable for tax on an equal footing. Deputy Dukes also said, on 17 May 1983, that if farmers were allowed the option of a system under which taxable income would be based on standard results, the more profitable farmers would be systematically undertaxed while the less profitable would have to keep accounts to avoid excessive income tax charges. He went on to say that a notional system of taxation for farmers would be inconsistent with the objective of treating all taxpayers on an equal basis.
During the mid-seventies Deputy Garret FitzGerald proposed a 12 per cent levy on farm sales. He said it was merely an option and the idea was that if we could raise about £120 million by these means we would be able to revalue the IR£ upwards against sterling by 5 per cent. He said it would also mean that income tax could be reduced, an increase in food subsidies and an elimination of rates on private homes and agricultural holdings. He also said in Magill in July 1979, that he was convinced that the inequities to which such a levy would give rise would offset the benefits that would accrue and, therefore, the proposal was rejected in favour of a straightforward tax on farmers. Did the Labour Party change the Taoiseach's mind since then?
The 2 per cent which Fianna Fáil introduced changed his mind.
Another U-turn.
(Limerick West:) At that time also Deputy Garret FitzGerald was asked what form of farm taxation he favoured and he replied that farming should be taxed on the basis of accounts as in any other business. It is about time Deputy Farrelly asserted his independence and he will have an opportunity to do so on behalf of the farmers of County Meath who elected him——
(Interruptions.)
(Limerick West:) They elected Deputy Farrelly but they did not give him a mandate to bring in this type of legislation.
They gave me a mandate to bring down inflation.
(Interruptions.)
(Limerick West:) There is no guarantee either that the threshold of 80 adjusted acres will remain beyond year one of the land tax. Minister Kavanagh did not give us any such guarantee. As the IFA pointed out, the threshold for full income tax on accounts fell from £100 PLV to £40 PLV between 1974 and 1980 and was abolished completely in 1983. Nobody will give odds on the threshold remaining at 80 adjusted acres beyond 1987. I doubt if Minister Kavanagh can give us such a guarantee. The £10 and the 80 adjusted acre threshold is just the thin edge of the wedge.
We have been informed by the Government's advertisements, paid for dearly by the taxpayers, that the land tax will relieve farmers with less than 80 adjusted acres from keeping accounts. Is this something a responsible Government should promote? Is it true that the Government require the keeping of accounts anyway for the calculation of such things as health contributions — we did not hear anything from the Minister about that — and for income and youth employment levies? If accounts are now not to be kept, how will these levies be calculated? Will they be calculated on the basis of the adjusted acreage of the farm?
It is sad to reflect that it took a decade or so to encourage farmers to prepare proper accounts in the interest of tax calculation and other purposes. Farming, like any business, needs accounts kept properly to show where the enterprise is going. This drive had the added bonus of providing farmers with some basic knowledge of how their business was performing. Now, with a wave of their land tax wand, the Government will consign most of the ledgers to the dust pile while at the same time removing many income tax payers from paying their fair share of tax on their income.
The preparation of accounts, while difficult and possibly expensive, established good business practice among farmers and proved a useful management tool. How many farmers will now lapse into old ways and forget about their accounts? Another sad result of this short-sighted Bill is that the scope for development in the cattle sector, the only sector capable of increasing output in the quota-ridden agriculture industry today, is being inhibited from growth. With a land tax bill to be paid from capital, the small and medium sized farmer simply will not have the capacity to invest in extra cattle. I have called many times for the Government, as a matter of urgency and in the national interest, to do everything possible to restore our beef cow herd to its former level of 700,000; but instead, they have laid before us this Land Tax Bill which will effectively ensure that the beef cow population remains at its all-time low figure of 400,000.
I should like to deal with some of the technical aspects of the Bill. With regard to the provision that the owner of land let on conacre will be liable for tax, I should like the Minister to confirm if the tax payment will be allowed as a credit against rental income.
Concerning the publication of classification lists in public places, and in particular in Garda stations, I must protest strongly at this unwarranted invasion of privacy and urge the Minister to think again. Posting such information publicly in rural Ireland is akin to having one's sins published on the church gate on a Sunday. Shame on the Minister and the Government for bringing in this type of legislation in rural Ireland in 1985. They are a disgrace. The move is shortsighted.
I note that there can be no appeal against tax demands, merely against the assessment of the acreage adjustment. I note too that, while interest is payable on delayed payment of tax, no interest is payable by a local authority on tax found on appeal to have been wrongly assessed and paid. This should be amended in the interests of fair play. Will the Minister respond to that?
Where there is a hardship case a suspension of the tax due is allowed, but it causes me worry to note that the tax will only be suspended and not waived. When we had rates on agricultural land rates could be waived. I can envisage cases where a farmer through a long period of ill-health or otherwise, and without someone to replace him, could reach retirement with a millstone of land tax around his neck.
The Minister for Labour, Deputy Quinn, confirmed on RTE radio on 12 June that the tax will represent a charge on the land and that if the land is sold the amount due would have to be paid. In some instances that could amount to a sizeable figure which would prove a disincentive to the sale of the land. I note too a most petty charge, typical of the attitude of the Government, that will be levied for certificates proving that the land tax has been paid — another obnoxious section of the Bill. Could the Government not devise a form of receipt that would serve adequately for the purpose of land transfer without farmers having to go to the added expense of a certificate of proof of payment?
It is sad to have to make these comments in the House. The Government did not get a mandate to introduce this legislation. Labour and Fine Gael when they faced the electorate did not put such a proposal before the people. In November 1982 they conned the farming community in this regard. Fianna Fáil have repeatedly pointed out that instead of recruiting 100 people to operate this legislation they should increase the number of officials in the Revenue Commissioners to pursue those who are not paying their fair share of tax. If the Government feel that some farmers are not paying an adequate share of tax they should go after them, but the legislation before us is not the answer.
I should like to ask the Chair how much time I have left.
The Deputy must conclude at 6.25 p.m. because the Minister must intervene in the debate at that stage.
What about the other speakers who are anxious to contribute?
(Limerick West:) There is a certain element of “jobs for the boys” in the legislation. The Land Commission personnel could be deployed to a different area which would prove a greater source of revenue for the Government.
It is regrettable that, at a time when the Government should be encouraging farm development, they introduce this Bill which will have the inevitable result of farm splitting between members of families. Another sad consequence of the Bill is that young farmers, immediately they come into possession of their own land, will be liable for an annual capital expense of land tax, making it more difficult than ever for them to make their business pay its way. Where will they find the money over and above the tax to stock their farm with cattle? If they borrow to do so, they will not get relief from land tax on it. No wonder Building on Reality predicts another 7,700 farmers leaving the land before 1987.
I will finish by repeating my comments to the Fianna Fáil Ard Fheis on 30 March last. I said at the time:
The only possible explanation for the Government's blind obstinacy in relation to the proposed land tax is that the Labour tail is wagging the Fine Gael dog.
And the dog is not licensed.
(Limerick West:) No, indeed. I said:
All reasoned opinion is against the land tax. The chairperson of the Commission on Taxation has come out against it; the Government's own economic advisers, the National, Economic and Social Council (NESC), are against it, and need I remind you, we in Fianna Fáil are against it.
The land tax is inequitable, both among farmers and between farmers and others. It will bring widespread acrimony. It will tax the farming community without regard to the ability to pay. It is simply "not on" and I give you my pledge here today that Fianna Fáil will continue its opposition to it to ensure that it will never reach the Statute Book.
Nothing has changed since 30 March. The reasons we opposed it then are the same reasons why we oppose it now. I hope I have outlined our position to this Government who are obstinate and blind in bringing in this legislation. I also hope that some Government backbenchers, such as Deputy Farrelly and Deputy Dowling, will see the light and walk up those steps with Fianna Fáil to reject this legislation which is obnoxious and which, in the words of their own leader, is the wrong way to tax farmers. Farmers must be taxed the same way as everybody else, on their income.
Deputy Taylor has one minute.
The best way I can illustrate the point in this minute available to me is to say that this minute compared to the 60 minutes taken by Deputy Noonan, is approximately in the same proportion to the amount of tax paid by farmers compared with the amount paid by the PAYE sector. That measures the Fianna Fáil Party's opposition to this——
And the number of seats the Labour Party lost in the local elections.
If Deputy Noonan is opposing the Bill, there are two grounds on which he could do so. He could oppose it——
(Interruptions.)
This is typical of the Opposition. Even the one minute left is to be denied to me. One can oppose this Bill on the basis that it taxes the farmers too much and that they are being overtaxed, or on the basis that they are not being taxed sufficiently. Which is he saying? Is he saying farmers are not paying enough, and that Fianna Fáil would bring in proper, sensible, substantial taxation on the farmers? But he does not say that. This is the kind of waffle we had before. Fianna Fáil were in power for decades. They never taxed the farmers and they never will.
Your time is up Deputy. The Minister to conclude the debate and he has until 6.45 p.m.
I want to protest in the strongest terms possible. I have been waiting for two days to contribute to this very serious Bill which will affect farmers and the nation as a whole. Deputy Taylor is a Government Whip and should have seen to it that we all had an opportunity to speak on this Bill.
Please resume your seat, Deputy.
On a point of order——
We do not have enough time to discuss this penal tax.
(Interruptions.)
Order, Deputies please resume your seats.
(Interruptions.)
The Order of Business was agreed this morning. It was agreed that the Minister would intervene at 6.25 p.m.
Last Thursday we were told we would discuss this Bill this week.
The Order of Business was agreed today. I am calling the Minister to conclude the debate.
The Government Whip ordered the business of the House. We had no option——
The Minister, without interruption please.
The Government are running away from the debate.
Would Deputies please allow the Minister to conclude the debate?
We have a right to speak on behalf of the people and the Government are preventing the people from hearing of the injustice——
Deputy Byrne is being disorderly.
The timing of this debate was agreed between the Whips. Obviously the Fianna Fáil Whip agreed to this and the Deputies opposite who did not have an opportunity to contribute should take it up with their Whip. Two Fianna Fáil speakers took almost three hours of the time available——
Is that not their right on Second Stage?
I am not saying it was not their right but, when Fianna Fáil Deputies protest so violently about the time available, they should be aware of what happened.
(Interruptions.)
I will attempt to respond to the points made in relation to those matters which arise directly from the proposals in this Bill. Before I do so however, having listened to the various contributions. I think it is necessary to remind Deputies of some of my opening remarks. One of the achievements of this measure will be, in some degree, to equalise the contribution of the farming sector to national taxation. Land constitutes the major part of the natural resources of the State and its importance as taxable property was recognised in the system of rates on land which the farm tax will replace.
Which was found to be unconstitutional.
It is widely recognised that since rates on land are no longer applicable, the tax contribution from the farming sector has been reduced substantially. The provisions of the Bill represent a simple but effective mechanism for correcting that situation. The Bill also represents the first attempt in over a century to put an up to date realistic value on land for tax purposes. The concept of an adjusted acre will stand for the future as an equitable, definitive assessment of the productive capabilities of land——
(Limerick West:) How is it to be adjusted?
——in the control of the farming sector.
The people will adjust Fine Gael when they get a chance to vote. They will be adjusted downwards and the Labour Party as well.
They will be extinguished.
As I have said, the farm tax will be collected——
(Limerick West:) The Minister should take note of the result of the local elections.
The Government sewed up the farmers for the last three years. They could not even add up for the superlevy and the Minister had the cheek to talk about farmers' incomes in Brussels.
Deputy, control yourself.
How can I control myself? This is Civil Service trash, paid for by the taxpayers. It is pure waffle. This Government are so down on the farmers.
The Deputy wants to be put out.
Continue, Minister.
As I have said, the farm tax will be collected by the local authorities and will form part of their current revenue. It will be available to each local authority for the purposes of local services, including county roads, from which the local community, including the farmers, benefit directly.
(Interruptions.)
(Limerick West:) Let the Minister give over the bluff and tell us the true facts.
In his opening remarks, Deputy O'Kennedy queried, first, whether the Department of the Environment should be the one introducing this legislation.
(Limerick West:) Because no other Department would take it.
They could not even add.
At this point, I should add that the full amount of this tax will go to the local authorities and be collected by them and that is why a Minister for the Environment will introduce the Bill.
The Opposition forget the 2 per cent levy and the resource tax.
Will the Deputies on both sides of the House allow the Minister to make his contribution?
He is trying to mislead us.
Please, Deputy Daly. I am surprised at you.
It can be proved from what has been said——
(Limerick West:) We are perplexed by the Minister.
Deputy O'Kennedy attempted to attack the provisions of the Bill on the grounds that the farm tax, first, was not equitable and, second, will be unfair between sectors. Deputy Calleary followed him very closely in this. First, the proposals for the farm tax are equitable. It is not an income tax but a tax on adjusted land acreage with, first, exemption for those under 20 adjusted acres — this removes any danger of hardship on smaller farmers — secondly, a sliding scale of liability for those with between 20 and 25 adjusted acres, thirdly, liability which is clear and definite for those with between 25 and 80 adjusted acres and fourthly, an interaction with income tax for those over 80 adjusted acres. The amount payable will also be related to the ability of persons to pay, as measured by the size of their resource — the land itself — in terms of an up to date classification, by expert professional officers, of the value of the resource.
Some people never see the men from the Department. I hope that they will never get to us.
As to fairness between sectors, the result of this tax, when fully operational, will be to double the take of tax from the farming sector and thus make a real start towards removing the imbalance that has crept in between the farming sector and the PAYE sector.
(Limerick West:) The Government are causing the rift again.
Deputy O'Kennedy made the bold statement during his contribution that I was wrong — I repeat, wrong — to say that the penalties clause in the Bill was no more severe than in other tax legislation. He seemed to base his assertion on the impression that tax inspectors may not enter on property for assessing liability to other kinds of tax. I am rather surprised that Deputy O'Kennedy appears to have overlooked section 34 of the 1976 Finance Act, as amended by section 60 of the 1980 Finance Act which he himself introduced——
That is right.
——where officers of the Revenue Commissioners may enter any premises where the trade or profession is carried out and inspect or take away books and records. They may also examine any property listed in the balance sheets, etc. The penalties for obstructing officers of the Revenue Commissioners are provided for in section 94 of the 1983 Finance Act and are, in fact, more severe than those included in this Bill.
(Limerick West:) That is to do with accounts.
Deputy O'Kennedy wants to have it both ways, like other Deputies on the other side of the House. He opposes the Bill on the grounds that it seems that it will be unfair to farmers.
(Interruptions.)
Then he opposes it on the ground that it will not be hard enough on them, invoking the farmers' organisations or ICTU, depending on which horse he is riding at the particular time.
(Limerick West:) The Government got their answer in Wicklow.
Please, Deputy.
I can tell the Deputy that we got 7,000 Labour votes in the Wicklow County Council election and that was not bad. We held our four seats, so let the Deputy not talk about answers in Wicklow.
Would the Minister please stay on the Farm Tax Bill?
The Deputy is reading the magazine Magill, which is not accurate on that point.
(Limerick West:) Who control the county council votes in Wicklow now?
We know who control it now, but I suppose a break after 50 years is not amazing while we wait for another few years and get back again. I was attempting to explain to the House that Deputy O'Kennedy was trying to walk on both sides of the street at the same time. He opposes the Bill on the grounds that it would be unfair to farmers, but then opposes it on the grounds that it will not be hard enough on them. When he is thinking of the farmers' organisations, he says it is too hard. We heard that from Deputy Noonan, also. When Fianna Fáil are in the city, they are able to produce documentation promising the people of the city, as in this little document——
(Limerick West:) He does not. That is not correct.
The same little booklet does not circulate in rural areas, I can assure the Deputies, where it says that Fianna Fáil want farmers to pay income tax the same as everyone else.
(Limerick West:) He did not put advertisements in the newspapers, purporting to explain the position to farmers.
There are two types of taxation here.
That would balance up matters a lot, would it not?
The Minister is out of his mind. The farmers will pay one tax the same as everybody else, but not two.
Deputy Byrne, please resume your seat and control yourself——
I am repeating what the Minister said. He should have his head examined.
——for your own sake, and the sake of the House.
Does that mean the PAYE people?
That is bluff by the Minister.
Turning to adjusted acres——
Measurements instead of relativity.
Deputy O'Kennedy, for want of any better argument about the measure has sought to ridicule the basis of the tax and in the process may have caused an amount of confusion and unease about the basis of the farm tax.
(Limerick West:) We know what is causing the confusion — the Minister and his Government.
Indeed, I might mention that Deputy O'Kennedy seems uncertain as to the details of the Bill. He refers to the adjustment of acres having to take place again and again and that is not the case. The initial classification will stand once the appeals process has been completed and the Bill is very definite that revision of the initial classification will take place only if there is a material change of circumstances — not where a farmer goes ahead with some development plan or other.
Again, Deputy O'Kennedy seems to think that the provision that local authorities will issue certificates indicates that they will have to set up a register of land sales, with all its attendant bureaucracy. This, of course, is wrong. The issuing of certificates and receipts on application is to facilitate the sale of land by showing that the farm tax is paid. This is no more complicated than the inquiries a prudent solicitor makes in any property transaction about charges on the property being sold or bought and inquiries about rates due on land where a standard practice in all land transactions, when there were rates on land. On a more general argument about adjusted acreage made by Deputy O'Kennedy, the fact is that the concept of adjusted acreage has been used for many years by the Land Commission in the distribution of land, in order to determine the amount of land required for a viable holding. Deputy Noonan mentioned adjusted acreage in some of the figures he gave, but yet would not say how these adjusted acreages were determined.
(Limerick West:) I did not talk at all about adjusted acreage.
The Deputy did, indeed. He should refer back to his supplied script.
(Limerick West:) I referred to figures published by the Agricultural Institute. I do not expect the Minister to understand what I am talking about.
Deputy Yates, in his very sound contribution, was quite right in this respect. There was no statutory backing for the concept and, although farms were adjusted to the equivalent of prime agricultural land, the adjustment to be made in each case was left to the land inspector. I think the Deputy knows that very well.
(Limerick West:) That is a different issue altogether. The Minister is talking about the farm tax.
The definition of an adjusted acre in the Bill, section 2 (1), is aimed at providing an objective basis for classifications, appeals and revisions. This will enable us to avoid the problem of the arbitrary and inequitable nature of the valuation base which led ultimately to the termination of rates on land, as the House is well aware. Some anomalies may, of course, arise but the farm tax commissioners, by instituting appropriate control arrangements, should be able to deal with these and there will be, of course, right of appeal.
(Limerick West:) Downgrading it.
Deputy O'Kennedy is now advocating strongly, so it seems, that income tax is what will bring about equity between farmers and the PAYE sector. We have to face the facts and they are simply as follows. We can look on this tax as a replacement for rates on agricultural land and as a contribution towards the cost of providing local authority services. Rates were a property tax unrelated to income. The farming community are now paying about £35 million in income tax. In 1980 they paid £64 million between rates and income tax. If you adjust that up to the present, that would be £108 million in 1985 as between rates and income tax. There has been a reduction in the tax take from farmers, not as a result of action by the Government——
What did the Minister say was the income tax take four or five years ago?
——but by a court decision.
The Government sold out the farmers. They have done nothing for them.
I am asking Deputy Byrne to allow the Minister to continue without interruption.
There is a need to remedy the present situation.
They have sold out the farmers.
Will Deputy Byrne please stop interrupting?
Will I get extra time for the interruptions?
(Limerick West:) Very shortly the Minister will have as much time as he wants.
Several Deputies asked how long it will take to bring the tax into operation. This depends on when we can get started. The Bill gives power to enter on land and, incidentally, provides for penalties for failure to co-operate. The full classification of land into adjusted acres is likely to take several years. The aim will be to start in each county with the bigger farms and to introduce tax on those farms in 1986. All counties will be treated equally. To those Deputies who have expressed doubts about the time and scale I wish to point out that the basic records in respect of land holdings, occupiers and so on are already available and, as a result of the Bill, they will be available as a right to persons doing the classification. The tax will start in 1986 on the basis of the stage reached in the classification——
The Government will be out of office by then. They will be run out.
The classification of land will be done by experts — obviously it will require expertise. In the final analysis the appeals process will provide a safeguard against any unfairness or any significant lack of consistency in individual cases. I do not think there is any real need to worry about the points raised by Deputy Calleary and Deputy Brennan regarding variation in the quality of land and the effects of reclamation. The expert staff should not find it beyond their competence to deal with that matter. The staff already available are well used to the basic concept of adjusted acreage but we will deal with that matter on Committee Stage.
A number of Deputies referred to the rate and yield of the tax. Section 9 provides that the rate of tax will be determined by the Minister having regard to the estimated change in the level of family farm incomes and the yield to the Exchequer from other taxes. The rate will be £10 per adjusted acre. I propose on Committee Stage to bring in amendments that will provide that in the Bill the rate of farm tax in 1986 will be £10 per adjusted acre——
It is £12.50 per acre.
Will the Deputy please show some restraint?
The Minister should tell the House the truth.
I am giving the facts in the House. What I am saying is the truth. When fully operational the tax at £10 per adjusted acre is expected to yield £72 million, with an additional £6 million from income tax payable by farmers who have more than 80 adjusted acres. Perhaps the Leader of the Opposition would like to tell one of his Deputies that other people like to know what is going on in this House.
I want to make it clear——
Deputies cannot have a private arrangement——
I was invited by the Minister to intervene.
The Chair is calling on the Minister to conclude his speech.
Perhaps the Chair will censure the Minister.
I have appealed for order since I came into the Chair. I am doing my best to get order but I am not getting much co-operation.
I have been in the House for some time and I have not intervened in any way. The Minister asked me a question and I am very anxious to answer him.
The Deputy knows well that the Minister has only a few minutes to conclude.
I gave total order to Deputy Noonan during his very long statement.
I have given total order to the Minister.
I asked if Deputy Haughey could keep one of his Deputies a little quiet.
I did not intervene. I sat quietly listening to the Minister. He asked me a question.
The Minister is not entitled to ask the Deputy to intervene.
Then the Chair should censure the Minister.
I have done so. I am sorry but I must put the question in this disorderly atmosphere.
The Minister did not tell the public that the tax would be £12.50p, not £10.
Question put.
The Dáil divided: Tá, 71; Níl, 61.
Tá
- Allen, Bernard.
- Barnes, Monica.
- Barrett, Seán.
- Barry, Peter.
- Begley, Michael.
- Bell, Michael.
- Bermingham, Joe.
- Birmingham, George Martin.
- Boland, John.
- Bruton, John.
- Bruton, Richard.
- Carey, Donal.
- Cluskey, Frank.
- Conlon, John F.
- Connaughton, Paul.
- Cooney, Patrick Mark.
- Cosgrave, Liam T.
- Cosgrave, Michael Joe.
- Coveney, Hugh.
- Creed, Donal.
- Crowley, Frank.
- D'Arcy, Michael.
- De Rossa, Proinsias.
- Desmond, Barry.
- Desmond, Eileen.
- Donnellan, John.
- Dowling, Dick.
- Doyle, Avril.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard J.
- Enright, Thomas W.
- Farrelly, John V.
- Fennell, Nuala.
- FitzGerald, Garret.
- Flaherty, Mary.
- Glenn, Alice.
- Gregory-Independent, Tony.
- Harte, Patrick D.
- Hegarty, Paddy.
- Hussey, Gemma.
- Kavanagh, Liam.
- Keating, Michael.
- Kelly, John.
- Kenny, Enda.
- L'Estrange, Gerry.
- McGahon, Brendan.
- McGinley, Dinny.
- Mac Giolla, Tomás.
- McLoughlin, Frank.
- Mitchell, Gay.
- Mitchell, Jim.
- Moynihan, Michael.
- Naughten, Liam.
- Nealon, Ted.
- Noonan, Michael.
- (Limerick East)
- O'Leary, Michael.
- O'Sullivan, Toddy.
- O'Toole, Paddy.
- Owen, Nora.
- Pattison, Séamus.
- Prendergast, Frank.
- Ryan, John.
- Shatter, Alan.
- Sheehan, Patrick, Joseph.
- Skelly, Liam.
- Spring, Dick.
- Taylor, Mervyn.
- Taylor-Quinn, Madeline.
- Timmins, Godfrey.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Michael.
- Aylward, Liam.
- Barrett, Michael.
- Blaney, Neil Terence.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Paudge.
- Brennan, Séamus.
- Briscoe, Ben.
- Browne, John.
- Burke, Raphael P.
- Byrne, Hugh.
- Byrne, Seán.
- Calleary, Seán.
- Collins, Gerard.
- Conaghan, Hugh.
- Coughlan, Cathal Seán.
- Cowen, Brian.
- Daly, Brendan.
- Doherty, Seán.
- Fahey, Francis.
- Faulkner, Pádraig.
- Fitzgerald, Liam Joseph.
- Flynn, Pádraig.
- Foley, Denis.
- Ormonde, Donal.
- O'Rourke, Mary.
- Treacy, Noel.
- Tunney, Jim.
- Gallagher, Denis.
- Gallagher, Pat Cope.
- Geoghegan-Quinn, Máire.
- Harney, Mary.
- Haughey, Charles J.
- Hilliard, Colm.
- Hyland, Liam.
- Kirk, Séamus.
- Kitt, Michael.
- Lenihan, Brian.
- Leonard, Jimmy.
- Leonard, Tom.
- Leyden, Terry.
- Lyons, Denis.
- McCarthy, Seán.
- McCreevy, Charlie.
- McEllistrim, Tom.
- Molloy, Robert.
- Moynihan, Donal.
- Nolan, M.J.
- Noonan, Michael J.
- (Limerick West)
- O'Connell, John.
- O'Dea, William.
- O'Hanlon, Rory.
- O'Keeffe, Edmond.
- O'Leary, John.
- Walsh, Joe.
- Walsh, Seán.
- Wilson, John P.
- Wyse, Pearse.
Tellers: Tá, Deputies Barrett(Dún Laoghaire) and Taylor; Níl, Deputies V. Brady and Browne.
Question declared carried.
When is it proposed to take Committee Stage?
On Tuesday next, subject to the agreement of the Whips.
It is agreed to take it subject to agreement with the Whips but there is no guarantee that such agreement will be forthcoming.
Committee Stage ordered for Tuesday, 9 July 1985.