asked the Minister for Finance in view of the fact that the average tax paid by farmers has decreased in each of the past five years, while the average payment by PAYE workers has increased by 55 per cent in the same period, the measures he intends to take to correct this imbalance and to ensure a fairer return from the farming sector; and if he will make a statement on the matter.
Ceisteanna — Questions. Oral Answers. - Taxation of Farmers.
4.
Statistics of the average tax payment made by PAYE workers and farmers were given in my reply to a parliamentary question from Deputy Mac Giolla on 19 October last and it is to these that I presume the Deputy now alludes.
I would point out that the reduction in the average tax payment made by farmers in the years 1983 to 1987, inclusive, as indicated in that reply is mainly due to the introduction of additional numbers of farmers to tax records since 1983-84 following the abolition of the rateable valuation threshold. These new cases, in general, had much smaller holdings and consequently had, on average, lower taxable incomes.
I would also draw the Deputy's attention to the reply which I gave to his colleague Deputy De Rossa on 22 June last, in which I outlined the significant progress being made in relation to the taxation of all farmers likely to have taxable incomes, through the issue of the farm profile forms. It has been tentatively estimated that about 63,000 farmers will be obliged to make a return of income for 1988-89, and that the number expected to be ultimately liable to income tax for 1988-89 will be about 29,000. The estimated net receipt of income tax from farmers in 1987 was £34.5 million, and the budget estimate for the 1988 yield is £42 million, an increase of 22 per cent.
Finally, I would again emphasise that the new self-assessment system, which has been introduced for the 1988-89 tax year covering all self-employed persons including farmers, will make it much more difficult and costly for the individual farmer, like other assessed taxpayers, do delay the payment of income tax.
In the reply of 19 October to which the Minister referred he indicated that the average payment by farmers had fallen from £705 to £585 between 1983 and 1987. In the same period the average payment by the PAYE worker had arisen from £1,900 to £2,900 — an increase of 55 per cent for the PAYE taxpayer and a decrease of 17 per cent for farmers. Would the Minister agree that there are a number of reasons why the average take from PAYE workers should have fallen, such as the decrease in employment in the high level areas of the Civil Service, the ESB, Aer Lingus and so on, the collapse of Irish Shipping and the increase in low-paid and part-time jobs in the meantime? The Minister will agree that the reasons given for the fall in tax take from farmers——
The Deputy is making a speech.
This seems to be a scandalously low level of tax. What steps are being taken by the Minister to bring about a balance of tax between farmers and PAYE workers?
This is a very long question.
It is the question on the Order Paper.
Please, Deputy Mac Giolla, you have made your point.
I have given a factual reply in relation to the numbers and that is where the averages can be seen to be reducing. The amount of tax from farmers has increased from last year to this year by 22 per cent.
In his reply the Minister said the tax take in 1987 was £34.5 million and £42 million in 1988. Would he not agree that the last year when agricultural rates were paid, the total from farmers between tax and agricultural rates was £52 million, and we have not yet reached that figure? Is it proposed to ensure that at least the level of tax paid seven or eight years ago will be achieved now?
I know the Deputy has been making that point for as long as I have known him but I do not think we need to put on the record again the position of all sides of this House about the high level of tax paid by the PAYE sector. Until this year I thought the issue of farmer taxation was over and done with after ten years of arguing about what type of system they should be on. As far as I am concerned it is over and done with, but there are a number of parties who have decided to open the argument again and thereby jeopardise, or raise difficulties, in relation to the yield of income tax which will come from the farming community. In 1985 and 1986 farming incomes drastically reduced but the opposite happened in 1987 and 1988.
That is where we got this increased taxation of 22 per cent. In the 1987 and 1988 budgets, because of delays in payment or refusals to pay arrears of levies, we changed the VAT refund to farmers and got the money into the Exchequer which farmers should have paid. We must wait to see what the outcome of the amnesty will be in relation to bringing the arrears up to date. That subject too, will be dealt with later. We will see exactly what the position is regarding VAT refunds for farmers in next year's budget and beyond, arising from the payment of the arrears I have referred to.
(Limerick East): Will the Minister consider an alternative tax to tax on account for farmers, or does he believe a period of tax stability in farm taxation is what is required?
That is what is required and that is what we have.