In a reply to a parliamentary question from Deputy De Rossa on 7 October last, I gave details of statistics of the average income tax payments by PAYE workers, farmers and the self-employed. I presume it is these statistics to which the Deputy is referring.
It should be noted that the figures given in reply to that parliamentary question gave the tax take in respect of farming profits. It did not include PAYE tax paid on employment income earned by farmers or their spouses. Such tax is included in the overall collection of PAYE and is not distinguishable until after the income tax returns submitted by farmers have been analysed. An analysis of the returns for the income tax year 1990-91, the latest available, indicates that some £33 million in tax was paid by farmers, including trader-farmers, or their spouses, under the PAYE system for that year.
The reduction in income tax yield on farming profits since 1989 is mainly attributable to a fall in farm incomes in two years in succession, 1990 and 1991. A recovery in farm profits only became evident in 1992. This is borne out in revised figures published by the Central Statistics Office in late July of this year for income from self-employment and other trading income of the agricultural sector. The current estimates of the CSO are for a fall of 1.6 per cent in 1990 profits as compared with the corresponding 1989 earnings, a further fall in 1991 over 1990 of 8.9 per cent and a recovery in 1992 over 1991 of 19 per cent. This recovery is reflected in the increase in farmers' taxation in 1992 over 1991.
However, the income tax yield of £36 million in 1991 included a fall of approximately £5 million due to the deferral of the balances of 1990-91 tax from 1991 to 1992 as a transitional effect of introducing the current year basis of assessment for self-employed persons in 1990. This amount was included in the yield of £48 million for 1992. When the distorting effect of the 1990-91 balances is excluded for comparative purposes, the average yield per capita from farmers' taxation in 1992 increased by about 18 per cent over the 1991 average.
With regard to steps taken to ensure a fair tax return from the farming sector, in common with other self-employed taxpayers, farmers are subject to the various compliance and audit arrangements which apply under the self-assessment system. As from 1992 a percentage of new cases selected for audit are chosen on a random basis. Revenue audit activity increased in 1992 and was further intensified in 1993 with a significant increase in staff and a reorganisation of audit activity in tax offices.
