I do not welcome this Bill. Indeed, I will speak very strongly against the Bill, especially because of the Title of the Bill, Rates on Agricultural Land (Relief) Bill, 1978. One would expect extra relief from such a Bill. Such Bills in previous years gave relief, much more relief than has been spoken of by Senators on the other side of the House, but this Bill gives no extra relief but, as I said, a reduction in relief to the farmers. The Bill is a demand by the Government for more revenue through the rating system, a system that we all believe to be an unfair one. It has been said by Senators on the other side of the House "We accept that this system is an unfair system because it is based on valuation of land".
The farmers in my constituency are very disappointed if those in the west are not. In the near future they will be disappointed there too because there will be a reduction in the qualifying valuation. The prospects of the financial assistance promised by the Government during the last election are now diminishing. Today, because of this Bill, instead of assistance they are receiving a demand by the Government for more revenue from the rating system. We all, and I include the Government, know that the collection of revenue through the rating system is an unfair way of collecting because it does not have regard to the income of the ratepayers or his capacity to pay it.
In 1978 a farmer with a rateable valuation of £75, before the introduction of this Bill, would receive relief of up to £320, assuming his rate demand was £10 in the £. A farmer with £100 valuation would receive more than £400. A man with a £75 valuation is not a farmer with a huge area of land. In my constituency it would be in the region of 75 statute acres. This Bill is unfair especially to a farmer who has purchased land or who has received land from the Land Commission to increase his holding to a rateable valuation of more than £60— I mention £60 because the Bill refers to £60 in the future. Large financial investments may be necessary to make that land viable because we all know that from time to time when the Land Commission take over land that land is rented out for a period of years and farmers who take it take the value from it without putting much back into it. Then the land becomes inferior.
A lot of investment would have to be put into that land to bring it up to such a standard that its productivity would be at its highest. Because of that investment a farmer would not make a profit in the years he was bringing the land up to the standard of productivity that he would like. He does not make a profit but he cannot get relief of rates because of the valuation qualification.
In 1978 those with holdings of valuations of £75 who cannot make a profit are to be penalised in this Bill. In 1979, the farmer with a valuation of £60 who suffered the same misfortune, through investment necessity, of not making a profit, will under this Bill have to pay substantially more in rates. It does not go directly to the Exchequer but eventually it is the Exchequer which will have to pay the moneys to the local authorities. One of the most extraordinary things about the Bill is that a married farmer with a young family who has a valuation of £60 plus, and who because of his commitment to his family must employ help to work the farm and probably negotiate a bank loan to develop the land, may find at the end of the rateable valuation fluctuation that a substantial rates demand awaits him. Nobody can say that that is fair.
Another example is a farmer who because of illness is unable to carry out his farming duties to the best of his ability. He is being penalised because of this Bill to the extent of £320 or more because of his illness. A man has to stay in bed and is not able to look after the farm and so on, and the crops may suffer and the cattle may suffer. Naturally if he makes a profit it would be very small. If he does not make a profit then he is taxed anyway because of the introduction of this Bill today. It is the first time that I have ever heard of illness being taxed as it is taxed by this Bill.
I will give another example. A farmer may go to a bank for an overdraft, a loan, to help the family. He may be ill and because of his illness and his commitments to his family, until he returns to full health the farm does not make a profit. The worry caused by this extra taxation may cause illness by itself. It may also have the effect of keeping some members of the family at home, away from proper education.
There is no doubt that farmers having examined this Bill will see to it that at least the farm must be made to pay, and the farmer must try to make a profit to pay for this burden being placed upon him. If he has to do that, he has to try to employ extra help or ask friends to help to work the farm. The 1978 provision is based on a £75 valuation. What about the poor man with a £60 valuation in 1979 who will come into the same circumstances? He will have to pay this substantial demand.
It is the wish of everybody, and I accept it is a wish of Senators on the other side, that the present rating system should be changed. If we accept that, we must agree that the introduction of this Bill based on this system must be wrong, and if it is wrong it is only right that it should be withdrawn. Instead of reducing the number of farmers paying rates this Bill will increase the number and the amount of money collected through this unfair system. We have heard from time to time of many Government Deputies and Senators, especially during the last general election, stating that the present rating system was wrong and that when they would be returned to Government they would try to put the system right. If this Bill is any proof of their intent, we will be waiting a long time for that change. They expect to increase their finances through this Bill. The Bill is wrong because the rating system is not based on the quality of the land. It is quality that rates should be based on.
The Agricultural Institute carried out surveys and did a survey on the quality of the land and rateable valuation of land some years ago. The Government should now take into consideration the findings of that survey and make it a point that they will change the rating system and the valuation of the land before this Bill becomes law. If this Bill is any indication of the change, we are not going forward. Those with high poor law valuations in respect of the quality of land will now have to pay a greater share of the tax burden through the rating system. We on this side of the House realise that and will vote against the Bill, and I know that some Senators on the other side, from speaking to them, will also like to vote against it because they will be meeting their electorate who will be caught because of this Bill and who have already met them and have told them in no uncertain manner that the introduction of this Bill is wrong and that they should vote against it. Some Senators are caught in that predicament and I have respect for them because they cannot vote against this Bill because of the Whip, and only because of this will the Bill be passed today. I am sure that was the position in the other House.
Farmers have not been shouting about the Bill, as has been said by Senator Hyland. They are beginning to talk about it and they are beginning to talk about the other taxes that have been introduced gradually by the Government. They are going to be as loud in their condemnation as they have been in the past. Everyone knows they have been loud in their condemnation for many, many years, and they have been heard.
The Bill means that farmers with valuations of £75 or more are being asked to pay extra money to the Exchequer. As mentioned in the Bill, the valuation limit will be reduced to £60 next year and I am sure the Government have in mind an ultimate threshold for income tax purposes of a £50 valuation. In the years to come that will be reduced still further and if that is so farmers caught in that bracket will be caught under this Bill because there is no doubt that if the threshold is reduced then this Bill will be reintroduced to catch the people who will not be making profit, and farmers who will not be paying through the taxation system will have to pay through the rating system, because extra revenue will be needed by the Government because of high borrowing.
There are many other reasons why extra revenue was needed by this Government, but the one reason that I feel strongly about is the high extra borrowing by the Government because it has to be paid back with interest. This extra money will be found through the people of this country and nobody else will be paying back that borrowing but the people of Ireland, and the farmers will have to pay their share. This Bill is being introduced to get money from the farming community in a backhanded way.
It is fair to assume that there will be an annual rates increase and this means that on average farmers will have their contributions increased by 11 per cent because of the increase in rates. Has the Minister any idea of the number of farmers who, because of this Bill, will be paying tax in one form or another, whether that form is in income tax or rates tax? Many extra farmers will be brought into the tax net because of this Bill.
Farmers with rateable valuations in 1978 of £75 and in 1979 of £60, who because they fail to make a profit will be included to allow for hardship cases. I would recommend that the Minister amend the Bill to ensure that all farmers liable for income tax to the amount exceeding the increase in the rates be included in the Bill.
I know a number of farmers who supported our policies in the last election but, because of the propaganda of the Fianna Fáil Party — and I am not against propaganda by any party if there is truth in it — were misled and voted for the present Government. I was invited to meetings a few nights before the election to explain a tax demand note based on an assessment of tax and in my presence photostat copies of the tax demand note were distributed by the Fianna Fáil canvassers. I am not against that either, if what was in it was correct. It was distributed to convince farmers that they were being taxed to that level, omitting that the demand was based on an assessment. When I tried to explain what an assessment was I was not allowed to be heard, so the lie was spread throughout the constituency and I am sure throughout the country as well. Farmers now not only realise their mistake but they are beginning to admit that mistake. They all know that the removal of subsidies from fertilisers had an effect on them. The removal of subsidies from cheese is having an effect also as the production of cheese had to be reduced because of the high cost. Farmers are beginning to examine Government policy and know that the accumulation of those taxes has become intolerable. Farmers with moderate means, or those who are, for one reason or another, unable to make a profit, are penalised by this Bill to the extent of more than £7 million in 1978. It is estimated that up to 15,000 farmers will pay that tax through the rates, averaging from £400 to £700 a year. Because of the reduction of the valuation threshold to £60, many more farmers will be included in the rates tax.
Farmers within the rateable valuation for this extra tax, because of their inability to make a profit for one reason or another, will now have to meet a rates bill of over £750, assuming that the valuation is £10 in the £, and I am not over-estimating that because in places it is up to £15 in the £. Those with a rateable valuation of £10 in the £ will now be caught for up to £750. It is almost certain that this demand will increase next year because the rate demand will be increased probably by another 11 per cent or more. The Government tied it to 11 per cent this year and they will probably have something like that in mind next year. If that is the case. the unfortunate farmer will be taxed by this Bill even if he is unable to make a profit and will have to meet a rates bill of £825. With a reduction from £75 to £60 next year he will be penalised to the extent of £660 — his total rates bill.
Where else is there a tax penalty for failing to make a profit? Nobody in the farming community or in the farming organisations disagrees with paying his fair share of tax, but this type of tax is going to be opposed. It has to be opposed not just by the Senators on this side of the House, not just by the Opposition in the other House, but by the people who will get their next rates bill. It is only then that they will realise what this Bill will do. Fianna Fáil when in Opposition suggested they would drastically change the tax code and that they would drastically change the farmers' tax code. They have lived up to that promise today and there is no way I could congratulate the Minister for doing that. They have taxed farmers by way of rates payments. It is a tax based on the most inequitable form imaginable — the rateable valuation. Everybody has admitted, as has been admitted here today by Senators on the other side of the House, that this is the most unfair system that any tax could be based on. It is unfair as a rating system.
A large portion of lands have a high rateable valuation and a high percentage of that land is poor. It is not only quality land that has a high rateable valuation. Therefore, it is not all high quality landowners in the £75 valuation range, or in the £60 valuation range in 1979, who are being taxed by this Bill. The owner of high quality land has not much to fear from the Bill, unless he runs into debt because of sickness or some other misfortune. Under normal circumstances he will make a fair profit from his holding. The unfortunate farmer with poor land and a high valuation is likely to find it more difficult in normal circumstances to make a profit. Nobody can deny that. If he runs into debt or has any farming troubles maybe because of the weather or for some other reason beyond his control, and he makes no profit, he is now taxed by this Bill up to £320 or £400, depending on the valuation of the land.
There are large areas throughout the country capable of high production and other areas capable of low production and they may have the same poor law valuation. This Bill makes no allowance for that. In fact, it penalises the owners of low productivity land. Because the farmer finds himself in trouble at the end of a financial year, not having made a profit he has to pay through the nose. He will have to pay extra rates because of this Bill.
The Bill penalises the farmer who has to work hardest to earn a living from the land — the farmer with the poorest land. He is the man who has to work hardest to develop productivity from that land, to get finances to help him to develop that land in future years and to make some kind of life for himself and his family. The Bill penalises him because the development of that poor land is out of his control. I do not know of any other group in this country who would stand for that. There should be an allowance for the amount of work a person puts in to develop his land or the amount of work he puts in at factory level and so on. Because of that amount of work he should be paid extra but in this case where the land is poor and the profit is low, or maybe there is no profit, that person is penalised.
The Bill might have something to recommend it if the land valuation system was a good one. It is accepted by both Government and Opposition Senators that the valuation system is wrong and must be changed. Let us do something about it. I would ask the Minister to withdraw the Bill and to reintroduce it in an amended form when the poor law valuation system is made a fair one. That is not asking very much. Make the poor law valuation system right and then reintroduce the Bill. I am sure that with some other amendments something like that could be introduced.