I move amendment No. 138:
In page 101, before section 80, to insert the following new section:
"80.—In addition to the relief afforded to flat-rate farmers under section 6 of the Value-Added Tax (Amendment) Act, 1978, credits at 5.6 per cent shall also be claimable by unregistered tillage farmers.".
The aim of the amendment is that a higher flat-rate addition be applied to supplies by tillage farmers than to agricultural supplies by other flat-rate farmers.
As EC law allows member states, as an option, to fix different flat-rate additions for different sub-divisons of agriculture, I have no problem of principle with the proposal. However, any flat-rate addition must be based on macro-economic statistics for the agricultural sector involved. In practice, information of the detailed type required is not available on a reliable basis. The data which are available here simply allows for the calculation of a single or average flat rate across the agricultural sector as a whole.
One consequence of applying different flat-rate additions would be that an increase in the flat rate to one sector of agriculture would be at the expense of another sector which would, accordingly, receive a lower flat-rate than the single addition now applying. It has always been based on an across the sector basis which is to the benefit of the farmers.
It should, of course, be borne in mind that any farmer who feels that the existing flat-rate addition does not adequately compensate him for his inputs may register for VAT and reclaim the VAT on his inputs directly. At present, the majority of intensive tillage farmers would be included in the approximately 2,000 VAT registered farmers.
Why is the data not available? I did not understand the Minister's reference to that. I gather he supports the general thrust of this amendment but, because of some logistical difficulties in terms of the availability of data, he cannot accede to the request in the amendment. He should consider the case of the unregistered tillage farmer. Given that tillage is so capital intensive today, all tillage farmers use contractors to do the work and they have high inputs into their enterprise of one kind or another. They use contractors from ploughing to seeding and even harvesting and saving the crop.
Unregistered tillage farmers are in a particularly difficult situation. If the only reason he needs to register for VAT is to claim this back it is probably involving him in unnecessary and cumbersome bookwork. Older farmers in particular baulk at this. They are not able to cope with the bureaucracy involved in registering for VAT and claiming it back. I ask for consideration to be given to the unregistered tillage farmer given his unusual circumstances. Will the Minister explain why the necessary data is not available?
I take the point the Deputy makes. The flat-rate scheme works to the advantage of agriculture in that it is an across sectors scheme. From my meetings with the IFA and the ICMSA that is the way they wish to have it.
We accept that.
The unregistered tillage farmer should register and reclaim VAT directly. That is what several thousand of them are doing. They are fully recouped. They have an option — either they take the flat-rate, which many of them do, or they register for VAT.
We are used to bureaucracy and to understand the enormous reluctance of some, particularly older, people to register for VAT. The flat-rate is a very acceptable system. Unregistered tillage farmers, because of their input expenses, are different to any other agricultural enterprise and they should be allowed the extra 5.6 per cent on top of the flat rate.
I cannot do that. I do not know what is bureaucratic about registering and getting money back. If you were asked to register and pay I could understand it. The flat-rate system is not in any way bureaucratic. It is designed to assist farmers.
There is no problem with the flat-rate. They are not registered for that.
From my experience of dealing with farmers when they realise they will get money back they will register. They will be able to keep all the necessary records.
I am sure the Minister is aware that registering is still a problem. Rather than buying expensive machinery, using it for a couple of weeks and then having it laying idle, tillage farmers employ contractors. That is the way agriculture is going. It is quite costly to operate and maintain these machines but farmers are prepared to bear the cost. They are entitled to some return of VAT. If there is a problem in relation to registering we should look at it. Better educated young farmers who go through college have no difficulty with this because it is part and parcel of their training.
I take the Deputy's point. What happens — and the Deputy will probably know this better than me — is in the flat-rate calculation all that data is taken into account every year. It is reassessed every year. It went from 2.3 per cent to 2.7 per cent this year. The contract data is taken into account in the calculation of that figure every year.
Deputy Doyle asked about reliable data on agricultural outputs and inputs. That is available but not on a sectoral basis.
In relation to macro-economic data, in calculating the flat-rate addition for tillage farmers, we look at the inputs and outputs from the tillage sector.
I move amendment No. 139:
In page 101, lines 24 and 25, to delete paragraph (a).
The effect of this amendment is to retain the flat-rate addition to unregistered farmers at 2.7 per cent. The basis for calculating the flat-rate percentage is set out in the VAT directive. This provides that the rate must be struck on the basis of the data I referred to.
The directive specifically provides that the flat-rate addition which is an optional mechanism for member states must not be used to give refunds greater than the VAT charged on inputs. Failure to adjust the refunds to 2.5 per cent would breach this rule. This year's rate of 2.5 per cent continues to fully compensate the farming sector as a whole for VAT borne on farming inputs. It is automatically adjusted every year.
