asked the Minister for Finance if in relation to the agreement reached with farming organisations on 27 February 1979 he will give (i) the amount of revenue the Exchequer will forego by this agreement; (ii) details of the alternative system of taxation for farmers described as single, long term and equitable; and if he will make a statement on the matter.

7.

andMr. P. Barry asked the Minister for Finance if the new income tax system proposed is accepted by the farming organisations whether the VAT system at present in operation will be operated during 1980.

8.

andMr. P. Barry asked the Minister for Finance if the reference in the Government statement issued after the meeting with representatives of the farming organisations to “the new tax system would commence next year” means that payment of income tax under the system would become due after April 1981.

With the permission of the Ceann Comhairle, I propose to take Questions Nos. 6, 7 and 8 together.

As will be seen from the statement issued by the Government in regard to the agreement in question, if the new income taxation system is to be brought in, the VAT system will be operated without a refund until an amount equal to the amount foregone by the non-operation of the levy is recovered by the Exchequer. The Government have not referred to a system of taxation as single, long term and equitable.

It is not possible to give the exact duration of the period from 1 May 1979 during which the VAT system would operate without a refund, but it is likely that it would last until early 1980.

The new system of income taxation would operate as from 6 April 1980 and the yield would accrue in course of the income tax year 1980-81.

Could the Minister say on the basis of the discussions which have taken place so far with the farming leaders whether he is confident that a tax system on the lines originally suggested will be implemented from 1 May in relation to farmers?

I cannot anticipate the outcome of the discussions going on at present. I am sure the Deputy will realise that the taxation system to operate from April of next year is not dependent on the outcome of these discussions.

If the new tax system is accepted and brought into operation, will it operate from 6 April 1980? Is that correct?

Yes.

The first money from that system will become due to the Exchequer and payable after 6 April 1981. Is that right?

No. That depends on the system.

Did not the Minister say the system will operate for the financial year from 6 April 1980 to 6 April 1981?

For the income tax year.

Because it will be an accounts system the amounts will only become due after the latter date?

That depends on the system.

I do not follow.

The Deputy may be thinking in terms of the present system, but we are talking about a new system.

When does the Minister expect the first yield will come from whatever system is agreed?

I cannot anticipate the results of the discussions which are going on at the moment. I am simply saying one cannot assume that any such system will be precisely the same as the present system. In fact, by definition it must be different.

Whether the proposition before the farmer's leaders is accepted or otherwise, surely the Minister can predict when the first yield from the new system will become available.

No. The discussions are going on at the moment. As the Deputy is aware, the system will be devised by the Government and the devising of that system will occur when the consultations have concluded, which they have not yet done.

Does the Minister recollect that on the Special Committee on the VAT Bill he described the present operation of the VAT system as being wrong both in principle and in practice? Does he now propose such a system to the farming community as one of the options?

That is widening the three questions.

This is in relation to Question No. 7. It is absolutely relevant.

May I be permitted to answer that question?

The Minister may answer that question if he wishes, but the Chair will not permit the question to be further expanded.

I think the Deputy meant not the present system of VAT but the one that has been operating until recently, and his recollection of what I said is correct. Certainly it represents the sense of what I said. As I have indicated, if the VAT system is to operate in that way from 1 May, it will be for the purpose of recovering for the Exchequer any sum that would otherwise be lost.

Will such a system not be open to the same objections?

I agree with that.

Could the Minister, who originally proposed the levy of 2 per cent which was abandoned in favour of new unspecified proposals——

Would the Deputy repeat that question?

In regard to the 2 per cent levy which we understand was suspended pending discussions going ahead now, could the Minister indicate to the House what is the Government's intention as to the first dating of a yield of tax? What is the Government's objective in this area? Which year can we expect to see the farming sector begin to pay some form of tax?

The Deputy should be aware that the operation of the levy has neither been abandoned nor suspended. It was due to commence operation on 1 May next. As indicated there are circumstances in which this might happen. The question of the yield and the amount and the date of the yield that would come from a new system to be devised must obviously await the devising and publication of that system.

Given that the amount the Minister is going to get in lieu of the levy, if the levy is dropped in favour of a new form of taxation, and this is going to stop coming in early 1980, what kind of gap between that and the beginning of the new form of taxation does he regard as tolerable, given that any length of gap will mean a shortfall to the Exchequer?

The answer to that clearly depends on the new system and the yield from it.

I asked the Minister what kind of gap he would regard as tolerable. That is a question of asking him his view of what is regarded as acceptable. The answer to that does not depend on what is agreed. It depends on what his view is.

If the Deputy thinks I am going to start speculating at this stage he is wrong.

In relation to the levy we knew when it was expected to commence and what the expected yield would be. The position is now that the Minister leaves the House totally ignorant as to what his idea is on when yields may be available to the State from any other system that may be devised.

I have already indicated that the question of the yield and the date of the yield and so on is a matter that can only be determined when the system is devised and published. At least it can only be made available to the House when it is devised and published. I appreciate Deputy O'Leary is concerned with regard to the levy but I note of course that he and his party and his party leader were against the levy and I am consoled by their concern about it now.

Is it true that if a system is devised and accepted by the Government which commences on 6 April 1980 and if it is similar though not exactly the same as the present system, then payment under that system will not be due until the end of 1981? How does the Minister propose to fill the gap between the ceasing of the VAT system in early 1980 and that date? That is something the Government must have considered and we would like to know the answers.

I have already indicated that the new system must, by definition, be different from the present system because it will have to be designed to produce a yield from farmer taxation in line with the yield from the rest of the community which the present system does not do.

I have already told the Deputies that that information can only be made available when a system has been devised.

Surely the Minister should be able to give us this minimal information.

We have pursued this question for an unusually long time. These are hypothetical questions as far as the Chair is concerned and they have been answered.

We only want minimal information. We want to know the yield and the date. That is not asking for details of the agreement.

The Minister has told us when the VAT system will cease to operate and he must tell us now when the other one is going to commence.

I do not propose to answer that question again.

Does the Minister appreciate that there is widespread concern at the insensitivity with which this issue has been handled and concern lest the kind of insensitivity shown by his failure to reply to this question provoke further difficulties and further divisions in the country about taxation? Does he not appreciate that we are in a very delicate area and that we should try to avoid causing the situation to deteriorate further?

The Deputy's view of insensitivity may not be shared by everybody but I would think that the Deputies opposite, if they had an ounce of shame in them, would be afraid to raise the whole question of taxation because of their record in that regard, and we will be hearing more about that later this evening.

Due to the unsatisfactory nature of the Minister's reply I ask permission to raise this matter on the adjournment?

I will communicate with the Deputy.