Tom Parlon (Laois-Offaly, Progressive Democrats)

I happen to be familiar with the deal agreed between landowners and the Minister for the Environment, Heritage and Local Government because I was party to it. The deal involves the valuation of the land. Senator Bradford referred to lower prices being offered for land than was hitherto the case. The main discussion on this subject related to the size of a parcel of land. A farmer who loses three acres because of a road building project could not compare this parcel to a 100-acre farm being sold in his area. That is a matter of form. Account is taken of the disturbance the road will cause and the fact that part of the land might be severed from the main body. The deal is such that a farmer can receive a bonus for signing up to the scheme early rather than going through all the legal procedures associated with compulsory purchase orders. This is aimed at expediting the work in question. I understand the deal still offers fair compensation to farmers affected by road widening.

Hardball is being played. There has certainly been criticism of the NRA and other agencies over the cost of motorways. They are playing hardball in that they hire consultants to value the land in question. Likewise, the landowners hire consultants to value their land. There is always an argument over the value, which is probably only right.

The Senators referred to cases in Youghal and Bennett's Bridge, for example, but I understand landowners are quite happy about the deals that have been made. In advance of signing up to the deals, much hardball is played. The farmers may not receive as much as they desire but they are as good at negotiating as anybody else.

I note Senator John Paul Phelan accepts that his recommendation might have been too broad. He seeks to restore roll-over relief for capital gains tax purposes where a disposal arises as a result of a compulsory purchase order. There was a thorough debate on this issue on Committee Stage in the Dáil in light of Deputy Bruton's similar proposal in this regard.

If a gain arises on a disposal of land, whether it be as a result of a compulsory purchase order or otherwise, capital gains tax is due on that gain. There is no valid reason land that has been purchased compulsorily should be treated differently from land that has been offered for sale.

The Senator referred to the compulsory purchase of private houses. If such a house is the principal private residence of the taxpayer, it would not be charged to capital gains tax. This is in line with the general exemption on such gains. Individual landowners and houseowners are being affected but they will not be charged capital gains tax.

The current rate of capital gains tax is only 20%, compared to 40% prior to the 1998 budget. Roll-over relief was more important to the taxpayer when capital gains tax rates were as high as 60% in the 1980s. Reinstating the relief would result in gains being rolled over time and again, with the effect that the gain would not be realised in many cases. It is appropriate to tax gains where they are realised. Abolishing roll-over relief allows this to happen and brings capital gains tax in line with other taxes.

As already stated, the decision to abolish roll-over relief is consistent with the Government's taxation policy of having a wide tax base and low tax rates. The abolition of roll-over relief and other reliefs is the price that must be paid to achieve this wide tax base. The upsurge in capital gains tax receipts during the past eight years, since the rate was lowered to 20%, is just one indicator of the success of the Government's taxation policy.

I appreciate the point Senator John Paul Phelan made about consolidation. In the most recent budget, acceptance was shown by the Minister for Finance for consolidation. The system was quite narrow in scope in that it allowed an exemption of stamp duty where farmers exchanged land. I would have sympathy for a person whose sole occupation is farming if he lost a few acres — even as few as ten — that he needed. I hope the understanding regarding consolidation demonstrated by the Minister in the most recent budget will be reciprocated and perhaps widened.