Living off the fat of the CAP: Ireland's garishly affluent 'ranchers' have grown rich on European aid, opening up a dangerous gap between rich and poor, says Alan Murdoch

THE IRISH Derby yesterday and Galway Race Week next month provide the sort of excitement on the turf you will never forget - and outfits you wish you could. Strange sights emerge from big Mercedes and Japanese saloons. Portly grandmas in cream flapper dresses wobble on high heels. Colour schemes defy belief: a two-piece suit in blinding orange with hat, gloves, handbag, nails and lipstick to match; a black- and-white check dress with huge buttons in the colours of snooker balls.

This is a costume spectacular with a new monied elite cast in the lead roles, cash wads at the ready, glowing with deep suntans from Marbella or the local beauty salon. If you've made it, this is where you come to flaunt it.

Probably the largest group are what Ireland's hard left derides as 'ranchers', or 'the hacienda classes': recently wealthy large farmers and a dependent stratum of provincial business people, whose money derives to a large extent from social changes wrought by the European Union's Common Agricultural Policy over the past 20 years.

Of the few European issues that emerged in Ireland during this month's European elections, the most recurrent was what many, on the left and right alike, consider to be a scandalous misallocation of European funding. Grinding the axe of urban-rural divide, the Democratic Left's combative TD (MP) and European candidate, Pat Rabitte, wrote to all Dublin voters highlighting payments of IR pounds 70,000 to some farmers this year for doing effectively nothing under the 'set-aside' scheme.

He quoted figures based on Irish receipts from the EU from 1989 to 1993, showing that more than 50 per cent of the European money coming to Ireland went to just 3 per cent of the population - the country's richest farmers. With almost 100,000 unemployed in Ireland, he said, 'Dublin has been screwed for the last 20 years'.

The foundations of this new agrarian elite were laid in the five-year transition period after Ireland joined the European Community in 1973. Large-scale bounty began to flow in 1976 when EU farm-supports for Ireland more than doubled to IR pounds 245m, and in 1978 reached IR pounds 365m. This fuelled land price inflation as farm acreages were expanded on the back of rising receipts.

Garish affluence came into its own. Farmers' conspicuous consumption ranged from the big Mercs to bold white, Texan-inspired, architectural eccentricities known in country property circles as 'Irish Dallas'. This was epitomised by the Meath farmer who erected huge sets of antlers over his gleaming white gateway.

Resentment against farmers among punitively taxed workers resulted in mass protests in 1979. These were ignited by the agrarian lobby's hostility to a proposed 2 per cent farm sales tax, and fuelled by what the Irish left had long seen as a tax regime that turns a blind eye to farmers' profits. 'The system means the top third are on a big multiple of the average income,' a senior union official complains. 'The top 10,000 to 20,000 farmers pay sweet FA in tax and don't work.' He is exaggerating, but how much?

Irish Finance Minister Bertie Ahern revealed provisional figures in the Dail last year, showing the average farmer's income tax in 1992 at just IR pounds 696, with the average worker chipping in IR pounds 3,662 (the non-farming self-employed coughed up IR pounds 3,431).

Economists argue that farmers and other self-employed people are merely making the most of generous business allowances. But that highlights the absurdity of a tax system under which, in 1989, only 5,100 of the self- employed - supposedly out of 2,000 doctors, legions of barristers, dentists, publicans and 190,000 farmers - declared taxable incomes of IR pounds 25,000 or more. This figure made front-page headlines.

The irresistible conclusion is that a massive fiscal black hole has long existed, which Irish governments have judged politically too hot to tackle. No accountant questioned could recall anyone convicted of tax fraud actually going to jail in Ireland. A Cork man sentenced for failing to submit a tax return had his sentence quashed on appeal. And some serve short sentences for failing to pay fines for non-payment of tax.

A reading of the Irish Revenue Commissioners 1993 report suggests that many farmers have Arthur Daley as their tax consultant: among those fined in the preceeding 12 months for tax misdemeanours, 34 per cent were farmers, as were 21 per cent of those settling unpaid arrears, including the sum of IR pounds 750,000 from a Clare farmer-publican and IR pounds 172,000 from a Tipperary farmer.

This is not necessarily humiliating for the miscreant. A visiting friend listened in amazement as in-laws boasted of a IR pounds 50,000 back-tax settlement. 'It shows what wealth there is in the family,' the mother said.

European aid to Irish farmers has reached mind-boggling sums: a total of IR pounds 7,026m between 1989 and 1993, the Dail was told last week. But the farm community itself is riven with stark inequalities. In 1991, EU Agriculture Commissioner Ray MacSharry warned that 80 per cent of farm supports were going to 20 per cent of farms, under a system that 'did not take adequate account of the incomes of small and medium-sized family holdings'.

His reforms set ceilings for agricultural subsidies and, for example, increased the market influence in reducing grain production where supply exceeded demand. Before the reforms, big-quota producers thrived, but the number of farm holdings fell by 24 per cent during the Eighties. The poorest 10 per cent of Ireland's 160,000 farms have an estimated value of under IR pounds 10,000, with 57 per cent below IR pounds 50,000.

British and Dutch attacks on what they called Mr MacSharry's 'Sligo-isation' - differentiated, and lower, supports for smaller units - helped to rein in the commissioner's more redistributive ideas. But continuing inequity - especially EU funding of costly 'set-aside' schemes at a time of high unemployment - are likely increasingly to shock the public. Professor Alan Matthews, of Trinity College, Dublin, finds nothing inaccurate in claims that the CAP means that the unemployed of Dublin, who are forced to pay inflated food prices, are subsidising the country's richest farmers .

The fortunes of Taoiseach Albert Reynolds's Fianna Fail, the larger party in the Dublin coalition, were boosted by the reforms of Mr MacSharry, a former Fianna Fail agriculture and finance minister, by his contribution to the solution of the Gatt crisis last year, and by the increased prosperity for those still in farming.

Armed with this and IR pounds 7bn in EU aid over six years, the party is eating into the wealthy large farmers' allegiance to Fine Gael, lately an unhappy cohabitation between Catholic right-wingers and liberal social democrats.

Mr Reynolds and close ministerial allies, nicknamed the 'Country and Western Alliance', are well-placed to become Fine Gael's undertakers. But it would be ironic if a party, which used to be committed to maintaining as many people in agriculture as possible, gained the support of a rural elite created by a regressive farm policy and mass migration from the land.

(Photographs omitted)