Plaid Cymru urged the UK Government to pause and review planned changes to inheritance tax for farmers, warning the impact could be destructive in rural Wales.
Llŷr Gruffydd said the problem with the policy is it does not distinguish between millionaires buying land to avoid tax and family farms scraping a living from the land.
Raising concerns about far-reaching consequences, he told the Senedd: "Wales isn't a nation of lavish-living millionaire farmers. Our family farms operate on tight margins and they're cash poor; many live a hand-to-mouth existence and too many are in debt."
Mr Gruffydd warned the changes, which will see 100% agricultural property relief to inheritance tax restricted to the first £1m from April, will force family farms to sell land.
The shadow rural affairs secretary said: "The policy is utterly counter-productive at a time, of course, when we need to be strengthening our food security – not undermining it."
'Caught in the cross-fire'
Recognising a need to crack down with multi-millionaires who buy up land for tax avoidance purposes, Mr Gruffydd warned working family farms are being caught in the cross-fire.
"This isn't just bad news for farms," he said. "It's bad news for the wider food sector, for the wider rural economy and for jobs in the supply chain. It will reduce local economic activity ... and, of course, it'll further weaken the social fabric of our rural areas."
Leading a debate on Wednesday, he pointed to proposals for an alternative "clawback" system which would levy inheritance tax if assets are sold by the beneficiary within seven years.
He explained clawback is used by other European countries to discourage buying farmland to minimise tax bills, adding that such a policy could raise 7% more for the UK Treasury.
"It feels very often like a sector under siege these days," Mr Gruffydd said. "But this proposal on inheritance tax goes deeper...the one thing you cling onto is your ability to pass your farm on to the next generation, to give your children a livelihood."
'Draconian'
Peter Fox, the Conservatives' shadow rural affairs secretary who is a retired farmer, backed calls to pause the "draconian" decision to remove agricultural property relief.
He said: "Let's also be clear: average farm incomes are low, certainly nowhere near even half of what any of us get paid in this place."
"There's no way the average farm can generate enough money to pay inheritance tax, even if spread over 10 years. The fact is farms would have to be broken up."
His colleague Samuel Kurtz criticised the Welsh Government's "delete-all" amendment to the motion which "rides roughshod over this Senedd in trying to gain a unified voice".
Mr Kurtz, the son of a farmer, pointed out that Steve Reed, the UK rural affairs secretary, told farmers Labour had no plans to change inheritance tax rules before the election.
'Frozen in fear'
Welsh Lib Dem leader Jane Dodds said farmers and their families are frozen in fear as she accused the Labour UK Government of repeatedly picking on the little people.
"Families are genuinely worried about their futures," she said. "Young people are concerned about whether they can carry on. This policy discriminates against the widowed, the widower, the terminally ill and older farmers."
Pointing out that 43% of the sector speaks Welsh, Plaid Cymru's Siân Gwenllian warned the change could have a disproportionate impact on the language.
Plaid leader Rhun ap Iorwerth, whose son is an agriculture student, warned the change will be a heavy blow to an industry already under so much pressure.
He said: "Welsh family farms need a Welsh Government that stands up for them and genuinely makes the case that this inheritance tax change should be delayed until its impact is honestly and carefully assessed."
'Catastrophic'
Huw Irranca-Davies, the deputy first minister, said the UK Government inherited a catastrophic financial situation, with a £20 billion "blackhole".
Mr Irranca-Davies, who is responsible for rural affairs in Wales, acknowledged significant concerns about the proposed changes to agricultural property relief which is not devolved.
He said: "Many farmers have met with me and shared their worries about passing on their farms to their children, reflecting a widespread anxiety amongst our rural areas."
"I have made and will continue to make strong representations to the UK Government about the need to understand and respond to the specific concerns of our Welsh farmers."
Plaid Cymru's motion was narrowly voted down, 26-25, before the Welsh Government's amended version was agreed, 26-14 with 11 abstentions.
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