Wednesday 28 September 2016

What farmers need to know after Budget 2016 revealed

Published 14/10/2015 | 02:30

Minister for Finance Michael Noonan waits by the steps of Government Buildings in Dublin. Photo: REUTERS/Cathal McNaughton
Minister for Finance Michael Noonan waits by the steps of Government Buildings in Dublin. Photo: REUTERS/Cathal McNaughton

FINE Gael have played to their most loyal supporters by granting most of the farm lobby's wish list for Budget 2016.

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Granted, income volatility measures to tackle the increasingly yo-yo nature of farmgate prices were not granted.

But in the Minister's defence, he did extend the income averaging measure from three to five years in last year's Budget, and it appears that many of these innovative ideas take months, if not years, to get the required buy-in from not only national finance mandarins, but international officials at the EU Commission. Expect further measures in future Budgets to deal with this issue.

Many horticultural producers are hugely dependent on minimum-wage staff for manual labour, and they will now face a battle to pass on the hike in the minimum wage to €9.15/hr to their suppliers.

These niggles aside, there were at least five reasons for farmers to be satisfied with their lot in Noonan's Budget.

n Increased land transfer

There were a number of measures that will help the age-old issue of land mobility in Irish farming, not least the Family Transfer Partnership measure that offers the carrot of up to €25,000 in tax relief to farm families grappling with getting land transferred into the hands of the next generation.

The €55,000 increase in the tax-free threshold will also allow parents to transfer an additional €550,000 of land and assets to the next generation tax-free. That will count for a lot in an era when land values continue to creep steadily northwards.

n Lower taxes

Farmers will also be beneficiaries of the taxation measures that have been sweetened for the rest of the workforce. So the cuts in the three USC bands, along with the new €550 tax credit for the self employed, will flow into farmers' pockets too.

n Forestry becomes tax free

After waiting at least 30 years for forestry to mature, woodland owners found themselves being hit with a massive tax bill on their clearfell earnings. In reality, most were opting to harvest their trees in a piecemeal fashion to avoid their sales breaching the current tax-free threshold of €80,000. The Government hopes that the scrapping of any tax on forestry sales will lead to more efficient harvesting at a relatively low €1m cost to the Exchequer.

n Schemes and reliefs untouched

The Department of Agriculture's allocation increased by €109m, which will help it fill vacancies and continue investing in its labs and facilities. It also helps increase the multitude of grant schemes available to farmers next year to €494m.

Close to half of this amount comes from the national Exchequer, which is a 12.5pc increase on last year, allowing an additional €55m to be spent on ensuring schemes such as the new environmental scheme, GLAS, can cope with demand.

In addition, the raft of stock reliefs that apply at varying rates for young farmers, partnerships, and others have been maintained, along with the Stamp Duty exemption on land transfers to young farmers.

n Food industry boosts

The food processing industry that farmers depend upon to turn their farm sales into €10bn of food exports every year has also done well out of this Budget.

The road tax for big articulated trucks falls 80pc to €900, while food entrepreneurs will benefit from the extension of the 100pc tax relief on income for the next three years.

Irish Independent

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