Farm Ireland

Sunday 23 October 2016

Economic View: Budget's farming tax reliefs will only benefit a minority

Éamon Ó Cuív

Published 21/10/2015 | 02:30

Éamon Ó Cuiv, Fianna Fáil spokesman on Agriculture, Food and Community affairs
Éamon Ó Cuiv, Fianna Fáil spokesman on Agriculture, Food and Community affairs

Last week's Budget was welcomed as a good one for farmers, and the extra €550 for the self-employed certainly is good news. Even better is the fact that it is also Fianna Fáil policy to increase this allowance to the same level as the Employee Tax Credit of €1,650 during the life of the next government.

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However, this is one of the few tax reliefs trumpeted by Minister Coveney for the farm sector that will have a real benefit across the vast majority of farming families.

By contrast the number of beneficiaries and the cost of income tax breaks specifically for farmers are relatively small.

I recently asked the Minister for Finance to give me the latest available details of the number of farmers who availed of the various income tax reliefs, and the cost of each relief.

The reply is as set out in the table below.

When you allow for the fact that some farmers will be availing of more than one relief, the figures show that only about 10pc of farmers are benefitting from the tax breaks.

Compared to the hundreds of millions that are dispersed to almost every farming household in the country, the sum benefits of these measures are tiny.

This proves that decisions on direct payments and schemes are significantly more important to the vast majority than specialised tax reliefs.

This is not to say that tax reliefs do not have a key part to play in influencing farmer behaviour. An example of this is the tax relief on farm leases which has dramatically increased the amount of longer term leasing taking place compared to conacre. This can only be a good thing for all.

I would expect when the 2015 figures eventually become available we will see a marked increase in the number of beneficiaries of this relief.

In reality, as many farm families benefit from the Farm Assist and the Rural Social schemes as from farm specific income tax breaks.

In this light, it is interesting to examine this year's budget. The only specific farmer tax break is the new Farm Succession Transfer Partnership relief which will be introduced, subject to EU State Aid approval.

This can benefit farm families to the tune of €5,000 per annum.

The cost of the break in 2015 will be zero and when fully up and running it is estimated that the relief will cost €10m per annum, benefitting 2,000 families.

On the expenditure side the budget was very disappointing with the continued slow roll out of the Rural Development Plan and no significant increase in funding for the plan.

For example AEOS and GLAS have only been allocated €203m compared to the €250m sought by the farming organisations.

There was no roll back of the cutbacks to the scheme for Areas of Natural Constraint; no provision for a Hen Harrier and Natura 2000 restrictions compensation scheme; no matching funds announced for the EU package for the dairy industry; and no targeted payment for the ewe flock.

On the broader front it is now becoming more evident every day that there will be a very large underspend in the RDP by the end of 2020.

The Government also did nothing to remove the 100pc means test for farmers in receipt of Farm Assist, which means that every euro of farm income earned by such farmers is handed over to the State.

When I look at any budget I look for equity of benefit across all sectors and regions.

With €1.5bn to give out it is clear that the agriculture sector has been let down.

Éamon Ó Cuiv TD is Fianna Fáil spokesman on Agriculture, Food and Community affairs

Indo Farming


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