Farm Ireland

Wednesday 17 January 2018

Skillful cuts and ticking timebombs

Darragh McCullough

Darragh McCullough

Minister Coveney has learned his lesson from last year's Budget.

Back then, he announced a €30m hit to the Disadvantaged Area Scheme (DAS). With 100,000 recipients, it was always going to be political dynamite.

In effect, the cuts are still being pushed through, albeit a year later and with an additional sweetener of €5m being reallocated to the pot.

The minister has also been much more careful to couch his cuts to the DAS and suckler cow scheme this time round in a way that he claims protects the most vulnerable farmers in the most marginal areas.

At the same time, the cut that really affects the most vulnerable farmers - to the Farm Assist scheme - is conveniently somebody else's problem in the Department of Social Protection.

But there could be a couple of ticking time bombs in changes that slipped under the radar. The Capital Gains and Acquisitions Tax increases, along with the threshold reductions, will not overly worry most farming families.

A 160ac farm valued at €10,000/ac along with stock, machinery and a house would not breach the reduced threshold of €225,000 in most cases.

However, a jump in land values to €12,000/ac would make this same farm liable to over €100,000 in taxes.

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In addition, the long game on the farm consolidation and partnership incentives is an interesting one. Bigger farms will be more profitable units. In turn, these could be easy targets for governments. With this in mind, it is probably only a matter of time before the stock reliefs that are available to the aforementioned partnerships and young farmers are wound up.

Left-leaning politicians may also be dismayed to find that the average farmhouse stuck in the middle of a farm is likely to yield little more than a paltry €90 a year under the current rate of property tax. The fact that these same houses are sitting on farm properties worth millions is likely to catch somebody's attention in the future.

Indeed, the fact that Stamp Duty Relief was 'over-looked' in this Budget (it is due to be reinstated in the Finance Act) may have been an exercise in softening up the farming electorate for a more permanent change in 12 months time.

Indo Farming