Ac­cess to low-cost lend­ing re­mains the big­gest

Irish Independent - Farming - - FINANCE - JIM McCLEANE

AF­TER en­dur­ing ex­treme weather con­di­tions and the risk of a hard Brexit in­creas­ing, the agri-sec­tor will be anx­ious Min­is­ter for Fi­nance Paschal Dono­hoe will not in­tro­duce any mea­sures in to­day’s Bud­get that will add to the dif­fi­cul­ties al­ready be­ing faced by them.

This year the Min­is­ter is ex­pected to have a lit­tle over €1bn to spend on a mix­ture of in­creased spend­ing on services and tax cuts, so the room for mak­ing sig­nif­i­cant tax changes is lim­ited.

He also has to be care­ful not to do any­thing that causes an al­ready ex­pand­ing econ­omy to over­heat. In that con­text, any tax changes for the agri-sec­tor are un­likely to be sig­nif­i­cant and lim­ited to changes that af­fect tax­pay­ers in gen­eral. But if the funds were avail­able, what could the Min­is­ter do for the sec­tor this af­ter­noon?

In­come vo­latil­ity is an on-go­ing chal­lenge faced by farm­ers and the ex­ten­sion of the in­come av­er­ag­ing pe­riod with an opt-out fa­cil­ity was a wel­come in­tro­duc­tion. Changes that would im­prove the flex­i­bil­ity of the in­come av­er­ag­ing sys­tem would be an in­crease in the num­ber of opt-outs and the re­moval of the ex­clu­sion for farm­ers that have in­come from other sources or in in­ter­est in com­pa­nies.

An­other op­tion for help­ing to deal with the is­sue of in­come vo­latil­ity would be the in­tro­duc­tion of a de­posit type scheme. Typ­i­cally the scheme al­lows a farmer to set aside an el­e­ment of prof­its in a good year and draw those funds down in a dif­fi­cult year with tax be­ing paid only when the funds are drawn down. Such schemes, which have been in­tro­duced in a num­ber of coun­tries, would pro­vide a more tar­geted and in­di­vid­u­alised in­come vo­latil­ity mea­sure for farm­ers.

It seems that ev­ery year, the Min­is­ter an­nounces an­other short ex­ten­sion of the gen­eral stock re­lief pro­vi­sion. This has been a fea­ture of the tax­a­tion of farm prof­its for many years and it would be a sim­ple change to the leg­is­la­tion to in­tro­duce stock re­lief on a per­ma­nent ba­sis. Both the gen­eral scheme of stock re­lief and the en­hanced ver­sion of stock re­lief for young trained farm­ers are due to ex­pire on De­cem­ber 31, 2018. It is to be hoped that both will be ex­tended.

Other mea­sures the Min­is­ter might con­sider would be: ÷ ex­tend­ing the lease ex­emp­tion pro­vi­sions to in­clude land leased to rel­a­tives;

÷en­hanced cap­i­tal al­lowances for spec­i­fied equip­ment de­signed to im­prove en­vi­ron­men­tal pro­tec­tion (sim­i­lar to the scheme for al­lowances for spec­i­fied en­ergy ef­fi­cient equip­ment); ÷ in­crease the earned in­come credit above its cur­rent limit of €1,150.

Tax mea­sures can also be used as an in­cen­tive to achieve pol­icy ob­jec­tives. It is cur­rent pol­icy to en­cour­age the trans­fer of fam­ily farm en­ter­prises to the next gen­er­a­tion of younger trained farm­ers. To con­tinue with this in­cen­tive, mea­sures that would be wel­come in­clude: ÷ a com­mit­ment from Min­is­ter Dono­hoe to re­tain­ing re­tire­ment re­lief from Cap­i­tal Gains Tax (CGT) and the agri­cul­tural re­lief from Cap­i­tal Ac­qui­si­tions Tax (CAT). These re­liefs are cru­cial in en­cour­ag­ing the life­time trans­fer of the fam­ily farm to the next gen­er­a­tion with­out the need to sell part of the farm en­ter­prise to pay a tax bill.

÷ a re­duc­tion in the cur­rent 6pc rate of stamp duty on trans­fers of non-res­i­den­tial prop­erty. While that is re­duced for trans­fers be­tween blood rel­a­tives and for ac­qui­si­tions by some young trained farm­ers, it is a huge dis­in­cen­tive where a farmer wishes to ac­quire ad­di­tional land to ex­pand his/her farm­ing en­ter­prise but can­not avail of these re­liefs;

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