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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;