The improved growth rate in the Irish economy in 2014 and a positive outlook for 2015 enabled the Government to bring in a budget within the required 3% deficit ceiling without any overall reduction in public spending or any further increase in the burden of taxation. The total budget package involved a transfer of €1.05b to the Irish people from Government; this is made up of €420m in net tax reductions and a €630m net increase in Government expenditure.
Expenditure by the Department of Agriculture is set to increase in 2015 by 2%, from €1,203m to €1,251m. This increase is due largely to a significant increase in EU funding through the Rural Development Programme. Overall the net exchequer contribution to agriculture for 2015 was reduced.
Agri-environment measures: Total funding of €150m for the agri-environment schemes (REPS, AEOS, GLAS) in 2015. This is a reduction of €34m on the 2014 allocation.
Areas of Natural Constraint: Funding for the ANCs (formerly DAS) has been maintained at €195m.
Beef Genomics Scheme: Funding of €52m has been allocated for the Beef Genomics Scheme, with a payment of €100/animal for the first 10 animals, with remaining animals to receive a payment of €80/animal.
Other Beef Programmes: Funding of €9m has been allocated for the Beef Data Programme, €6m for the Beef Quality Assurance Scheme, and €1m for the Beef Efficiency Programme.
Sheep Technology Adoption Programme: Funding of €4m has been allocated to the STAP.
Food Safety Animal Health & Welfare: Total funding allocated is €81.5m which is a reduction from €84m in 2014. Funding for Brucellosis and TB is retained at €35m.
TAMS: There is a total funding allocation of €34m for TAMS in 2015, up from €17m in 2014.
Farm Safety Scheme: Funding of €12m has been allocated for a once-off Farm Safety Scheme (TAMS 1) to support farmers in upgrading safety arrangements on their farms.
Forestry: The funding allocation for forestry in 2015 is €110m, for a planned afforestation programme of 7,000 hectares.
Horticulture: Capital grant aid for horticulture of €4.2m has been provided.
Aquaculture: €6.3 m has been allocated to investments in aquaculture and fish processing.
The Government review of the agri-taxation system in 2013 has resulted in the announcement of a number of significant changes in the system. The agri-taxation changes to be implemented in this year’s budget are outlined below. At a general taxation level, there have been some reductions in income taxes announced for the first time since the economic crisis.
Income Tax Exemption for Long Term Land Leasing:
- Increase of 50% in the amount of income exempt from tax for long term leases (e.g. from €20,000-€30,000 for lease of greater than 10 years).
- Introduction of fourth income tax free threshold of €40,000 for leases greater than 15 years.
- Extension to scheme to include incorporated farm companies as a lessee and removal of requirement for qualifying lessors to be aged over 40.
Income Averaging: Extended from 3 years to 5 years and to farmers with additional self-employed income from on-farm diversification.
Capital Acquisitions Tax – Agricultural Relief: Retained at 90% for active farmers and for individuals who are not active farmers but who lease out the property on a long-term basis to an active farmer.
CGT Relief for Farm Restructuring: This measure is extended to end 2016, and rules will be amended to enable whole farm replacement to be eligible for the relief.
CGT Retirement Relief – disposals within family: Land that has been leased for up to 25 years (up from a current limit of 15 years) will qualify for CGT Retirement Relief upon disposal.
CGT Retirement Relief – disposals outside family: Land currently let under conacre that is disposed of outside of the family must either be disposed of by end 2016 to qualify for CGT Retirement relief. Alternatively, the land can be leased out long term (min. 5 years) to qualify for the relief.
Stamp Duty on Leases: Leases of 5 years duration or longer will now be exempt from Stamp Duty.
Stamp Duty Consanguinity Relief: This relief, which halves the rate of Stamp Duty (from 2% to 1% currently) between family members, is extended to end 2017, where transferor is 65 years or under.
VAT refund: The refund for unregistered farmers is increased from 5% to 5.2%.
General Taxation Measures
- Reduction in the top rate of tax from 41% to 40%.
- The income threshold for the higher rate is increased from €32,800 to €33,800 for single tax payers and from €41,800 to €42,800 for married one-earner couples.
Universal Social Charge:
- The lowest rate of 2% is to be reduced to 1.5% and the 4% rate is to be reduced to 3.5%.
- The threshold for the lowest rate is to increase from €10,036 to €12,013 and the threshold for the 3.5% rate is to increase from €16,016 to €17,576.
- The current rate of 7% is to increase to 8% for incomes over €70,044.
- Currently an extra 3% (i.e. 10%) is paid by self-employed earning over €100,000; this rate is to go to 11%.
Water charges: Introduction of a tax relief at 20% on water charges up to a maximum payment of €500, i.e. maximum tax credit of €100 per household.
Pension levy: The levy on pension funds at a rate of 0.75% in 2014 is to be cut to 0.15% in 2015 and abolished at the end of 2015.
Windfall tax: The 80% Windfall tax introduced in 2009, which applies on profits from sale or development of land which arise from planning decisions, is being abolished. The 33% CGT rate will apply.
Child Benefit: To increase by €5 to €135/month for each child from January 2015.
Water Charges: €100 per year to be paid to pensioners, people with disabilities and carers receiving a Household Benefits package, to reduce the cost of water charges. This will also be paid to Fuel Allowance recipients.
Social Housing: A comprehensive package of measures were announced to increase the supply of social housing.
Farm Assist: No change in rates; recipients are eligible for the 25% Christmas bonus.
Third level student contribution: final increase of €250 to bring the total contribution to €3,000 for the 2015/16 academic year.
Economic Growth (GDP): Projected to be 4.7% in 2014, with growth of 3.9% in 2015, and continuing at a steady growth rate of 3.4% in the following three years
Government Deficit: Projected to be €5.2b or 2.7% of GDP in 2015, falling to 1.8% of GDP by 2016 and leading to a slight surplus (0.3%) by 2018.
Government Debt: GDP ratio: Falling from 110.5% of GDP in 2014 to below 100% by 2018.
Unemployment rate: Projected to be 11.4% for 2014, falling to 8.1% by 2018.