Farm Taxation measures to support agriculture and family farms
IFA believes that the taxation system can play an important role in promoting investment and improving on-farm efficiency, encouraging timely farm transfers and overall, growing output at farm level, leading to increased earnings for the national economy.
- Retention of 90% Agricultural/Business Relief and further adjustment of CAT exemption thresholds to reflect asset price increases of past two years;
- Increase in the self-employed Earned Income Tax Credit of €550 (introduced in Budget 2016) to come in line with the PAYE tax credit of €1,650;
- Further taxation measures to address the extreme income volatility now evident across the agricultural sector. To help achieve this, it is important that our Government insist on a review of EU state aid rules, which have hampered the development of taxation measures in this area;
- Reduction in the rates of Capital Gains Tax CGT and Capital Acquisitions Tax CAT which are too high and are proving a disincentive to investment and enterprise;
- Extension of the long term land leasing tax exemption scheme to leases between siblings in certain circumstances;
- Reintroduction of targeted rollover relief for capital gains arising from the disposal of farm land following CPO;
- Extension of SEAI accelerated capital allowances for investment in energy efficient equipment to sole traders. This is particularly relevant to the horticulture, pigmeat and poultry sectors;
- That land committed to Solar Farm installations is deemed as ‘agricultural activity’ and is thus eligible for EU Direct Payments, and qualifies for Retirement and Agricultural Reliefs.
Tax measures to promote economic activity and jobs in Rural Ireland
IFA is seeking:
- Introduction of tax-credits to encourage employers to take on apprentices and create sustainable employment in rural communities;
- Double tax relief on rental expenditure and concessions on commercial rates, to encourage businesses to locate in villages and town centres decimated during the recession.
Reduced farm finance costs
Of the SME sector agriculture has the highest percentage of performing loans (loans not in default) which is in line with the positive economic performance of the sector in the post-crisis period.
However, with high interest rates and one of the highest levels of credit constraint for SME lending, Central Bank figures show the Irish banking environment remains uncompetitive and that Irish SMEs facing higher borrowing costs than their European counterparts particularly for smaller loans (loans less than €250,000, i.e. typical agricultural loans).
To help drive down the cost of finance to farmers, farmers need:
- Further Government actions to increase competition in the banking sector and to improve oversight to ensure that access to more affordable finance is available for the performing primary agricultural sector;
- Securing low cost EIB funds for investment and development in the agri sector;
- A reduction in the high costs of registering a Legal Charge, which is preventing movement of customers and reducing competition;
- The greater availability of Strategic Banking Corporation of Ireland (SBCI) loans delivered competitively through all the commercial banks to farmers at real interest rate savings;
- Farmer representation on the governance board of the SBCI to reflect the fact that to date 32% of the €45m funds drawn down have been accessed by farmers. This represents 40% of SBCI loans to date. (€45m drawn down to July 2015 is out of a potential initial fund of €800m);
- Regulation that places a fixed fee on debit card payments above an agreed transaction amount. Currently debit cards are not a realistic payment service for merchants and marts where fees based on a % of typically larger transaction amounts prove prohibitively expensive.