21 May 2014
TAX REVIEW AN OPPORTUNITY FOR REAL REFORM OF FARM TAX SYSTEMEconomics, Farm Business & Credit
IFA President Eddie Downey has said the review of the agri-taxation system presents a real opportunity for a close examination and reform of taxation measures for the sector. Mr Downey was speaking as he led an IFA delegation to meet with the inter-departmental group, comprising officials from the Departments of Finance and Agriculture, with responsibility for overseeing the agri-taxation review.
Eddie Downey said, “Farming requires ongoing investment and structural change. With changing family structures, increased scale required for efficiency and an evolving external policy environment, exposing farmers to volatility, there is a real need to review the agri-taxation system”.
IFA’s priorities for this taxation review are to:
- Ensure valuable tax reliefs, which are critical to the development and growth of the agri sector, are maintained;
- Secure new tax incentives that are necessary to drive structural improvements by incentivising land transfer, mobility and investment;
- Examine how the taxation system can better accommodate the extreme volatility in farm incomes; and
- Examine how tax returns can be simplified to drive down compliance costs.
Issues that IFA has identified that the review must address include the negative impact that high marginal tax rates are having on farm investment. In addition, increasing land mobility, improving farm structures and encouraging more and earlier lifetime transfers must all be key objectives of the review. Further developments in the taxation system must better support farmers to manage increasing price and income volatility.
IFA Farm Business Chairman Tom Doyle stated, “Capital tax rates have increased by over 60% in the past number of years, with a huge reduction in the tax exempt thresholds for transfer. This will have a negative impact on investment and on farm transfers of a scale required to support a viable enterprise. There must be indexation of the capital tax reliefs, with no further increases in tax rates”.
Mr Downey concluded, “The work of the review group will feed into this October’s budget. It is critical that all stakeholders make clear their support for reform of the system that will allow the primary agriculture sector to grow, increase economic activity and boost employment across the country”.