The IFA has set out its priorities for Budget 2016, with a significant focus on supporting farm incomes in what is proving a difficult year on most farms.

Volatility has been recognised, not just by farming representatives, but also by Government and Revenue, as a real problem.

Finding tools and coping mechanisms has proven difficult. IFA chief economist Rowena Dwyer explained that for farmers on income averaging, a year like this one, where income drops sharply on the rolling average, sees large tax bills with little capacity to meet them.

The IFA’s proposal would see farmers pay the income tax due on profits made in the current year only.

Temporary opt-out

Any tax liability carried into the year through averaging would be deferred by a temporary opt-out. It would then fall due in subsequent years. “Farmers would pay the same amount of tax, Revenue would receive the same tax-take from farming,” said Dwyer.

She pointed out that the proposal allows scheduling of tax payment to be in line with payment capacity – ability to pay is an essential element of fair taxation. Currently, one in four farmers avails of income averaging. The IFA proposes that to widen the use of this facility, the restriction preventing farmers whose spouse is in self-employment should be removed.

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Other tax measures include a call for the earned income tax credit to be increased to parity with the PAYE allowance this year, one year ahead of schedule. Following years of lobbying, an earned tax credit of €800 was introduced last year.

Commitment

“We recognise the commitment in the Programme for Government to match the PAYE credit by 2018,” said IFA president Joe Healy. “IFA believes that the Government should equalise the credits fully by 2017, giving a direct cashflow boost to farmers”.

Taxation incentives for energy-efficient equipment and renewable energy investment are also called for.

IFA farm business chair Martin Stapleton highlighted the need for land leasing incentives to be extended to siblings. “If a person decides to lease their land, their sibling is at a massive disadvantage against any other farmer competing for the land, which is hardly fair,” said Stapleton, the recently elected Limerick farmer.

To prevent such a measure being exploited by families for tax-avoidance, the IFA has added some restrictive clauses. Both farmers would have to have owned the land for a defined period prior to the lease commencing, and only one sibling could avail of the leasing tax exemption – there could be no “cross-leasing”.

IFA rural development chair Joe Brady highlighted the importance of income support schemes such as the Rural Social Scheme (in which the IFA wants places increased from 2,500 to 4,000) and Farm Assist (the IFA says the income and child disregards must be re-instated). “Land abandonment is now a real possibility,” Brady said. The Rural Development Programme has a budget of €3.75bn over a seven-year period. Only €1.35bn has been drawn in the first three years. The IFA wants €600m/year in RDP funds from 2017 to 2020 to ensure all allocated funds are used.

“The programmes have all been established now, and roll-out of funds is the priority,” said Brady.

One scheme IFA wants improved is the ANC (formerly Disadvantaged Areas). “The cuts imposed in 2008 should be restored for these most vulnerable farmers,” said Healy, fresh from a visit to Clare Island where the stark reality of farming on the margins is a constant challenge.

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