Dáil Éireann Debate, Friday - 16 September 2016
1601. Deputy Sean Sherlock asked the Minister for Agriculture, Food and the Marine the potential cost to the Exchequer of introducing an income volatility management tool modelled on the Australian farm management deposits scheme. [26236/16]
View answerThe publication of the ‘Agri-taxation Review’ in Budget 2015 put in place a comprehensive taxation strategy for the sector. The Government’s commitment to agriculture was evidenced by the implementation of the Review’s recommendations over the past two budgets. This has seen a series of positive changes for Irish agriculture, especially in the areas of land mobility and succession, all of which will support the aims of Food Wise 2025 in terms of increasing the productivity of Irish farms.
The Agri-taxation Review included two recommendations specifically to help address farm income volatility, both of which were introduced in Budget 2015:
- Retain and enhance ‘Income Averaging’ by increasing the period from 3 to 5 years, providing more scope for income smoothing within a commodity price cycle.
- Allow averaging to be availed of where a farmer and/or their spouse receive income from an on-farm diversification trade or profession.
The Agri-taxation Review concluded that a farm deposit scheme to counteract income volatility (based on Australian and New Zealand models) would not be compatible with EU State Aid rules, which preclude supports to falling farm incomes arising from low commodity prices in the market place. It was noted that even if a compatible scheme was devised, it would be likely to have a very significant cost.
Recent difficult market conditions have brought renewed focus to this issue and there have been proposals for the introduction of various types of income deferral scheme. The ‘Programme for a Partnership Government’ states regarding agri-taxation: “We will also investigate taxation measures aimed at supporting farmers through periods of volatility”. Consideration of this and the various cost and state aid issues involved is ongoing in the context of Budget 2017 deliberations with my colleague the Minister for Finance.
