I propose to take Questions Nos. 237, 247 and 248 together.
Section 664 of the Taxes Consolidation Act 1997 provides for the exemption from income tax of certain income in connection with the leasing of farm land, where the land is let under a qualifying lease. The lessee must carry on a trade of farming on the leased land either solely or in partnership with a person or persons who is also a qualifying lessee on a commercial basis with a view to the realisation of profits.
This particular relief was designed to encourage longer term leases of farm land to active farmers, with the targeted policy objective of assisting with the mobility and productive use of agricultural land for farming purposes. It is not clear how inclusion of land leased for renewable energy projects could sit within the scope of the section 664 relief as currently framed.
A working group consisting of officials from my Department, the Department of Agriculture, Food and the Marine and the Revenue Commissioners examined this income tax exemption as part of its 2014 Agri-taxation Review. The 2018 exercise to update this review noted the changes made in Finance Bill 2017 that, where farmers lease farm land for solar panel use, it will be considered as eligible for Agricultural Relief (section 89 of the Capital Acquisitions Tax Consolidation Act 2003) and Retirement Relief (section 577A of the Capital Acquisitions Tax Consolidation Act 2003).
While currently I have no plans to review the tax treatment of rental income received by landowners and farmers who rent land for the development of solar energy, I understand that the matter of CAT Agricultural Relief and solar energy use will be considered as part of next year's Tax Strategy Group (TSG) pre-Budget papers.Officials in my Department and from Revenue have recently engaged with officials from the Department of Agriculture, Food and the Marine and the Department of the Environment, Climate and Communications to review CAT agricultural relief and the current taxation rules in the broader context of policies promoted by the two Departments.
As the Deputy will appreciate, the introduction of any new tax expenditure measure takes place in the context of the annual Budget and Finance Bill process. Proposals for tax expenditure measures are assessed in accordance with my Department's Tax Expenditure Guidelines. These make clear that any policy proposal which involves tax expenditures should only occur in limited circumstances where there are demonstrable market failures and where a tax-based incentive is more efficient than a direct expenditure intervention.
Furthermore, I must always be mindful of the public finances and the many demands on the Exchequer. Tax reliefs, no matter how worthwhile in themselves, lead to a narrowing of the tax base and a strong and convincing case for the benefits and outcomes needs to be articulated in order for due consideration to be given for the commitment of scarce taxpayer resources for such reliefs.