Following the announcement of Budget 2023 yesterday (Tuesday, September 27), the farming community is considering how it will affect their finances.
The €11 billion budget outlined by Minister for Finance, Paschal Donohoe, primarily focused on a response to the ongoing cost-of-living and energy crises.
The single biggest measure, costing nearly €900 million, is a permanent increase in social welfare payments of €12/week.
Agriland, along with financial services firm BDO Ireland, have examined several case studies to determine what the impact of the government’s financial measures will be on the farming sector.
Figures in these case studies are based on statistics included in the Teagasc National Farm Survey 2021 and experts working within the industry.
Agricultural contractor case study
In this article, we consider how Budget 2023 may impact the finances of an agricultural contractor.
The 52-year-old contractor in this example is self-employed, single and does not have any children.
For this case study, we have estimated the contractor’s gross income at €125,000 with total costs of €95,000.
This leaves the contractor with an annual profit of €30,000.
The analysis carried out by BDO Ireland shows that this contractor will see an increase of €190 in his take-home pay, as a result of a 4.3% tax saving.
Income tax and Universal Social Charge (USC) changes introduced in the budget will result in the contractor paying €190 less in tax, leaving him with a take-home pay of €25,753.
Along with all households in the country, the contractor will recieve €600 worth of electricity credits.
This will be paid in three €200 installments, the first of which will be made before Christmas.
Minister Donohoe confirmed that the current excise reduction of 21c/L for petrol, 16c/L for diesel and 5.4c/L of marked gas oil (green diesel), along with the 9% VAT rate for electricity and gas, will be extended until February 28, 2023.
There was no measure in Budget 2023 which would allow contractors to avail of a tax credit for the carbon tax component of agri-diesel, as is the case for farmers.
Concerns have been raised about the increase in the carbon tax rate for petrol and diesel from €41 to €48.50 from October 12.
However, Minister Paschal Donohoe said that cutting the National Oil Reserves Agency (NORA) levy would offset the increase.
He said that this “means that the price at the pump will not go up as a result of taxes or levies”.