The decrease in the farmer flat rate VAT refund in Budget 2022 from 5.6% to 5.5% is “a sting in the tail” that will “cost farmers” millions.
This is according to the Irish Farmers’ Association (IFA), who has reacted to details of Budget 2022.
Overall, the IFA has described the budget as “underwhelming”.
The IFA president expressed dissatisfaction over carbon tax fund allocations.
The Programme for Government commits to additional spending of 9.5 billion from 2021 to 2030, with this figure based on estimates of the revenue that will be raised by the annual increases in carbon tax.
An additional allocation to the Department of Social Protection in carbon tax funds for next year, in light of the current upward trend in energy costs, has been made possible by deferring the €49 million that the Department of Agriculture would otherwise expect to receive in 2022, according to the government.
“While €1.5 billion will still be made available for investments that aid the decarbonisation of the agricultural sector over the period 2021 – 2030, the Department of Agriculture has advised that these schemes will form part of the suite of programmes under the new CAP and hence will commence in 2023 rather than 2022.”
On this, Tim Cullinan said:
“It’s stated in the Programme for Government that this funding would be used for environmental and climate measures for farming.
“This has not happened and it will further rock farmer confidence in the Programme for Government commitment on the allocation of the carbon tax, which is also costing farmers a lot of money.”
Budget 2022 ‘underwhelming’
Overall, Cullinan said that the budget is “an underwhelming one for farmers”.
Chair of the IFA’s Farm Business Committee Rose Mary McDonagh said that “it’s important to see stamp duty and stock relief measures extended”.
“These will encourage farm transfer and generational renewal,” she added.
However, the “reduction in the farmer flat rate VAT refund from 5.6% to 5.5% was a sting in the tail that would cost farmers €7 million a year”, the IFA claims.
The IFA Rural Development vice chair Denis Tuohy meanwhile said that “it’s positive to see an allocation for the rollover of farm schemes“, such as GLAS, ANC, BDGP and BEEP-S.
“While the renewal of these schemes is important for 2022, the schemes and the level of co-financing will need to be significantly enhanced in the CAP National Strategic Plans for 2023-2027,” Tuohy said.
“This must be separate from, and in addition to, government funding of €1.5 billion from carbon tax receipts for environmental measures.”
Concluding, Cullinan said that there are other aspects of the budget that “needed further examination”.
“The new zoned land tax must exclude farmed land and the support for multi-species swards needed to be fleshed out,” he added.