‘I would have liked to close the gap on the Earned Income Tax Credit’

In an ideal situation the income tax gap between the self-employed and the PAYE sector would have been closed completely in Budget 2018, the Minister for Agriculture, Food and the Marine, Michael Creed, said.

But unfortunately this was not possible in this year’s budget; the minister added that the gap would be closed on a phased basis.

As part of today’s announcement, it was revealed that the Earned Income Tax Credit would be increased by €200 to €1,150.

Most farmers, foresters, fishermen and small food processors are self-employed and will see their tax liability fall with the increase in the tax credit, Minister Creed explained.

“The commitment was always to close the gap between those that were self-employed and the PAYE sector on a phased basis, and this is a further step in that direction.

It was never envisaged that it would be closed entirely this year.

‘A measured response’

Speaking at a press conference following the budget announcement, Minister Creed described today’s budget as a “measured response” to the difficulties currently facing the agriculture sector.

“Obviously the changes in the budget that are applicable to the broad tax-paying community are a benefit to farmers in that category as well. The USC (Universal Social Charge) and the tax bands are important. The Earned Income Tax Credit for self-employed; increasing that by €200 to €1,150 is important.

“The tax treatment of lands leased for solar panels is equally important for individual land owners -but also to drive investment in renewable [energy], because we have obligations in terms of the percentage of our electricity generated by renewable energy to meet,” he said.

Minister Creed also said the fact that the government is “introducing a balanced budget for the first time in many years” shouldn’t be lost on anyone – especially in a “particularly difficult year”.

He highlighted that Ireland is facing significant headwinds in terms: of Brexit; in terms of possible trade policy changes in the US; sterling difficulties; and all of the other international issues that are largely outside of the Irish government’s control.

Minister Creed said: “It is important that we are seen as and perceived as a country that manages its public finances in a prudent way. There are things that I would have liked to have seen.

I would have liked to have seen progress on the income volatility measures, closed the Earned Income Tax Credit, the list is endless.

“But everybody could spend an awful lot more, there’s no point in saying otherwise,” Minister Creed said.

IFA critical of Earned Income Tax Credit measures

Meanwhile, the Irish Farmers’ Association (IFA) believes the measures announced in today’s budget relating to the Earned Income Tax Credit don’t go far enough.

Commenting on the issue, the president of the IFA, Joe Healy, said: “The government has chosen to continue the discrimination between employees and self-employed in the income tax system for yet another year.

It is simply not right that a farmer earning €16,500 will be paying €500 a year more in income tax than an employee next year.

“The government has reneged on a clear commitment in the Programme for Government that the PAYE and Earned Income Tax Credits would reach parity, of €1,650, by 2018.”