An independent TD has claimed that the Residential Zoned Land Tax (RZLT) could “distort” the market for agricultural land.
Galway East TD Sean Canney raised the issue in the Dáil, where he questioned the Minister for Public Expenditure and Reform Michael McGrath.
RZLT is an annual tax, calculated at 3% of the market value of land within its scope. It will apply from 2024 onwards.
Canney said that the tax will force farm families to sell impacted land and may prove counter-productive and potentially inflate house prices in the short term.
“At a recent meeting of the Joint Oireachtas Committee on Budgetary Oversight to discuss the recommendations of the commission on taxation, there was unanimous agreement among all members and contributors, that farmed land used as an integral part of the farm business, must be exempt from the Residential Zoned Land Tax (RZLT),” Deputy Canney said.
“Farmers are private landowners, not builders. They own land to farm and earn a living, not hoard it as an investment.
“Commercial demand is not accounted for at all in the design of the tax. If a housing need is not materially evident at local level, why are farmers liable for this tax?
“E.g., anecdotal evident suggests there are over 230ac of zoned residential land in Killarney. Only [circa] 10ac of new-build construction occurs each year. It’s unjust/unfair that some farmers may be exposed to [circa] 20years of tax liability before their land may actually be required for housing,” the deputy added.
Residential Zoned Land Tax
The independent TD told the Dáil that there are many farmers who are completely unaware of the zoned status of their land or their potential liability to RZLT.
He claimed that the zoned status was applied by Local Authorities without their knowledge or intent.
Each local authority is preparing and publishing a map identifying land within the scope of RZLT. The first draft maps were published by local authorities on November 1, 2022. Supplemental and final maps will be published in 2023.
“These farmers cannot now be exposed to the RZLT. Lack of direct engagement from Local Authorities with potentially impacted landowners compounded this situation, coupled with the very tight timeline to lodge submissions against their inclusion for the RZLT,” Deputy Canney continued.
“The 3% market value tax is completely disproportionate to the potential income yield from farming. It must be noted too that the rental or income yield of farmland, unlike commercial or residential property, is not influenced by location.
“This tax will lead to the forced sale of intergenerationally held lands and distort the agricultural land market. It’s inequitable and unfair that this discriminatory action is placed on farmers,” he stressed.
The Galway East representative said that farmers and other long-term owners hold land as capital asset – on disposal, pay Capital Gains Tax at 33%.
He added that speculators / developers / builders hold land “more as a trading stock” – included in stock-take at year end – pay corporation tax on profits from “trading in land” as described by revenue.
“The RZLT should target land held on financial accounts as ‘stock’ as it’s clear that it was ‘in stock’ with an intention for resale,” Deputy Canney concluded.
Previously, the Irish Farmers’ Association (IFA) has said that no liability should accrue to farmers who wish to continue farming on privately-owned land.