Stamp duty rise: The consequences on agriculture
The government’s decision to increase stamp duty from 2% up to 6% will not only have a negative effect on the land market, but on the entire agricultural sector, according to well-known auctioneer Joseph Naughton.
Naughton, an auctioneer based in Ballinasloe, Co. Galway, said that the move will bring down both the price of land and the appetite of farmers to buy land.
Elaborating, the auctioneer noted that the increased tax will just be factored into the purchase price of the land, which will in turn discourage farmers from selling land, as they will be getting less per acre than previously. This will impact on the whole market.
“It is a massive shock,” Naughton said. “It will take the appetite out of some people selling the land and buying it; it will definitely affect the trade and the market.”
Instead, he believes that farmers are going to be more attracted to long-term leasing, which will be viewed as a better option tax-wise.
This is likely to affect the farming sector in general, Naughton warned, as it could potentially hold back progress being made by farmers trying to expand and become more efficient.
The move will affect young farmers – who are not yet qualified – who attempt to buy land or get into the sector from other industries.
It could also potentially reduce the number of young people getting into farming – at a time when a new younger generation of farmers is needed given the current advanced age profile of Irish farmers in general, the auctioneer said.
The stamp duty hike could well hamper progress on the entire sector, Naughton concluded.