There are fears that the trebling of the stamp duty rate on agricultural land in Budget 2018 could lead to “more good land being planted”.
Speaking to AgriLand, Fianna Fail councillor Ivan Connaughton outlined his concerns about how increasing the stamp duty rate to 6% will hurt farmers and rural Ireland in general.
While also running an auctioneering business in Athleague, Co. Roscommon, Connaughton was quick to notice the detrimental effects the stamp duty rate increase would have.
However, he was left stunned by the confusion surrounding the issue on Tuesday, October 10.
I was very worried that many senators and TDs didn’t realise that commercial stamp duty includes agricultural land.
“It’s very worrying that, as legislators, some of these people were going to vote on something that they didn’t have a great knowledge about,” he said.
In an agricultural land market that is under pressure due to a lack of available finance, there is a genuine fear that this latest move by the government could see “more good land being planted”, according to Connaughton.
If confidence in the market is eroded due to this increase, it could lead to a case where large forestry companies may pounce on the opportunity and choose to buy up land, he added.
Danger of a divide?
Meanwhile, the Roscommon man also added that there is a danger of a divide being created between farmers – due to the increase in stamp duty rates and the relief measures in place for young qualified farmers.
Speaking on the matter, Connaughton said: “There wasn’t a huge difference at 2%; but now there is a substantial difference between 0% and 6%.
“That’s €6,000 in every €100,000. There is a danger that this increase could create a divide between farmers; it will create a disadvantage in the market.
“Active farmers in their 40s – who are looking to expand – are going to suffer compared to young qualified farmers. Looking at the age profile of Irish farmers, it is fair to say that 80% would be 40-years-old or older,” he added.
Based on land sales of €300 million in a given year, the total stamp duty would have amounted to €6 million at a rate of 2%. But this 4% increase introduced in Budget 2018 will lead to an increase of €12 million, Connaughton warned.
However, the auctioneer believes that the additional funds that would be raised as a result of this increase will be negated due to the implications that reduced sale prices would have on Capital Gains Tax and Inheritance Tax returns.
What needs to happen?
Connaughton warned that the increase announced on Tuesday will have a much wider impact on rural Ireland and its economy outside the agricultural sector.
“This will act as another nail in the coffin in parts of rural Ireland that were just beginning to show signs of recovery. This is a measure for Dublin, not rural Ireland.
“It is time for rural TDs, regardless of their political persuasion, to stand up and be counted. This matter needs to be rectified,” he concluded.