‘Welcome but not enough’: Irish farm groups react to SD age limit abolition

Irish farmers’ organisations have had mixed reactions to the news that the inter-family age limit of 67-years-of-age is to be abolished.

While the abolition of the limit was welcomed universally, it is widely believed by the farmers’ groups that this is not enough following the trebling of stamp duty in Budget 2018.

ICMSA

Speaking on the subject, the Irish Creamery Milk Suppliers Association (ICMSA) has responded by welcoming the removal of the ‘Under 67’ age limit for consanguinity relief and said that the age limit had always been arbitrary and unfounded.

But John Comer, president of the ICMSA, said that the widening of availability for consanguinity relief in no way addressed the problems encountered by farmers seeking to consolidate their holdings through land purchase on the open market.

He said that focus would still rest on the contrast between the treatment of developers purchasing tracts of land for residential development for vast sums – who qualified for a refund in full of their 6% stamp duty rate – and, for example, dairy farmers borrowing over 20 years to purchase the additional 10ac or 15ac that might make all the difference towards achieving long-term viability – who would get no such refund.

The amendment was of course welcome, Comer said, but it fell disappointingly short of what was required and farmers would justifiably feel that the discrimination against them contained in the budget announcement had not been rectified.

ICSA

Also commenting on the matter, the Irish Cattle and Sheep Farmers’ Association’s (ICSA’s) president Patrick Kent welcomed the news of the age limit abolition.

“The ICSA has been demanding a reversal on this issue since budget day. However, it is clear that the government still doesn’t get it when it comes to the damage done by the trebling of stamp duty to 6%,” Kent said.

The stamp duty rate of 6% will still apply to land purchase. This is a savage assault on the people who get up early in the morning.

“Previous government policy was supposed to support the consolidation of fragmented farm holdings. The ICSA believes this tax is an own goal, as it will likely reduce the overall take of money because people will be deterred from getting up early, working hard and looking to finance farm consolidation projects.

“It is also clear that it will undermine the ability of farmers who want to expand their holding to spend money on improving newly-bought land, because additional money will have to be borrowed to fund the stamp duty – thus reducing what is available to reclaim or upgrade land.

“In the short term this will reduce employment and enterprise in rural areas, and in the medium term it will slow down productivity growth on newly-bought farmland,” Kent concluded.

IFA

Meanwhile, Irish Farmers’ Association’s (IFA’s) president Joe Healy has acknowledged the move by the government yesterday to remove the upper age limit.

He said: “This adjustment will allow more families to carry out a lifetime transfer at the rate of 1% rather than the 6% rate.”

Ahead of the publication of the Finance Bill later today, the IFA had made a detailed submission with a number of proposals based on the tax measures announced in Budget 2018.

Healy said the increase in stamp duty is a very negative step in the context of the 2014 review of agri-taxation that represented real progress to improve land mobility, farm restructuring and the promotion of on-farm investment.

In response, the IFA has put forward three key proposals on the matter.

Firstly, the farmers’ group has proposed the Finance Act must provide that land purchased or transferred and used for farming is subject to the 2% stamp duty rate. The qualifying criteria for this measure would be the same as Revenue currently applies for an active farmer, under a number of other agri-taxation measures (Agricultural Relief, Long-term leasing).

Secondly, to address the deterrent effect of the 6% stamp duty on family lifetime transfers, greater flexibility is required for the 1% consanguinity relief, the IFA says. The age limit on the transferor should be removed for a one-year period (i.e. for 2018), to encourage and expedite family transfers. After this period, it is proposed that an age limit of 40 would be put on the transferee – to ensure the relief incentivises timely lifetime transfers.

Thirdly, transitional arrangements are recommended to be put in place to provide the lower rate of stamp duty (2%) on transactions where agreement had been reached on a land transaction (transfer/purchase) before the budget, but where the transaction had not been completed.

Aside from these proposals, the IFA is also looking for a reduced rate of stamp duty for farm consolidation and the abolition of stamp duty on long-term leases, as announced in Budget 2015, but not yet enacted.

The submission also identifies a number of “practical measures”, to ensure that participation in the Key Employee Engagement Programme (KEEP) would be available to farming enterprises.

Lastly, there is also a detailed proposal on income averaging, whereby a farmer should be allowed to ‘step-out’ of income averaging more than once in a five-year period, where he/she is not carrying an unpaid deferred tax amount from a previous ‘step-out’.