Farmers want extra time to pay tax bills due to ‘income crisis’

Farmers should get extra time to pay their tax bills and receive further income support, the Irish Farmers’ Association (IFA) has said.

The association, which represents 75,000 farmers from all sectors, revealed its pre-budget submission on Tuesday that emphasised an “income crisis” in the industry.

IFA president Joe Healy called on the Government to deliver short-term measures to tackle "income volatility" in October's budget.

The IFA president said a combination of low product prices and “bad spring weather”, which negatively affected grass growth and increased feed costs, had put farming families under “huge pressure” as cashflow tightened.

“Throughout 2016 we’ve seen many of the commodities sell below the price of production and on top of that the recent vote in the UK has added fuel to the fire,” he said.

Mr Healy said the Britain's vote to leave the European Union had added to the uncertainty in the industry with 40 per cent of agri-food exports going to UK.

He said cattle prices had dropped by up to 20 cent a kilo since result and dairy prices had fallen by more than 30 per cent in the last 18 months.

Recent figures from a survey carried out by Teagasc in 2015 showed the average farm income in the State was about €26,500, up 6 per cent from 2014.

In a break down of the sectors, the survey found the average incomes on a dairy farm, traditionally the most profitable, were €63,000, tillage of €33,700, cattle and other at €16,200, sheep at €15,800 and cattle rearing farms at €12,900.

In its submission to the Minister for Finance, the IFA has asked for €600 million in funding for farm schemes under the Rural Development Programme, up from the €450 million allocated in last year’s budget.

Income averaging

Mr Healy said the organisation proposed a new tax payment option for farmers on income averaging, which is when a farmer elects to have their profits taxed on an average basis over five years.

Under the new proposal a farmer would be allowed, during a year when their income falls significantly, to have longer to pay their tax bill.

“To pay the tax due for a single year only on the actual income earned in that year, rather than the average tax due arising from five years’ income,” Mr Healy said.

He said the deferred tax would be paid over a three-year period.

“It’s not in any way getting out of paying tax, it’s just in the difficult year to defer tax over the following few years,” Mr Healy said.

A Revenue spokeswoman said there were no numbers on how many farmers were on “income averaging” yet as 2015 was the first year people were asked to note it on their income tax returns (Form 11).

The association is also asking for income averaging to be extended to include farmers whose spouse has a self-employed income and the tax credit to be increased to the same level as the PAYE credit.

“We recognise the commitment in the Programme for Government to increase this to match the PAYE credit, by 2018. However, IFA believes that the Government should equalise the credits fully by 2017, which would give a direct cashflow boost to farmers and other self-employed,” he said.

Other key priorities in the submission include: funding of €250 million for agri-environment schemes, introduction of a targeted sheep scheme of €25 million, extra funding of €25 million in support for the suckler cow and increasing the number of places on the Rural Social Scheme from 2.600 to 4,000.

The full budget pre-submission is available here.