Budget 2017: Farmers to get extra time to pay tax bills
Noonan says measures aimed at helping farmers facing ‘exceptionally poor year’
Minister for Finance Michael Noonan said in his budget speech in the Dáil that the measures were to help farmers facing an “exceptionally poor year”to “step out” of income averaging this year. File photograph: Jeff J Mitchell/Getty Images
Farmers will be allowed extra time to pay their tax bills and given access next year to a new low-interest loan fund of €15 million under measures announced in the budget.
Minister for Finance Michael Noonan said in his budget speech in the Dáil that the measures were to help farmers facing an “exceptionally poor year”to “step out” of income averaging this year. “Income averaging” is when a farmer chooses to have profits taxed on an average basis over five years.
The new measure, which has been made available immediately, will allow farmers to defer the tax liability owed, and pay only the tax due for the current year.
Mr Noonan said the agrifood and farming sector had been going through a tough time due to lower world prices, adverse weather and the impact of the Brexit decision.
The Irish Farmers’ Association (IFA), which represents 75,000 farmers from all sectors, welcomed the introduction of the “opt-out” option. Joe Healy, president of the association, said the move would help farmers manage the “very difficult cashflow situation” on farms and the impact of price volatility.
Minister for Agriculture, Food and Marine Michael Creed said the introduction of the agricultural cash flow support fund, with at an interest rate of 2.95 per cent, was “groundbreaking”.
“It’ll be unsecured so it’ll be less red tape . . . there’s certainly nothing like it in the marketplace at the moment,” he told reporters.
The “flexible finance” would be available to livestock, tillage and horticulture farmers. Farmers would have an option to repay interest only in the initial years. However, the full loan would need to be repaid within six years.
Each farmer could apply for a maximum loan of €150,000 and there was no minimum amount. Mr Creed said he hoped the scheme would be up and running by January 2017.
The Minister said although the scheme is a “one-off” for the year, he was not “ruling anything out” for it to be implemented in future years.
John Comer, president of the Irish Creamery Milk Suppliers’ Association (ICMSA), was critical that €11 million from the EU crisis fund was diverted into the low-cost loan fund, “instead of being utilised in a flat payment per dairy farmer in the manner that ICMSA had proposed. There is a very real danger that fund would be frittered away in ‘penny packets’ instead of making a real difference to dairy farmers who were the main beneficiaries in most other member states.”
Mr Comer said the “step out” option of income averaging would not make any “meaningful difference”. He said it was a “niche solution” that was irrelevant to the main body of farmers that would be better served by the introduction of the Farm Management Deposit Scheme.
Mr Comer said farmers would generally consider the budget as “steady and solid”. He said his organisation welcomed the €400 increase of the Earned Income Credits for self-employed although he said the taxation system still had an “in-built bias” against farmers in terms of individual credits.
Seán Finan, president of Macra na Feirme, the rural youth and young farmers’ organisation, said he welcomed the new €25 million sheep welfare scheme. However, he said the group was “deeply disappointed” that a young farmer top-up was not applied.
Other initiatives announced to for agricultural industry include increasing the flat-rate addition for farmers not registered for VAT from 5.2 per cent to 5.4 per cent with effect from January 1st next year, extending farm restructuring relief to the end of 2019, which had been due to run out at the end of this year, and improvements in the means testing arrangements for lower-income farmers on Farm Assist.