Main farming bodies react coldly

THE main farm organisations reacted coldly to a Budget welcomed by the Minister for Agriculture, Mr Yates, as being worth at …

THE main farm organisations reacted coldly to a Budget welcomed by the Minister for Agriculture, Mr Yates, as being worth at least £25 million per year to the sector.

Mr Yates said that in addition to the VAT refunds, innovative capital allowances for pollution control, the renewal of stamp duty relief and capital acquisitions tax relief, farmers will also be substantial beneficiaries of the radical changes in personal taxation.

The measures, he said, will play a major role in promoting investment in pollution control and will be of real assistance in ensuring the rapid transfer of land to young trained farmers.

The £25 million package on farm taxation relief came high in the Budget. Mr Quinn told the "House that the level of flat rate addition which compensates unregistered farmers for the VAT borne on their inputs was being increased from 2.8 per cent to 3.3

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per cent from March 1st next.

He said the associated VAT rate for livestock will also he increased to 3.3 per cent from the same date.

The Minister said he was also introducing, for a three year period, an improved capital allowance for farm pollution control, as well as continuing the existing farming stock reliefs and the special stamp duty relief for transfers of assets to young, trained farmers.

Mr Quinn said the VAT reductions will cost £14.1 million and the improved capital allowance measures £8.5 million in a full year.

He said farmers will also benefit from the business relief under capital acquisitions tax, which he had increased to a flat rate 75 per cent for property retained in the business for at least 10 years after transfer.

Mr Yates said the VAT refund will be worth £14 million each year to farmers. Farmers who undertake necessary pollution control works will be entitled to a special year one allowance of 50 per cent on expenditure of up to £20,000, a major improvement on existing write off arrangements, he said.

The 25 per cent stock relief for all farmers will be a significant boost, allowing farmers to release resources for productive on farm investment.

He said that the two tax incentives specifically aimed at ensuring the early entry of young trained people into farming have been renewed a two thirds reduction of stamp duty on the purchase or gift of farmland and the 100 per cent stock relief for young trained farmers, a direct saving of £5 million each year.

He said that the increase in standard agricultural relief for Capital Acquisitions Tax to 90 per cent will be of real benefit to many farmers - transferring land, building, livestock and machinery.

But reaction by the farm organisations was cold and predictable.

Mr John Donnelly, president of the Irish Farmers particularly welcomed the moves on pollution control grants.

However, I am extremely disappointed that the Minister gave no indication in his speech that the Government would provide the 50 per cent compensatory aid for the recent CAP support price cuts arising from the Green Pound revaluation," he said.

"The Government policy of having an overvalued £IR against the ECU is clearly a penalty on the agri food sector...

"Of course I welcome the general improvement in income taxation, the improved personal allowances, the cut in the standard rate and the wider standard band."

Mr Frank Allen, president of the Irish Creamery Milk Suppliers Association, said the Budget, provisions were concentrated, mainly in the social welfare and in non agricultural sectors.

"Farmers are still discriminated against and continue to suffer lower personal allowances," he said. He was furious at the exclusion of farmers from the one per cent reduction in PRSI contributions.

He said it was an uncaring Budget for farmers in that it did nothing to prepare the industry for increasing world wide competition.

Mr Michael O'Dwyer, the president of the umbrella body for the co operative movement, ICOS, said that while Mr Quinn had responded to some of the issues raised by it, he had failed to utilise the full opportunities presented to him to reduce the cost base of the food industry and make it more competitive.

One of the disappointments was the failure to adjust the ceiling for the lower rate of corporation tax.

"ICOS had asked specifically that the ceiling be lifted from £50,000 to £100,000. Although the Minister acknowledged that the potential for job creation is among the smaller businesses, it is surprising and disappointing that he did not adjust the threshold," he said.

He welcomed the changes in personal taxation, which he said will help keep wage inflation low. But the increase in excise duty on diesel was inflationary and would offset the personal taxation improvements, he said.

He expressed disappointment at the lack of funds for Green Pound revaluation compensation, and said ICOS will continue to lobby for it.

Macra na Feirme, the young farmers organisation, said the Budget recognised the importance of young, trained farmers to the future of the sector and it had lobbied for stock relief.

Its president, Mr Joe Healy, said that stamp duty is still a major financial burden on young farmers and the continuation of the one per cent rate would come as a relief.