Farmers and tax
THE PRESIDENT of the Irish Farmers Association, Padraig Walshe, accused the Minister for Agriculture, Brendan Smith, last week of being "unfair" by revealing that farmers shouldered only 1.3 per cent of the entire income tax burden in 2007. It was a strange allegation. It may reflect a realisation that tax compliance within the agricultural sector will become more important as exchequer revenues fall. It may also signal a change in relationship between the IFA and the Government following a stand-off during the Lisbon referendum. Whatever the reason, farm incomes and taxation are likely to move centre stage along with negotiations at the World Trade Organisation.
A detailed analysis of farm and off-farm incomes, published by the Department of Agriculture in its annual report, stripped away the fuzzy notion of farmers surviving on the edge of ruin. More information became available this week. Full-time farmers now enjoy average incomes of €43,900. And while part-timers earn less than one-quarter of that, a majority supplement their incomes through off-farm employment. In fact, the disposable income of farm households now exceeds that of urban households. And the rate of consistent poverty is lower in the countryside.
The IFA has grown accustomed to having its own way. As the most powerful lobby group in the State, with a large membership in many constituencies, few politicians have dared to oppose it. It has consistently used farm incomes alone, particularly those of part-time farmers, to explain low tax levels. Comprehensive figures are now available. And publication of all individual EU farm payments later this year may encourage the Revenue Commissioners to become more active.
Full-time farmers earned average incomes of €34,500 in 2006. But only 101,200 of an estimated 113,000 full-time farmers registered with the Revenue Commissioners. They paid an average of €1,895 in income tax. There is something wrong there, not just in terms of farmer numbers but in the amount of tax paid. The release of such material by the Government cannot be dismissed as "unfair" or "mischievous" behaviour. It is far too serious for that.
Agriculture is hugely important for the economy. Along with the food, drink and tobacco industry, it generates nearly one-third of total net foreign earnings. It is well supported by the exchequer. It is only proper that those farmers who benefit as a result are fully tax compliant.