Mr. John Enright:

Our submission is based on two key issues: the Food Harvest 2020 targets and how farmers can contribute to that; and the issue of farm income volatility which, certainly over the past five or six years, has become much more sharply into focus. The dairy sector is a good example of the latter where, since 2007, dairy farmers have seen milk prices vary, from 20 cents a litre to 40 cents a litre. For a family farm structure, it is extremely difficult to deal with such volatility. The taxation system needs to look at this issue and needs to facilitate farmers to address the problem of volatility in the future.

I will go down through some of the main aspects of our submission and set out what we feel needs to be addressed. First, on the issue of income volatility, income averaging has been an important relief for farmers over a number of years. It is an important relief. On income averaging, our concern would be that a farmer cannot earn €1 of off-farm income because if a farmer does so, he or she loses income averaging. If, for example, a farmer finds his product prices have collapsed, he or she is in a serious cash-flow situation and he or she decides to take on a part-time job in order to get through that period of time, be it three months, six months, 12 months or whatever, because the farmer takes that decision to improve his or her cash-flow and income situation, the current taxation system excludes him or her from income averaging. That is unfair. It does not make sense. That needs to be addressed in the farm income taxation review.

In terms of the issue of volatility, in Australia there is a farm management deposit scheme which is designed to address the issue of volatility. From an Irish perspective, if a farmer has a good year, in terms of product prices and income, there needs to be an opportunity for him or her to put some of that money away tax-efficiently so that in the event of a bad year he or she can draw down that money to get him through it. In that regard, there is precedent in Australia.

With quota abolition and all these free trade agreements - there are suggestions of a TTIP agreement and a Mercosur agreement, and an agreement has been brokered with Canada - we are moving into much more of a free trade scenario, which will lead to more volatility. We believe the taxation system needs to protect family farms in that scenario.

Certainly over the next two to three years and even at the moment, many farmers are looking at developing their farms. With the abolition of quotas, farmers are looking at expansion. If one decides to take on an additional cow, one does not just have to fund the cow; one must also fund the slurry storage, etc. There are a range of environmental regulations behind every additional animal one puts on one's farm. We certainly believe that the cattle allowance needs to be much more flexible in this regard. At the moment it is eight years, but we feel it should be from three to eight years and that it should have a floating allowance of 50% just to give farmers the opportunity to make these investments, given the uncertainty that is out there.

We have two issues regarding stock relief. In respect of herd expansion, there is a substantial cost from the taxation perspective, with only 25% stock relief. We certainly believe there should be 100% stock relief for additional expenditure of up to €100,000. A technical but important point concerns TB. The Department's policy on TB would be that it generally does not do full depopulations, but one could find a farmer losing 10%, 20%, 30%, 40% or even more of his herd. We feel that the taxation system needs to take that into account. At the moment, the stock relief requirement is there for depopulations. It needs to take account of the fact that a farmer could lose 20 or 30 cows, which is traumatic enough from a financial point of view, but if he gets penalised on the taxation side, it is extremely traumatic. Again, we feel that this needs to be addressed in the review.

In respect of land policy and taxation to support Irish agriculture, the key issue is that we have people who want to transfer their farms to the next generation and the tax system needs to facilitate those people so that they can do so in a tax-efficient manner. The tax system needs to support land mobility more than it does at the moment. There are a number of issues in respect of capital gains tax. Indexation was abolished when capital gains tax went down to 20%. It is now at 33%, and we feel that this needs to be looked at. The capital gains tax restructuring relief in respect of land consolidation is certainly a measure we welcome, as we think it is a very good measure, but, again, we feel it should be improved. If a farmer with two 30-acre blocks decides to buy an 80-acre block when it comes up for sale, he does not get the tax relief if he sells the two 30-acre blocks. We feel that if a farmer decides to consolidate by selling two smaller blocks to buy one block, the system should allow it. It has an advantage from his perspective, but those two blocks may be bought by two farmers, which will help their situation. We feel this needs to be looked at.

Our main point regarding capital acquisitions tax is that agricultural relief is hugely important in the transfer of farms from one generation to the next, and it is essential that this relief is maintained and improved. In respect of income tax and land leasing, one could find a member in his late fifties or early sixties whose son or daughter has just completed the green cert and wants to take over the farm. There was an early retirement scheme in the past that allowed that to take place where the older farmer had a level of income and the younger farmer could take over and develop the farm. With no early retirement scheme in place, we feel the issue of land leasing needs to be looked at again in that if a parent wants to lease the farm to his or her son or daughter for a period of time - and we would stress that it should be up to retirement age rather than continuous - the tax relief should be available in that scenario. We feel it is ridiculous that a parent can lease a farm to a stranger and qualify for tax relief but cannot lease it to his or her own son or daughter. In the context of improving land mobility, we feel this needs to be examined.

The 2% stamp duty rate is hugely important and we hope it will be retained. The young farmer stamp duty rate is important as well. In the past, there was installation aid as an encouragement for people under 35. One has the single farm payment, but stamp duty relief is important as an incentive for the early transfer of farms. We certainly believe it is important to maintain that.

Another important issue relates to pay and file dates. It was proposed last year that these dates would be brought forward, which would be of huge concern to our members, particularly in light of the CAP. The CAP is putting payments back further in the year rather than bringing them forward. For many farmers, until they get the single farm payment and disadvantaged area payments, they cannot pay their bills. If the pay and file dates are brought forward, it would post major challenges for farm families.

That is a short rundown through our submission. There are many challenges facing farmers and we feel that there are certain aspects of the tax system that need to be tweaked, particularly in the context of the volatility about which people are concerned.