Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

I live on a farm in rural Ireland. People come to this Chamber and say that rural Ireland is dead. That is not correct. There are challenges within rural Ireland. Of course there are. However, some areas in rural Ireland are flying. Some areas are not, but to come in and state blankly that rural Ireland is dead is wrong.

I am conscious of the prevalence of farm income volatility in the agriculture sector. I am a dairy farmer myself. I do not know if there are many dairy farmers in the Dáil any more. There are a number of other Members from a farming background. The dairy sector is the area with the highest price volatility. At the lowest point in 2016 the price of milk was 19 cent a litre. It currently 41 cent per litre for farmers who are providing winter milk on contract price.

The volatility in the same product is reflected in this way in the difference between summer supply and winter supply. It is huge and I know more about it than most.

In response to this volatility, a targeted relief is already available to farmers under the income averaging regime. It allows farmers to pay tax based on the average of the aggregate profits and losses of the farming trade over a five-year period. In acknowledgement of income volatility in the sector, my Department has introduced further flexibility to the income averaging regime in recent budgets. In the Finance Act 2014, the availability of income averaging was extended to allow farmers in receipt of income from an on-farm diversification trade or profession to opt into the averaging regime. The period of income averaging was also extended from three to five years, thereby providing a longer period over which income volatility can be smoothed out. In the Finance Act 2016, an optional step-out from the regime was introduced to allow for farmers to temporarily opt-out from the scheme in a year when they experience lower than expected incomes. The aim of this was to ease associated financial pressures and improve cash flow for farmers in a particularly difficult year, which 2016 was.

As referred to during discussions on this matter on Committee Stage, I have committed to undertaking a review of agricultural tax incentives more generally, in co-operation with my colleague the Minister for Agriculture, Food and Marine, Deputy Creed. This will involve an examination of existing schemes, with a particular focus on income volatility and income stabilisation measures, as well as engagement with relevant stakeholders, in advance of budget 2019.

We are going to do what the amendment seeks. The aim of the review will be to update the findings from the 2014 agri-tax review to ensure that the schemes are operating in an efficient and effective manner, and meeting their policy objectives in this area. Everybody I know in the agricultural sector believes that was a very successful review for the sector. Therefore, on the basis that there is already a targeted tax measure available to full-time farmers under the income averaging regime, and given a commitment by the Minister for Finance to undertake an update of the agri-tax review with a particular focus on income stabilisation, I do not propose to accept this amendment.

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