Thursday, 23 June 2016
4. To ask the Minister for Finance if he will assist registered farm contractors by introducing accelerated investment allowances to allow them to invest in high-capital-cost machinery, as occurs in the United Kingdom (details supplied); and if he will make a statement on the matter. [17492/16]
As the Minister knows, farm contracting is a very expensive business and the cost of equipment is enormous. Farmers need this equipment to deal with climatic conditions. Farmers want to get silage and harvesting done very fast. Other countries have special credit allowances. I have supplied the details of the situation in England to the Minister. It is to be hoped the Minister could consider introducing such a scheme for registered farm contractors in Ireland.
A comprehensive review of tax matters pertaining to the farming sector was announced in budget 2014 as a joint initiative between the Departments of Finance and Agriculture, Food and the Marine. The purpose of the review was to analyse the benefits of the various tax measures to the agricultural sector and the wider economy versus the costs to ensure tax policy aligned with the objectives set out in Food Harvest 2020.
The review focused on three key policy objectives for agri-taxation policy, including increasing mobility and productive use of land, assisting succession, and complementing wider agricultural policies and schemes through actions such as supporting investment to enhance competitiveness and environmental sustainability, alternative farming models such as farm partnership and the responses to increasing income volatility. Following this review, a significant number of measures were introduced, retained or refocused in the last two Finance Acts to assist with succession and support young trained farmers. These include, but are not limited to, targeting of capital acquisitions tax relief for agricultural property to ensure it is used by active farmers; broadening the capital gains tax requirement relief so that, for example, individuals can now lease out land for up to 25 years prior to disposal and still be eligible for CGT retirement relief; extending duty relief for non-residential land transfers between certain close relatives; extending general stock relief, stock relief for certain young trained farmers and stock relief for registered farm partnerships; and extending the stamp duty exemption for young trained farmers.
In addition, a new succession transfer partnership proposal was introduced in the Finance Act 2015, which is subject to State aid approval. There were a number of suggestions during the review regarding widening and accelerating capital allowances, but the review highlighted that capital allowances are the most costly to the Exchequer of any of the agri-tax measures.
As the Minister knows, the agricultural industry and exports are vital, and good harvesting, crop management and environmental issues are important. My proposal is aimed specifically at assisting registered farm contractors in Ireland. I must declare that I am a member of its representative body. I ask the Minister to introduce measures to assist them in the purchase of large machinery, which is computerised and extremely costly. Some tractors cost €150,000 and implements could cost the same. Combine and silage harvesters cost €750,000.
The UK has special incentives to assist farm contractors with tax breaks and low finances. I ask the Minister consider such a proposal. It has nothing to do with the handover or use of land. My question refers specifically to registered farm contractors who operate above board, are represented by their association and are recognised throughout Europe. They are members of European associations.
The Deputy's question referenced a review. The UK does not currently offer a capital allowance measure targeted at the agricultural sector. However, farmers can qualify for the annual investment allowance, which permits 100% first-year allowances on certain business, plant and machinery expenditure which would apply to general businesses. Interestingly, the IFA and the Department of Agriculture, Food and the Marine, when a full review of all of the agri-sector tax reliefs was done, did not recommend anything along these lines. I will refer the Deputy's question to the tax section of my Department and get a view from it in advance of the next finance Bill.
The IFA is not the Department of Agriculture, Food and the Marine and does not represent contractors. They might not want this. The IFA is a very powerful lobby group, which I support - it lobbied this week. I am referring to a specific national organisation representing hundreds of contractors who are registered, pay their taxes and employ people. We could not deliver our agri-industry without them. They are a vital cog in the wheel. The IFA does not want to know about them. We had issues with the IFA. It wants complete control. This matter is nothing to do with the IFA. Farm contractors have a separate, established, registered and recognised organisation in Ireland. The machinery costs an enormous amount of money. I appreciate that the Minister said the IFA did not recommend tax measures. We need specific incentives to help farm contractors. The IFA controls a lot, but it does not control everything.
The Deputy's suggestion seems to be that for one sector of the economy there would be an accelerated capital allowance in respect of machinery which would amount to 100% in the first year. The practice across taxation is that costs such as this are written off over a period of years, as I understand it. We will examine the issue. It would be out of line with the practice.