Michael McGrath (Cork South Central, Fianna Fail)
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9. To ask the Minister for Finance if he has engaged with farming representative organisations in respect of the change in stamp duty announced in budget 2018; if consideration has been given to alterations to the young farmer stamp duty relief and consanguinity relief; and if he will make a statement on the matter. [44696/17]

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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10. To ask the Minister for Finance the way in which he will ensure that farmers are not affected by stamp duty increases aimed at commercial developers. [44729/17]

Michael McGrath (Cork South Central, Fianna Fail)
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My question relates to the budget day announcement of the increase in non-residential stamp duty. I understand that we will discuss the Finance Bill later this evening and this question is in anticipation of that. Serious concerns have been raised, especially regarding the transfer of a farm from one generation to the next and the fact that this may be affected by the increase to 6%. I know the Minister has made the announcement in respect of the Finance Bill and I look forward to the debate on that later.

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 9 and 10 together.

In my Budget Statement, I announced an increase in the stamp duty rate for all non-residential property transactions, including those relating to agricultural land, from 2% to 6%. On the recommendation of the Minister for Agriculture, Food and the Marine, I also announced an extension of consanguinity relief for another three years and that the stamp duty rate applying under that scheme would be fixed at 1%. Consanguinity relief is availed of in transferring farms to younger family members. It encourages the early transfer of farms to younger generations and is mostly relevant where the transferee does not qualify for an alternative relief, such as the young trained farmer stamp duty exemption.

In the aftermath of the Budget Statement, I received correspondence from farming interests regarding a number of issues, including stamp duty. I have decided that in addition to extending the period of the relief and fixing the associated stamp duty rate at 1%, the age rule for the consanguinity relief will be removed. This means that it will be possible for all gifts and sales of farmlands to closely related family members who do not qualify for the 100% exemption available under the young trained farmer scheme to benefit from consanguinity relief at a stamp duty rate of 1%. The question of an age limit will be revisited when the measure comes up for review towards the end of 2020.

The young trained farmer relief scheme will not be affected by the stamp duty rate change because it provides for a full stamp duty exemption where the qualifying criteria are met.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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I thank the Minister for his reply. The issue raised is quite unusual. We had the announcement on budget day and the following day the Minister for Agriculture, Food and the Marine, Deputy Creed, informed us that the increase was not going to apply to farmland. We all said "Fine, great, it is not going to apply to farmland". It turns out that the Minister was mistaken and that the increase applies to farmland. The Minister for Finance says that the measure is to encourage the transfer of land early in the career of the farmer rather than waiting for him or her to reach his or her 80s or 90s.

That is what was encouraged but now the Government has changed the policy and will allow people to live to 100 while keeping the land. The day before they pass on to the Lord, they can transfer the land back without any stamp duty being imposed. The very policy the Government set out to achieve has now been turned on its head. I stand to be corrected, but it suggests it was not thought through in the first place. That is the first issue.

The main issue here and what my question really relates to is the following. While I accept the issue about young farmers and qualified farmers, I spoke to a man yesterday evening who is milking 65 cows and who wants to buy 40 acres of land beside his farm. To buy that land he will now have to pay 6% stamp duty. He gets up early in the morning and works very hard, pays his taxes and produces the goods. I listened to the exchanges earlier and I ask the Minister to look at what he is doing for society compared to Apple with its tax deal and the banks, which pay no tax on their profits. It seems totally unfair. I ask the Minister to address that particular point.

Paschal Donohoe (Dublin Central, Fine Gael)
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This is a tax rate which stood for most of our recent history at 9% before going to 6% and then down to 2%, where it has remained for the past number of years. I assure the Deputy that when I made the decision, I was fully aware, as with any decision, of all of the consequences of what I was putting to the Dáil on budget night. I accept that it causes difficulty, concern and increased cost for people, but at 2% the rate was unsustainably low. If we cannot use periods like the present to change rates like this, the tax base will continue to be too narrow. That is why this decision has been made. It is my understanding that the Sinn Féin budget proposal included a proposed change to stamp duty on commercial property. The party was proposing what we did on budget day.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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That was for commercial property, not agricultural land.

Paschal Donohoe (Dublin Central, Fine Gael)
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The Deputy will have been as aware as I am of the definition of "commercial property". In putting the point to me about relief, he neglected to state that we have brought the relief in at 1% with no age limit for the next three years and that at the end of three years, we will revert to an age limit. The way in which we are looking to maintain the incentive is by having this window in place for three years only. At the end of the three year period, it will revert to an age limit fixed by the Minister of the day. I did that in recognition of the concerns raised with me in relation to the integrity of the family farm. A measure like this was justified, which is why it is included in the Finance Bill.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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The Minister fails to accept the gravity of the situation. The average farm income in this country is half the average industrial wage, which is the issue here. Farmers are struggling to survive. In many cases and where they depend on the farm alone, the only way to survive is by expanding. To expand, they must buy land beside them. This aspect is recognised and the Minister for Agriculture, Food and the Marine raised the issue with the Minister for Finance. It is clear that he said it was not just for the young farmer or where a farm was in a family, but it was also an issue for the person who wants to expand his or her holding. There are all kinds of schemes in place, including TAMS, to assist farmers in that regard, yet the Government comes back and takes away with the other hand. It smacks of something that was not thought through.

Pearse Doherty (Donegal, Sinn Fein)
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I echo my colleague's points. Agricultural land should be exempt as proposed in the amendment we supported on budget night when the resolutions went through. I wish to refer to a tangential issue relating to this by which many individuals may be caught. Certainly, I am aware of one person who purchased a large quantity of land to ensure a farm was commercially viable. The last transaction went through on budget night and an invoice was generated by Revenue for 6% stamp duty. The individual does not have the additional €10,000 or €11,000 to pay the 6% rate. As the deal was concluded before 31 March, the family will be charged 2%, but they have to pay it now and there will be a late penalty if they do not. I ask the Minister to speak to Revenue to ensure there are no late penalties for individuals who have purchased land and face a 6% levy until the Finance Bill goes through. It is really important so that people are not in default of their tax liabilities. They have only four weeks to pay that tax liability. It is important for people who entered into genuine transactions and are now caught out because it is not possible to get a loan to cover the additional 4%.

Michael McGrath (Cork South Central, Fianna Fail)
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I welcome the change from the budget day announcement with the publication of the Finance Bill. There are farmers who had not transferred farms to the younger generation prior to age 67 and so had failed to avail of the consanguinity relief. They have now been provided with the opportunity to have the transfer go through at the 1% rate, which will hopefully happen. A related point is that there is a CGT exemption for the sale of certain farmland where the proceeds are used to acquire other farmland for the purposes of consolidating the overall farm land holding. In those limited circumstances where the CGT exemption applies, will the Minister consider applying an exemption to the stamp duty increase also?

Paschal Donohoe (Dublin Central, Fine Gael)
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Regarding Deputy Martin Kenny's points, I am well aware of the gravity of any decision that I make on taxation. I am crystal clear about it. I go back to the broad point that this rate of 2% was one third of what it had been a number of years ago. If we fail to use periods like this to bring rates like that back to a more sustainable level, we create the seeds of a tax system that is unable to cope with difficulty in the future. That is why I made this change.

I ask Deputy Doherty to give me the details of the individual to whom he referred. I will look into the matter on his behalf. It is our clear intention that anyone who has signed a contract for a land transaction avails of the 2% rate. If the Deputy has a concern about an individual transaction, I ask him to share it with me so that I can look into it and ensure it is dealt with correctly from a policy point of view. I am sure the Revenue Commissioners will be aware of it too.

Deputy McGrath referred to the farm consolidation piece. There is a capital gains tax for that particular area where transactions take place to consolidate farms. I have not looked at the issue to date because the overwhelming number of the contacts I received related to the provision of clarity on the applicable stamp duty rate where contracts are already signed and the consanguinity issue, which I have dealt with in the Finance Bill.