Paul Daly (Fianna Fail)

I thank Senator Casey for allowing me to share time with him. I want to raise two points with the Minister of State. In fact, it is one issue that has two anomalies on the back of the budget. I refer to the changes to the flat-rate VAT for farmers. I will not get into trying to explain the flat-rate VAT. It is a figure agreed between the Minister and Revenue based on macroeconomic data from the CSO. It changes and is reviewed. In the budget it was reduced from 5.1% to 4.5%. The anomaly is that there is also a flat rate for livestock of 4.8%, and it did not change.

In basic terms, using €1,000 as the figure, if you now sell an animal in the mart for that amount, you will bring home €997.14 or 0.03% less than if the animal was sold to an abattoir or factory where the person would get €1,000. This is going to put serious pressure on the marts of Ireland. They employ a lot of people in rural areas. Previously, farmers had the opportunity to shop around – if that is the correct term to use when you are selling. They had the option of telling the man in the factory they would go to the mart or vice versa. If they are going to take a hit of even 0.03%, it adds up over the entirety of the stock. It is an anomaly and it must be looked at before the Finance Bill is signed, sealed and delivered over the line.

The second point also relates to the flat-rate VAT for farmers. It relates to the poultry sector. The previous Minister, Paschal Donohoe, gave us very good briefings as to why the poultry sector was taken out of the flat-rate VAT and would have to register. I respect the bona fides in that regard. I am not reneging on that because I agreed with him at the time. There were directives from the Commission on the back of a whistleblower, but I will not go into the whole story.

There is an anomaly in that it is reduced in a situation where farmers do not exclusively have poultry but have a mixed farm. They could have a poultry section but also do beef, dairy, sheep, tillage or whatever. Now it is becoming a very onerous task for them to return their accounts at the end of the year without having to register the entire enterprise. That was never the ambition of the change. They need to register the poultry sector but it was envisaged that they would have been able to accept or work under the flat-rate VAT for the other sections. It is an unintended consequence. It is an anomaly that will cost a lot of money when it comes to accounting for those farmers who have to register. Some of them might not even reach the threshold of expenditure to register for VAT but by virtue of the fact that the poultry part of their enterprise now has to be registered, they cannot work under the flat rate and they are caught in that situation. They are the two anomalies relating to the flat-rate VAT.