Denis Naughten (Longford-Roscommon, Fine Gael)
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Question 525: To ask the Minister for Finance his views on the tax implications of the sugar compensation package for farmers; and if he will make a statement on the matter. [1268/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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There are three significant financial elements of the sugar compensation package, as far as farmers, as sugar beet growers, are concerned. The first is an amount of €123 million, payable over the next seven years via the single payment scheme, as compensation for the drop in the support price of beet. The second element of the compensation package is the restructuring aid. In July 2006 the Government decided that a sum of €40m restructuring aid be reserved for beet growers. This decision has been challenged by the Irish sugar processor by way of Judicial Review proceedings in the High Court. The third element is the diversification aid worth almost €44m, which will be drawn down in the framework of the National Restructuring Programme.

I am advised by the Revenue Commissioners that they are of the view that payments under the first two elements of the package in relation to the support price compensation and the restructuring aid to growers will be taxable as income. I am further advised that the Revenue Commissioners await some clarifications to enable them to finalise a view about the tax implications of the third element of the package, the diversification aid. The National Restructuring Programme on this element of the package was recently submitted to the EU Commission for consideration.