Michael Creed (Cork North West, Fine Gael)
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Question 77: To ask the Minister for Finance if his Department's attention has been drawn to the concerns among energy crop growers of the tax treatment of establishment costs; and if he will make a statement on the matter. [17404/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that the growing of energy crops such as miscanthus (elephant grass) and willow, for example, is regarded as crop husbandry. As such it is treated as farming for tax purposes. The crops in question are generally perennials which are harvested on a regular basis to provide bio-fuels. The initial cost of planting the root stock of these perennials is treated in tax law as capital expenditure. No deduction is, therefore, allowed for tax purposes. All expenditure subsequent to the initial planting is deductible as a trading expense. This tax treatment is in line with the tax treatment of other perennial crops such as nursery plants and fruit trees. I understand that grant aid is payable on 50% of the approved costs associated with establishing miscanthus and willow crops for biomass. The cost of establishment is estimated at €2,900 per hectare, giving a maximum grant payment amount of up to €1,450 per hectare.