Robert Troy (Longford-Westmeath, Fianna Fail)
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To ask the Minister for Agriculture, Food and the Marine if in the context of Budget discussions, he has raised the issue with the Department of Finance in relation to the importance of maintaining the farm taxation measures introduced in Budget 2012; and if he will make a statement on the matter. [48261/12]

Simon Coveney (Cork South Central, Fine Gael)
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A number of new tax measures were introduced in 2012, with a view to

- encourage farming as a career for young people;

- incentivise farm partnerships and greater productivity at farm level;

- stimulate land sales and land transfers;

- facilitate new enterprise opportunities in farming; and

- help agri-food businesses innovate and export.

The new stock relief measure for farm partnerships introduced from January 2012 is intended to encourage more farmers to enter into partnership agreements. For registered farm partnerships, the current rate of 25% stock relief was increased to 50%, and, for certain young trained farmers entering such partnerships, a rate of 100% stock relief is available. This new incentive will run until December 2015. I believe that collaboration through partnership can improve farm structures generally, facilitating farms to operate more efficiently, increasing scale on farms, and bringing more innovative and energetic young prospective farmers into farming. More farming partnerships are required to increase productivity and meet the Food Harvest 2020 targets. Several events were organised this year to encourage the concept of partnership amongst Irish farmers.

Budget 2012 reduced the stamp duty rate on agricultural land from 6% to 2%. In addition, half the rate (1%) will be applicable on transfers to close relatives until the end of 2014. This change will substantially reduce the stamp duty payable on transfers of farm land by gift or by sale. It should stimulate a stagnant land market – currently only 0.5% of total agricultural land is offered for sale annually – and ensure that land transfers to more active producers. It will also promote inter-generational transfer, as the cost of lifetime transfer to transferees who do not qualify for the young trained farmer stamp duty relief has reduced considerably.

Budget 2012 restructured the retirement relief available on Capital Gains Tax in order to incentivise the earlier transfer of farm assets to the next generation, and to encourage the sale of land by those farmers with no successors. As of 1st January 2014, for those farmers aged 66 and over, an upper limit of €3m will be introduced on family transfers, compared to an unlimited amount currently. On non-family transfers, the current upper limit of €750,000 will be reduced to €500,000. Applying the new limits from 1st January 2014 allows farmers already aged 66 and over to plan the orderly transfer of assets in advance of that date.

Other tax changes introduced in budget 2012 which benefit the agri-food industry include:

- Additional supports which will benefit the food industry including improvements to the R&D tax credit and a Foreign Earnings Deduction to apply where an individual spends 60 days a year developing markets for Ireland in the BRICS countries (Brazil, Russia, India, China and South Africa).

- The VAT rate applied to open farms (such as pet farms) will be 9% rather than the new standard rate of 23%. This will be of significant benefit to such farms, which offer an important opportunity for farm diversification. It brings the treatment of open farms into line with the VAT rate applied to museums and other cultural attractions.

- The exemption rate for the Universal Social Charge has been raised from €4,004 to €10,036. This will be of particular benefit to low-paid seasonal workers in the farming sector.

- Consistent with the commitment in the Programme for Government on carbon tax, farmers are now allowed a double income tax deduction in respect of the increased costs arising from the change in carbon tax (the carbon tax is to increase from €15 per tonne to €20 per tonne from 1 May 2012 for agricultural diesel).

- An amendment to the VAT refund order for farm construction will allow farmers to claim a refund on wind turbines purchased from 1st January 2012.

The taxation measures announced in Budget 2012 reflect the Government’s commitment to the agri-food industry and in particular to the expansion planned in the Food Harvest 2020 strategy. This commitment will continue to inform future budgetary policy.