Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

100. To ask the Minister for Finance if he has carried out a cost benefit analysis of the exemption he is granting from capital gains tax to farmers who have sold their single farm payment entitlement; and if he will make a statement on the matter. [32440/14]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The background to the Deputy's question is that a technical change made at EU level to the new Common Agriculture Policy (CAP) arrangements for replacing the Single Payment Scheme for farmers with the Basic Payment Scheme after this year impacts on farmers who let 100% of their farmland and their single farm payment entitlements. As a result of the change, farmers in this position would have lost their farm payment entitlements and the Department of Agriculture, Food and the Marine advised those farmers to transfer those entitlements to active farmers by 15 May last (the deadline by which the change takes effect and after which the payment entitlements in the hands of the affected lessor farmers would be worthless).

On 1 May last, I announced my intention, based on the case made to me, to provide for an exemption from CGT on any chargeable gains arising from the disposal by the owners of payment entitlements under the Single Payment Scheme where all of those entitlements were leased out in 2013 and where the owners, because of the change in CAP regulations, were advised by the Department of Agriculture, Food and the Marine, to transfer their entitlements to an active farmer by 15 May 2014.  I propose to include appropriate provisions to give effect to the CGT exemption in Finance Bill 2014 which will be published shortly after Budget 2015 in the Autumn.

I support the principle of ex-ante and ex-post economic impact assessments, including cost benefit analysis in formulating and evaluating tax policy and, since coming into office, I have instructed my Department to carry out a range of significant economic assessments of various tax expenditure measures. I do not, however, automatically follow this course in every tax change I have made or put forward, as circumstances and common sense also have a bearing on the decisions to be made in this regard. I did not have a cost benefit analysis carried out in this instance.

Among the reasons for this is that the CGT exemption will apply on a once-off basis only and to a specified number of affected farmers who would not have disposed of their leased farm payment entitlements if it were not for a change to EU regulations which was outside of their control. Moreover, I was persuaded that, since the Department of Agriculture had advised affected farmers involved in leasing to dispose of their leased payment entitlements in circumstances where they would not otherwise have done so, significant damage would be done to the critical policy of encouraging longer term leasing in the absence of the CGT tax concession. Encouraging land mobility through long-term leasing has been one of the main drivers in agri-taxation policy. Long-term leasing provides the certainty required to encourage lessees to invest and improve land and encourages progressive and competitive farmers to enlarge their farm holdings. Finally, since a decision had to be made in this matter within a relatively short period before 15 May last, there was insufficient time to conduct any meaningful impact analysis.