Listen: no apologies for Budget 2018 from Minister Creed

On Wednesday, Minister for Agriculture Michael Creed discussed Budget 2018 with the Irish Farmers Journal.

We began looking at the €25m committed for the creation of a second low-interest fund, and how much money that could leverage.

“We are in the process of evaluating the fir st loan scheme, which was €150m leveraged on €24m. The €300m fund that was announced for Brexit [partly for the agri-food sector, but not for farmers] was leveraged on €23m, but that is at a 4% interest rate [as opposed to the 2.95% of the first agri-loan]. We’re looking at what the strengths and weaknesses of the last loan operation were and to see what’s the best way to pitch a new loan scheme to meet the requirements of farmers and fishermen.”

Asked if loans could this time be used for capital investment, he said: “We’re looking at that issue in some detail. I don’t want to comment on that, but I hear the point you’re making.”

Some €25m is also being added to the Areas of Natural Constraints programme.

“I’m conscious that it’s a critical payment for a lot of farmers, particularly those on very marginal land,” explained the minister. “I’m aware that this doesn’t get us back to the pre-crash figures, but let me tell you it wasn’t easy, it wasn’t a given to get this €25m, though it was a commitment in the programme for government. The next debate how that €25m will be sliced and diced, but it would have been premature to do that before the money was secured. It’s a good news story.”

Income tax

Despite a €200 increase, the earned income tax credit still lags behind PAYE tax. “The gap will be closed out in due course,” said Minister Creed. “It’s a commitment we intend to honour in full, but it’s taking longer than any of us would like. It is also important to put the budget in context – we are delivering a balanced budget. It’s not possible to do everything today without blowing the carefully reconstructed public finances that are the cornerstone of the budget.”

Stamp duty

It was put to the minister that the trebling of stamp duty on land purchase to 6% will cost farmers an estimated €13.6m just on reported land purchases, before the impact of young farmer land purchase is considered.

Listen to Minister Creed as part of our discussion of the budget in our podcast below:

“Bear in mind that the total increase is expected to bring in in the region of €370m, so that puts it in context relative to other commercial transactions. The most important thing for us in the context of that stamp duty change was to retain the exempted categories. For good policy reasons we have had consanguinity relief and young qualified farmer relief for many years encouraging land mobility, inter-generational renewal and recognising the importance of having qualified farmers on holdings.

“All of those reliefs will continue to apply, and although I don’t have the figures, I’m satisfied in my own head that they are the vast majority of farming transactions in land.

“I accept that whether you’re selling a farm, or a corner shop or a public house or a block of apartments, you’re liable to 6% now. Bear in mind historically it was higher.”

It was pointed out that capital gains tax was much lower when stamp duty was last raised.

“What we have been trying to do in the past number of years is to reduce the burden of income tax, particularly at the marginal rate. We’re not getting back to a stage where we are excessively dependant on any particular tax.”

Young farmers

We asked the minister if he has any concerns that there is a swathe of farmers, over 40, trained, hard-working, especially on smaller farms who are now being disadvantaged – inadvertently – by the system, and that they now need to be considered.

“Well look, I hear the point you’re making, but I would be unapologetic in respect of the incentives we have had in place for many years. They have been about encouraging younger people in farming. If you look at the age profile, it is a critical issue and those incentives remain and they apply to most land transactions.”

Asked if there was any breakdown of the figures on land transfer, Minister Creed replied: “We are satisfied that the bulk of land transactions are inter-generational transfers, father or mother passing on to son or daughter, or under the consanguinity rule.”

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