Finance Bill 2014


Dáil Éireann 5 November 2014

Thank you for the opportunity to speak on this Bill.

I would like to begin by taking this opportunity to commend Michael Noonan and his officials for their hard work in recent months, which culminated in the recently announced Budget 2015 and now the Finance Bill 2014 to enact the necessary legislative changes.

Returning our country to growth has been and remains a key objective of this government and much of the infrastructural changes necessary to achieve that growth emanated from the Department of Finance.

Looking over today’s Finance Bill, it is clear that Minister Noonan has continued in his common sense approach to fiscal matters, ensuring that families across the country benefit from a reduction in universal social charge and income tax and ensuring that 80,000 more workers are removed from the obligations of the universal social charge.

I note that the Minister has endeavoured to increase the availability of land for active farmers and many of his actions on this front are commendable. However, I have grave reservations about certain changes to the capital gains tax regime, which I believe will cause huge problems in months and years to come for farm families in that it will have serious and unintended consequences for commercial farmers who also work part-time.

The new legislation defines an active farmer as a person who ‘actively farms at least 50% of his or her time on the land’. This provision will cause huge problems for many people who in recent years have taken up part-time employment to boost the viability of their farm holding. Many farmers who have a part-time job will now fail to qualify for inheritance and gift tax relief. This relief, which currently operates as a 90% reduction in the value of the land being transferred, is of huge benefit to all farmers.

Currently neither the person handing over the land nor the person receiving it needs to be active farmers to qualify for this relief. From January 1st next, the relief will only apply on agricultural properties gifted to, or inherited by, active farmers or to individuals who are not active farmers themselves but who immediately lease out their land on a long-term basis for agricultural use to an active farmer.

As a result of this change, many serious commercial part-time farmers will never be able to transfer their holdings to their sons or daughters as the inheritance or gift tax will be impossible to pay.

A second problem may arise with stamp duty. Currently in inter-family transfers, when the person getting the land has the appropriate agricultural education and is under 35 years of age, the stamp duty is reduced from two percent to one percent. This will remain in place up to 31st December 2017 but with two major changes. The retiring farmers must be under 65 on 31st December 2014 and the person getting the land must be an active farmer.

The definition of an active farmer must take into account part-time farmers who, if young enough, will have received the relevant agricultural education, such as the Green Certificate in Agriculture and who are farming the land irrespective of how many hours they work off-farm.

Many such families get huge help from their wives and partners and from their own families and this must be taken into account. The Budget made great strides to get land into the hands of people who can commercially work such lands, particularly through long-term leasing, but if it becomes a reality, particularly in the west of Ireland, where over 60% of all farmers are part-time, there will be large tracts of land that will not be transferred as it would financially ruin small farmers.

I don’t believe that there should be a two-tier approach to farm transfers. Most of the part-time farmers I know, because of their limited acreage, cannot make a living from the land without an outside job of some sort. There should be no discrimination between full-time and part-time farmers. If small farmers’ sons and daughters have the required agricultural education they should not be treated differently.

Many farmers have already contacted me about this issue, fearing that it will jeopardise their planned transfer of farmland and I would urge Minister Noonan and his officials to re-examine this provision, given the important role that part-time work plays in many rural communities, particularly in the west of Ireland, where farm holdings are, on average smaller, and farm incomes lower.