The October Budget is looming, and speculation is turning naturally to the intentions of Ministers Noonan and Donohoe.
The fact is that when growth rates are being revised on practically a weekly basis with knock-on effects for Government revenue, it becomes extremely challenging to put forward spending plans or tax changes that, by their nature, must rest on a fixed or at least a constant flow of revenue.
As the organisation most associated with the state’s 18,000-odd dairy farmers who are only now beginning to see a market recovery after nearly 16 months of receiving a milk price of up to six cents per litre below the costs of production, ICMSA is perfectly aware of challenges around constant or climbing bills and diminishing — or disappearing — income.
No sector in Ireland experienced the kind of income wipe-out suffered by our members since 2015 but we understand the dilemma faced by the Government and recognise that the demands for higher spending become hugely problematic in the kind of uncertain economic atmosphere engendered by, amongst other things, the Brexit decision.
That being said there are actions and decision that can be made that are effectively spending neutral.
One of the most destructive aspects of farming is the kind of excessive income volatility that makes it impossible for family farms to plan or invest with any degree of predictability. CSO figures show that total dairy income for 2015 was down €222 million on 2014 despite a 14% increase in production.
ICMSA has long argued that it must be possible to introduce measures that would allow farmers to deposit funds in ‘good’ years in a tax compliant and Government approved fashion that could be drawn down and utilised in the (generally more frequent) ‘bad’ years.
That’s the reason why we’ve put forward the Farm Management Deposit Scheme (FMDS) as part of our 2017 pre-Budget submission.
The scheme allows a farmer to claim a tax deduction for farm management deposits in the income tax year in which they are made, the appropriate amount of the deduction is included in the tax assessable income in the income year the deposit is repaid to the farmer.
The deposits scheme complements other risk management strategies available to farmers such as income averaging.
Our model places a maximum threshold for off-farm income of a person availing of this tax measure and there is an overall ceiling on the amount that can be deposited in the Farm Management Deposit Scheme.
We believe the proposal has many merits and most definitely should be used as a template for the introduction of a farm income volatility management tool into the Irish income tax code for farmers based on the following basic outlines:
We think that the time is here for the introduction of a tried-and-tested tool that addresses destructive farm income volatility in a sensible and Government-approved fashion.
The FMDS contained in our pre-Budget submission does exactly that. Any sensible examination of the problem will testify to that and every farmer in Ireland will want to see the introduction of this measure in the coming Budget.
© Irish Examiner Ltd. All rights reserved