ICMSA Submission

To The

Inter-Departmental Group

on

Property Tax

March 2012

INTRODUCTION

The submission will follow, insofar as it is feasible, the structure suggested for submissions.

There are six identified elements in the terms of reference.  It is not intended to make any submission with regard to the first which refers to the immediate financial requirements of the EU/IMF programme.  While this submission is primarily with respect to farm dwellings it will endeavour to cover all other elements of the terms of reference.

DEFINITIONS:

The Property Tax

This term is not defined in the terms of reference.  The only indication of a definition is that it is intended to replace the Household Charge.  It is taken in this submission that the term Property Tax is in effect and is confined to Residential Property Tax.  If that is not the case, it is our view that it should be the case and our submission would be totally different if the Property Tax applied to other property in addition to residential property. For clarity, it is thus taken that the Property Tax envisaged shall not apply to any agricultural land or farm buildings and that appropriate apportionment  formula are applied to cater for residential dwellings on farms. An outline proposal for such apportionment is given below.

Urban Areas / Rural Areas

The methodology used by the CSO to categorise an area as either urban or rural would seem to be appropriate, at least as the basic categorisation grid.  The details of the categorisation are contained in the Annex.

Determination for Property Tax

The proposal from the Commission on Taxation, namely, a tiered Property Tax based on the value of the house, would seem to have a lot of merit.  The valuation would be self assessed by the property owner.  The Commission on Taxation has proposed an eight band tiered Property Tax.  While we would broadly concur with this there are two essential or desired adjustments that should take place.  First, the increase in the Property Tax from one band to the next should be proportionate unlike the proposal from the Commission on Taxation, where, for example, a house with a value of €151,000 would have double the Property Tax compared to a house with a value of €149,000.   Secondly, we would favour a house with the market value (or adjusted market value, see below) below €150,000 having a standard amount of tax.  In addition, given that valuation is self assessed, we propose that there would be a safety zone of a least 20%.  In other words, that there would be no penalty of retrospective claim if the valuation was not lower than 20%.  With respect to valuation clearly it must be market value as distinct from replacement value or insurable value.

With respect to ease of determination and uniform application and to take account of changes in the value of residential property at National or Regional level, it may be appropriate to standardise the value as per base year and use an index in subsequent years to adjust the values.  Indeed, this methodology was part of the Capital Gains Tax code when account was taken of increased valued due to inflation.  The standardisation of value based on a base year plus an annual adjustor is used in England for Residential Property Tax.

Modified or Adjusted Valuation for Farm Dwellings

Arriving at the value of the dwelling on a farm (or indeed dwellings) account must be taken of the special nature of the farm dwelling. Clearly the value of the farm dwelling is lower than the value of an identical property taken in isolation from the farm. It is necessary to introduce a statutory apportionment and various approaches can be adopted. Essentially, a farm dwelling will have restricted value arising from access issues, nuisance factors, restricted services and planning restrictions. The nuisance factors are considerable and would call for a substantial discount on the value of a farm dwelling.

Adjustment for Residential Property in Rural Areas 

In addition to the adjustments described in the immediate above paragraph, a further adjustment is required for all dwellings in rural areas (farm dwellings and non -farm rural dwellings).

In the terms of reference, the purpose of the Property Tax is to provide a stable funding base for the Local Authority sector and, in addition, the Group is tasked to insure the maximum degree of fairness between and across urban and rural areas.  Thus, it is our firm view, that a rebate on the Property Tax should apply to dwellings in rural areas which have a lower level of Local Authority, or indeed, public utility services.  Indeed, the rebate could be graduated to take account of dwellings in cluster development in rural areas as distinct from individual or isolated farm dwellings.

For example, rural areas do not benefit from public sewage connections or public lighting.

Phased Payment

ICMSA favours phased payment, but not necessarily a uniform phased payment on, for example, a monthly basis. Account should be taken of cash flow pattern of business and in particular, farming, which has a marked seasonal pattern of flow with virtually all the positive cash flow occurring in the last two months of the year.

Local Authority Responsibility and National Parameters

We believe that the appropriate balance of Local Authority responsibility and Central Government directions dictates that a Local Authority would be prohibited from fixing a rate of Property Tax above a level set by Central Government and that Central Government could fix a rate at a lower rate than set by a Local Authority for all, or part of, the area of the county having regard to the level and or quality of the service provided in all or part of the county area.

Annex

Based on CSO Definitions – Rural and Urban Areas

Introduction

There are many different territorial divisions of the country of which the most important are described below.

Townlands

The enumeration of the census is carried out, in the first instance, by townlands in rural areas and by streets in urban areas. The townland is the smallest territorial division used for administrative purposes.

Electoral Divisions (EDs)

The smallest administrative area for which population statistics are published is the Electoral Division. In rural areas each Electoral Division consists of an aggregation of entire townlands. There are 3,440 Electoral Divisions in the State.

The term District Electoral Division was changed to Electoral Division by Section 23 of the Local Government Act, 1994. S.I. 196 of 1996 refers.

Town and Rural Areas

Electoral Divisions are aggregated to give Towns (or cities where appropriate) and Rural Districts which, in turn, build up to counties. The Rural districts, which numbered 160, were abolished as administrative areas in 1925 (in the case of Rural Districts in County Dublin, in 1930) but have been retained for census purposes as convenient units of area, intermediate in size between Electoral Divisions and Counties.

Counties and Cities

Under the Local Government Act, 2001 (S.I. 591 of 2001), the areas formerly known as County Boroughs are now called Cities. Areas formally known as Municipal Boroughs are now called Boroughs. The area of North Tipperary Riding and South Tipperary Riding are now known as North Tipperary and South Tipperary, respectively.

Towns

Towns with legally defined boundaries consist of:

(1)               five cities;

(2)               five boroughs;

(3)               75 towns.

Under Section 62 of the Local Government Act, 1994 (S.I. 171 of 1994), the following six towns ceased to have town status: Callan, Fethard, Newcastle West, Rathkeale, Roscommon and Tullow. The Towns Improvement Act has now ceased under the Local Government Act, 2001 (S.I. 591 of 2001). Under this act the areas previously known as Urban Districts are now called Towns, as are the 26 towns which were formally towns under the Towns Improvement Act.

Regional Authorities

Eight regions were established under the Local Government Act, 1991, Regional Authorities Establishment Order, 1993 which came into operation on 1 January 1994.

Two further Regional Authorities to be known as Regional Assemblies were established in 1999 under the Local Government Act, 1991, Regional Authorities Establishments Order, 1999 (S.I. 226 of 1999 refers). The two assemblies are based on the Existing Regional Authority Structure and are as follows:

Name of Region                                               Constituent Local Authorities

Border, Midland and Western                           County Councils of Cavan, Donegal, Galway,

Regional Assembly (BMW)                              Laois, Leitrim, Longford, Louth, Mayo,

Monaghan, Offaly, Roscommon, Sligo and

Westmeath and Galway City Council.

South and Eastern Regional                               County Councils of Carlow, Clare, Cork,

Assembly (S&E)                                              Dun Laoghaire/Rathdown, Fingal, Kerry,

Kildare, Kilkenny, Limerick, Meath, South

Dublin, North Tipperary, South Tipperary,

Waterford, and Wicklow and the City

Councils of Cork, Dublin, Limerick and

Waterford.

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ICMSA say likely grant changes are ‘a sop’ to anti-farmer sentiment

 The President of ICMSA, the state’s specialist dairy farmer organisation, has promised that his association will immediately begin a campaign of lobbying against the changes they suspect likely to be recommended by the Capital Assets Implementation group whose existence was confirmed by Minister Ruairi Quinn in a letter to ICMSA last week. John Comer said that the farm organisation will have established contact with every Dail deputy by the weekend and set out, in the most unambiguous and trenchant terms, what they say is the manifestly unfair and unjust situation that will result if farmers’ children find themselves declared ineligible for Third Level grants – not on the basis of their family incomes, but on the basis of an arbitrary value attached to the assets or tools used to earn that income. Mr Comer said that it was a fundamental principle of fairness that eligibility in these matters would be decided on the basis of income. It was now becoming apparent, that the Government and Minister Quinn were prepared to move past that principle and decide eligibility on the basis of a certain, very specific – and in this case, very specifically anti-farming – context.

 “We are absolutely determined that this attempt to effectively disqualify a large number of the children of farming families from any possibility of receiving Third Level grants will be resisted to the utmost. The Minister might like to pretend that that is neither the intention nor the likely effect; but that is to deny the facts of the matter and the logical consequence of the move already announced. Our submission to this Capital Assets Implementation group is that the value of farmland and associated farm buildings must not be included in any formula for assessment for grants eligibility. It should not be included on the simple basis that the market value placed on farm land bears absolutely no relation to the income being earned off that land by the owning farm family. The only fair and transparent means for assessing eligibility for Third Level grants is income. Bringing the value of farm land ‘into the mix’ is a deliberate move to discriminate against farm families in order to appease those who believe in what Minister Quinn himself is on record as describing as the ‘urban myth’ of farmers’ sons and daughters being over-represented in the numbers of students qualifying for grant assistance”, said Mr Comer.

 “The Government and all its deputies, where they are intent on introducing a new set of rules in a matter as fundamental as this, are duty-bound to ensure that the new system is fair, equitable and transparent. To include the value of agricultural land as an additional component to farm incomes in measuring eligibility is double-counting and it should be called what it is. It’s an affront to fairness and a sop to that very vocal group in Irish society that is anti-farmer without any reference to the real financial facts of farming”, concluded the ICMSA President.

Ends      14 March 2012.

John Comer, 087-2057846

President, ICMSA

or

Cathal MacCarthy, 087-6168758

ICMSA Press Office.

New ICMSA President sets out his ‘to-do’ list for 2012

The new President of ICMSA, John Comer, has outlined his association’s priorities for the coming year and has pledged to ‘give everything’ he has in the cause of advancing the interests and welfare of farming families. Mr Comer, who is the first president of the specialist dairy farmers’ organisation from the West of Ireland (Castlebar) has written to members of the ICMSA National Council setting out the areas where efforts and lobbying must be concentrated and where resources will be spent on protecting the interests of farm families as identified by ICMSA’s policy experts. He has divided the work plan into two based on whether the issues come under a ‘European’ or ‘National’  heading and he has urged the association to concentrate immediately as the he feels the challenges will present themselves ‘thick and fast’.

Under the ‘European’ heading and as the state’s chief dairy farmer organisation, Mr Comer anticipates that the EU legislation to replace the milk quota system – which has already reached an advanced state of negotiation – will be finalised this year. Its importance toIrelandcannot be overstated and ICMSA will be looking to see two fundamental requirements: firstly, there must be adequate market supports and market crisis management systems both of which must be designed to prevent any kind of the catastrophic dairy price collapse that occurred as recently as 2009. Secondly, and presuming that the Commission andMemberStatesrealise the necessity for the first requirement, there must be sufficient funds allocated for this purpose. According to Mr Comer, the case is relatively straightforward: we must have market support measures and a market support plan but we must also have the funds necessary to make those measures meaningful.

On CAP reform and Single Farm Payment, Mr Comer wants an immediate concentration on a solution to the problems arising from ‘base year’ and the land leasing question that follows that. He acknowledges that Minister Coveney appreciates the problem and he feels that progress is being made. He has also stated bluntly that ICMSA wants both EU and Irish rules and regulations to favour ‘active’ farmers and he says that those individuals who break land leases should not gain SFP as a result. ICMSA has already sought legal opinion on this matter and will be investigating the legal situation in this area. He also singled out the so-called ‘greening’ of the SFP and the role of permanent grassland in meeting any further moves on this direction as an issue on which ICMSA will concentrate and come forward with proposals. ICMSA will also monitor the situation around the Nitrates Derogation and the association will set out the policy for a continuation or ‘roll-over’ of the derogation at the opportune time.

On the ‘national’ scene, Mr Comer noted the success of ICMSA in terms of the arguments advanced on capital taxation and family farm transfer. But he did express concern about plans to implement any form of capital asset test for eligibility for Third Level grants. This would be grossly unfair on farm families and ICMSA would insist that eligibility would continue to be tested on the basis of income – as presently. The association will be having a meeting with the Minister of Education on the matter. On the question of environmental matters – and specifically, septic tanks – Mr Comer said that from a farmer’s point of view that probably not enough attention had been given to the standard required of a given septic tank system. Once that standard has been identified and a proper grant scheme has been set up to offset the costs, the matter should be much more amenable to solution.

Mr Comer ended an already packed worksheet with special mention of seasonality schemes, animal health and disease and the cost of inputs. “I can guarantee every member of ICMSA – and indeed, the wider farming community – that we’ll continue to work solidly on their behalf and concentrate on bringing forward the solutions that are usually there if the work and research is done. That’s our role and that’s our heritage: we concentrate on solutions”, concluded the new President.

Ends.   5 January 2012.

John Comer, 087-2057846

President, ICMSA.

or

Cathal MacCarthy, 087-6168758

ICMSA Press Office

Tuesday 8 November 2011

 Chairman  and Members of the Committee.

 May I first of all thank you for the invitation and the opportunity to present the main points of our Pre-budget Submission to the Joint Committee.  Before I get into the specifics, I would like, Chairman, to make a number of general comments by way of context. 

 The Agriculture and Food Sector is now viewed, or should I say, once again viewed – as an important indigenous sector currently contributing significantly to increased exports.  Indeed, it has untapped potential to increase this contribution.  Furthermore, it is now realised that export-led growth is the only way in which we can actually rebuild our economy both in terms of the size of the economy and its sustainability.  As these matters are now generally accepted, the issue is how the agri-food sector can be supported and be or allowed grow to its full potential in the context of Government policy, having full regard to current and upcoming policy changes at European level.

 The second general point I wish to make is that taxation, by its nature, is a complex matter and that, in the past tax provisions were introduced in a rather broad-brush way with little regard to economic benefits or disadvantage or their impact on the tax base.  We should now realise that the fine tuning of the tax system is an essential aspect which you as legislators no doubt are aware and play a critical role in this matter.  In our recent meetings with the Minister for Finance, the Minister indicated his full agreement in-so far as he noted that each sector had unique matters which must be taken on board in the drafting of any tax measure so that we get the maximum potential economic growth – particularly in the export oriented sectors.  I fully agree with this essential approach and  wish to emphasise the importance of this to the agricultural sector. 

 I now wish to deal with specifics both with regard to taxation and expenditure and with your permission Chairman, I’ll deal with taxation first.

 Based on figures contained in the National Recovery Plan for 2012, it would seem that a figure of €220million addition carbon tax may be implemented in 2012. (The revised budgetary adjustment figures announced by the Minister last week involving a total tax take of €1.6 billion may actually increase that figure further.) On the eve of the General Election, we met the Taoiseach in his home constituency where he emphasised that there would be no increase in the carbon tax on agricultural diesel and in so doing he was emphasising this provision of the Fine Gael manifesto.  Following the General Election, the Government Parties agreed to include this in the Programme for Government in which it was specifically stated that the Government will exempt farm diesel from further increases in farm tax.  Based on CSO data, the price of motor fuel used in agriculture has increased by over 45 per cent since 2009.  

 Given the enormous increase in the price of energy costs and given the importance of energy as a significant component to over all farm costs, we believe that this commitment to not increase the carbon tax on agricultural diesel must be honoured in full.

 Stamp Duty.

Referring back to our opening comments regarding the fine tuning of tax to take account of sectoral needs, a good example is furnished by looking at stamp duty relief for farm consolidation.  

 It is self-evident that availability of land, and particularly availability close to the farm yard, in is a critical matter and could be one of the limiting factors in the attainment of the targets in Food Harvest 2020.  We are disappointed that the stamp duty relief that existed for consolidation – notwithstanding its limitations – was not renewed last July.  Based on the latest figures available from the CSO, the average number of parcels of land per farm holding is 3.5 with about two-thirds of farms having 3 or more parcels.  Indeed, the fragmentation of farm holdings would seem to be increasing rather than decreasing based on CSO statistics over the last decade. The arguments for such a measure are self-evident and there is no material downside in terms of loss of revenue.  The upcoming budget should provide for a practical stamp duty relieve measure that takes account of the need to bring about greater farm consolidation.  I believe that this measure can be fine-tuned to cater for genuine consolidation with the obvious increase in productivity that would arise. 

 Other Capital Taxes

We are fully aware that capital taxes are likely to be increased and I am referring specifically to Capital Acquisition Tax and Capital Gains Tax.  In relation to Capital Acquisition Tax, our specific proposal is that there should be no further reduction in the Capital Acquisition tax-free threshold for gift or inheritance in Budget 2012 and it is crucial that the agricultural relief is retained at 90 per cent. 

 We are fully aware that minor changes, or a series of minor changes in the details of this tax, can have a profound impact on dairy farmers – even medium-scale enterprises.  I attach a table which sets out the impact of a reduction in the agricultural relief and an increase in the tax rate.  For example, a reduction in the agricultural relief to 75 per cent combined with an increase in the tax rate, could see an inheritance tax liability of €85,000 on a dairy farm with 100 cows. Chairman, this would represent, bluntly speaking, a re-introduction of the old Estate Duties or Death Duties as they were normally referred to. 

 Putting this in context, it would mean that in the above example of a family farm, we would have moved, over a very short number of years, from a situation  where there was Installation Aid and Early Retirement Schemes to a situation where there may actually be increased borrowing required to fund an inheritance tax liability.  Our proposal is quite clear and sufficiently targeted to bring about the desired result and to prevent an undesired result.  We have proposed to Minister Noonan that where a farm is farmed for a period of time by a donor and that farm is subsequently farmed by a son/daughter there would be no liability to capital acquisitions tax regardless of what changes be brought about to thresholds or rates of tax. 

 Capital Gains Tax

ICMSA believes that it is crucial that the transfer of a typical family farm can take place without incurring any tax liability. All current Capital Gains Tax reliefs to be retained.

Rollover relief should be introduced to allow for farm consolidation and parcel swaps. This could be restricted to a specific time limit for reinvestment in agricultural property.

In the event of an increase in the current CGT rates (as indicated in the National Recovery Plan) the Government must reintroduce reliefs such as indexation and general rollover relief.

ICMSA supports the Commission on Taxation proposal that Capital Gains Tax relief for disposal of a business or farm on retirement should continue.

  Income Tax

ICMSA supports the Commission on Taxation recommendation that an Earned Income Credit should be introduced for the self-employed and be equal to the PAYE allowance. 

 Income Averaging – ICMSA believes that farmers whose spouse takes on a trade or profession resulting in an income up to €40,000 should be allowed to continue to avail of Income Averaging. The current regime acts as a disincentive for farmers or farmer spouses in creating new enterprise.

 Expenditure

Disadvantaged Areas Payments are a very valuable direct income support across the country and ICMSA is totally opposed to any further cuts in DAS payments.

 ICMSA is very concerned that the Minister for Agriculture may be contemplating taking part of the Single Farm Payment in order to fund the current Suckler Cow Welfare Scheme.  This would be  a regressive move and would amount to actual reduction in incomes for a substantial number of farm families on top of the cuts and increased costs that these families are already facing. 

 While substantial investment has taken place on farms in recent times dealing primarily with environmental regulations, substantial investment remains to be undertaken on dairy farms and we would see a need for a continuation for the Targeted Agricultural Modernisation Scheme (TAMS), particularly the Dairy Equipment Scheme.

 Chairman, I have covered in very outline form the main points of our Pre-Budget Submission. I understand that a fully copy of our Pre-Budget Submission is available to Joint Committee Members. 

 I thank you and your Committee for the opportunity to put our Pre-Budget Submission before you today.

Thank You.

________________________________________________________________

ICMSA Views and Comments on

Draft European Communities (Environmental Impact Assessment) (Agriculture) Regulations 2011; A Guide for Farmers

Part 2; Activities Covered

3. Restructuring of Rural Land Holdings

(b)        Re-contouring (within farm-holding)

ICMSA believe that the screening process in assessing the impact on the environment should take account of the depth of the re-contouring. Many farmers carry out low depth/infill re-contouring on large areas but with no impact on the environment.

There is a self evident necessity that the current wording needs to be expanded, clarified and qualified to exclude the “levelling of land” from any requirement for screening and/or consent. Furthermore, there is need to set down objective parameters so as to provide an objective assessment for screening or consent decisions and a challenge to one or both of same in the context of an appeal.

The SI contains no definition of re-contouring either in Regulation 2 (Interpretation), Regulation 3 (Application) or in the Schedules. In addition, the draft Guide while it contains a reference in 3.(b), the example of re-contouring of land is limited to the levelling off of hills or the infilling of hollows and is devoid of detail. Thus, it is our considered view that the SI itself and the Guide must qualify re-contouring provisions by way of exempting an activity which changes the level of the current surface by not more than 1 metre on average and/or where the volume of material moved is not greater than 5,000 m³ per hectare.

4. Commencing to Use Uncultivated Land or Semi-Natural Areas for Intensive Agriculture

The Guide must provide a clear definition of Intensive Agriculture. ICMSA believe that the definition of uncultivated land proposed in the draft Guide is too wide because there are large tracts of land which are used for farming throughout the country that are not perennial ryegrass dominated grasslands.

This particular section of the Guide is unclear and indeed confusing and ICMSA believe that it is essential that there is a clear and more importantly reasonable definition of what is uncultivated land and semi-natural areas and then in addition what is the activity on these two types of land that is sought to restrict or prohibit. The activity is stated to be ‘commencing to use uncultivated land and semi-natural areas for intensive agriculture’ and ‘increase the agricultural productivity’ of the said lands. Is this activity the same but with two phrases to cover the same activity or are they two separate activities. We do not accept the definition of uncultivated land delineated by the 15 year rule (which incidentally goes back in time of up to 15 years prior to coming into effect of the SI). Uncultivated land is land that was never cultivated. In addition, while related but separately, cultivation could include mowing grass or cutting rhododendron or invading briars.

Finally, we do not accept as it being reasonable, necessary or required by the ruling of the European Court of Justice against Ireland in this case that the use of uncultivated land in and of itself is prohibited but only in the context of the impact of intensively working these lands which have never heretofore been so worked, it is whether or not they significantly negatively impact on habitats. If this is the case not alone has the Minister no obligation to bring this in but it is settled law that the Minister has no power under the EC Act to do anything other than that which is necessitated by EU law.

5. Land Drainage Works on Lands Used for Agriculture

5.1              ICMSA contend that field drainage systems require not alone routine maintenance but also partial or total replacement and this work in relation to field drainage must not be included in     the thresholds now in place. ICMSA believes that it is absolutely essential that mere replacement, in total or in part, of an existing drainage system must be excluded from the current thresholds as it does not represent new drainage and therefore will not have any further impact on the environment.

ICMSA believe that the Department must clearly outline how they propose to ascertain the area of land which will be affected by any new drainage system.

Part 3; Application for Screening

6.1              Significant Effect on the Environment

ICMSA is particularly concerned that the provision of the Regulations are exceedingly wide ranging and in effect puts every farmer on notice when they want to carry out any work on their farm, as any activity must be assessed on the basis of the criteria set out in Annex 3 of the Regulations. ICMSA believes it is essential that clarification is provided on what constitutes a ‘significant effect on the environment’. ICMSA contends that if the proposed activity is under the threshold and is not in a designated area then the farmer should not be subject to any further restriction or designation.

6.4              Thresholds

Clarification is required on the application of the five year period from a farmer’s perspective and how it will impact on farm development plans.

7.1              Screening Application

The current Guide does not provide any indication of how long a screening decision could take and ICMSA believes that the Department must provide a definite time-frame from the date of application for screening to notification of a decision to the farmer. ICMSA proposes that the following should be provided for;

“DAFF must issue a decision on the screening application, and the main reasons and considerations on which its decision is based, to the farmer within 4 weeks of the receipt of the request. If further information is requested and received, DAFF must issue the screening decision within 3 weeks of the date of receipt of the further information”

ICMSA is concerned with the following section in the S.I. No. 456 of 2011, which state as follows:

Part 3; Screening

7.(3) The Minister may consult with any consultation body or make such enquiries as the Minister considers necessary for the purposes of deciding on the application

ICMSA is extremely concerned with the involvement of a third party in the screening process and specifically we are concerned by the possible involvement of An Taisce. ICMSA believes that this will inevitable lead to relatively minor farm activity now being subjected to unnecessary scrutiny by outside parties. This process will inevitably lead to needless delays and costs to farming activities.

ICMSA proposes that where the Minister advice or a submission from a consultation body, or bodies, that all such information shall be made available to the applicant before any decision is taken by the Minister (other than a decision that consent is not required), and that the applicant will be given reasonable and adequate time to respond.

The Guide needs to clearly outline the internal review mechanism available to applicants in relation to screening decisions.

Part 4; Application for Consent

8. Application for Consent

Scoping Opinion must be provided free of charge by DAFF. ICMSA believes that the cost of an Environmental Impact Assessment must be funded by the State as it equates to an actual re-designation of agricultural land. Similarly, in the event of a Natura Impact Statement being required ICMSA believes that it is essential the State pays for this process.

In relation to consent ICMSA proposes that where the Minister consults with a consultation body and/or receives observations from a consultation body or a third party that all such information shall be made available to the applicant before any decision is taken by the Minister (other than a decision that development may proceed), and that the applicant will be given reasonable and adequate time to respond.

ICMSA believes that under no circumstances should DAFF publish details of an application for consent on the DAFF website for public consultation. There are a number of consultation bodies detailed in the Regulations and while ICMSA do not agree with the inclusion of all these bodies it is essential that routine farm work is not subjected to any further involvement from the public.

Part 5; Other Matters

11. Review (Statutory)

ICMSA believe the current review process as outlined in the draft Guide is totally inadequate and discriminatory. The only ‘appeal’ provided for in both the SI and the Guide is a statutory review to the High Court for consent decisions. ICMSA believes that this appeals mechanism as proposed is grossly and constitutionally flawed and will result in unnecessary costs for farmers.

ICMSA propose that DAFF must put in place a full appeals system both for the screening and consent phase of the process provided for by the Agricultural Appeals Office, and this must be provided for under a specific and comprehensive measure contained in an SI.  Statutory review proceedings are not a substitute for a full and comprehensive appeals system. The justification for this is based on a long string of judgements and to mirror what is available under the planning process.

The screening process is largely similar if not identical to the ‘declaration’ process under the planning regime and this is appealable to An Bord Pleanála. Of course a planning decision similar to a consent decision (either refusal or a grant of consent with conditions) must also be subject to appeal. It is also a fact that an application in the normal planning process can seek a review to either or both the planning authority or An Bord Pleanála as a separate and distinct process to the appeal process. We find it incredible – to say the least – that this Regulation, which carries with it criminal sanction on indictment has no appeal mechanism other than a review. References to a related SI governing forestry cannot be a justification for this statutory flaw in the legislation.

Forcing a farmer to carry out an EIA in itself is a costly exercise and a farmer faced with an unreasonable decision of the Department in this regard has to choose between either engaging an expert to carry out the assessment or seeking to review the Minister’s actions in the High Court. This, to put it plainly, is not reasonable or justified. The appeal must provide in addition to an appeal generally to the screening and consent process an appeal attached to a consent decision, appeal against a prohibition notice and reinstatement notice, in effect any decision of the Minister in the process.

Other Issues;

• ICMSA questions the relevance of the inclusion of the following in SI No. 456 of 201; Regulation 13 (5)(b)(ii) is likely to have an adverse impact on human health,

_________________________________________________________________________

ICMSA Views and Comments on

Guidelines for Planning Authorities on Drainage and Reclamation of Wetlands

Consultation Draft

Planning and Development (Amendment) (No. 2) Regulations 2011

ICMSA believes that the current definition of wetlands as provided for in the Regulations is extremely vague and that further clarification is required on the definition and description of ‘wetlands’ for example what exactly are ‘biogeochemical functions’.  Also, the Regulations refer to a ‘significant adverse effect on the environment’ but there is no definition of what constitutes a ‘significant adverse effect’ provided for in either the Regulations or the guidelines.

ICMSA contend and notes the agreement of the Department of the Environment that ‘periodic’ means a period of inundation or saturation in every year, thus, if the land does not suffer such inundation or saturation in every year they are not ‘wetlands’ for the present provisions. The issue then turns to the minimum period within every year that is required. This period of time within every year cannot be such as to be measured in days or scale of inundation (saturation by definition being full or not). The length of time is what is required to reasonably support the biogeochemical functions and will be specific to the site. Thus, if there is no biogeochemical function that is of environmental concern by definition the land in question is not wetlands for the purposes of the Regulations.

The interpretation of the word for ‘farm holding’ cannot be an economic or Single Payment Scheme but rather that parcel of land in question which may be a holding in its own right or part of a holding for Scheme purposes.

ICMSA are extremely concerned with the wider implications of these Regulations for drainage and reclamation on a farm with no ‘wetlands’ or on a part of the farm that is not ‘wetlands’. Because of the perceived impact on ‘wetlands’ on that farm or another farm these could be subjected to planning regulations.

ICMSA believes that clarification is required in the case of proposed works that do not exceed the threshold then who will decide if the activity will have a significant effect on the environment.

Appendix 4

‘Drainage ditches’ must be removed from the list of areas that fall under the classification Freshwater Wetlands.

Appeals

ICMSA propose that no fee shall apply where an owner occupier seeking a declaration from the planning authority or is applying to appeal a decision as a result of a declaration/referral to An Bord Pleanála.

In 2010 exports of Irish food and drink grew by 11 per cent to almost €8 billion and the agri-food industry accounts for 10 per cent of total exports. This demonstrates the actual and potentially significant contribution which the agri-food sector can and is making to export-led economic recovery and growth.

One of the greatest challenges facing the agri-sector is the attainment of the targets in Food Harvest 2020. For years, farm fragmentation has been a limiting factor on many Irish farm holdings and provisions must be made to ensure that dairy farmers, in particular, have access to land in close proximity to the milking facilities i.e. the so called “milking platform”. ICMSA believes that the Government in Budget 2012 must align the drive to achieve Food Harvest 2020 with effective land policy and taxation measures. In this context, and as previously outlined in the ICMSA submission to the Minister on 29 August 2011, ICMSA is proposing a number of tax incentives to farmers to consolidate and increase the scale of their farm to create a viable future in farming.

The provision of adequate funding for farm schemes must be a key component of Budget 2012. ICMSA believes that a reduction of the agricultural budget in relation to funding of necessary farm schemes in recent Budgets will ultimately damage the productive and development capacity of the agri-sector required to achieve the targets set in Food Harvest 2020.

ICMSA believes that succession planning in farming is fundamental to the growth and development of farming and that there should be no further erosion of the various reliefs and exemptions with regard to capital taxation so that the family farm can be transferred from one generation to the next without incurring a capital tax liability.

In our Pre-Budget Submission, we have outlined a number of key balanced proposals which will address the relevant issues affecting farmers in the future and ensuring the attainment of Food Harvest 2020 goals in a profitable and cost efficient manner.

Jackie Cahill.

President.

30 September, 2011.

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Section 1

1. Personal Tax

 ICMSA believes that the differences in personal allowances for taxpayers based on their employment status represents an unfair and inequitable system and must be addressed in Budget 2012. As a result of cuts to personal tax credits in Budget 2011, the gap between PAYE and self-employed is further widened. ICMSA believes that an Earned Income Credit (as recommended by the Commission on Taxation) should be introduced for the self-employed and be equal to the PAYE allowance.

The Programme for Government states that, as part of their fiscal strategy, the Government will “maintain the current rates of income tax together with bands and credits”; ICMSA believes it is essential that the Government ensures there are no further increases in income tax or cuts to bands and/or credits.

2. Income Averaging

Many farmers have used Income Averaging as a management tool to deal with the inherent volatility in farming incomes. However, many farmers are unable to avail of income averaging. Under current taxation regulations, where a farmer and/or their spouse have an income from another trade or profession (except where the trade is provision of farmhouse holidays), he/she can no longer use income averaging. In addition, farmers who are currently availing of income averaging will be obliged to withdraw from the system if they or their spouse take on a trade or profession with the prospect of incurring a tax liability arising solely from the forced ending of Income Averaging.

All the experts point to increased volatility in farming incomes and the trend in more farmers – or their spouses or both – making an income from another trade or profession will continue to grow.

ICMSA believes that farmers or farmer spouses who take on a trade or profession resulting in an income up to €40,000 should be allowed to continue to avail of Income Averaging. The current regime acts as a disincentive for farmers or farmer spouses in creating new enterprise.

3. Pension Contributions

 The current income tax relief for pension contributions must be maintained and the phased reduction in relief proposed in the National Recovery Plan will prove detrimental to private pension contributions. ICMSA are deeply dissatisfied with the Pension Levy introduced in June 2011 and it is a further stealth tax on private individuals providing for their future security. Pension fund management charges are excessive in many instances and ICMSA believes this is an issue which should be addressed by the Government in Budget 2012.

4. Property Tax

 ICMSA is strongly of the view that the introduction of a Residential Property Tax must not disproportionately and adversely impact on family farm homes.

5. Farmers Using Companies to Manage Volatility

 An increasing number of farmers are seeking to reduce their exposure to farm output price volatility by setting up companies. There are a number of anomalies which act as a disincentive for farmers in incorporating farm companies. For a farmer who wishes to retain ownership of his land personally, the remaining farm building allowances are lost on transfer to a company – the existing legislation states that “the interest” in the farm buildings must be transferred – the legislation should be changed to state “an interest” in the farm building should be transferred. By making this change, farmers can continue to claim unused capital allowances on farm buildings which will give the same relief that is available in respect of machinery.

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Section 2

One of the greatest challenges facing the agri-sector in the attainment of the targets in Food Harvest 2020 is the efficient management of farm consolidation and access to land at a reasonable price. Farm fragmentation is a key feature on many Irish farm holdings and provisions must be made to ensure that dairy farmers, in particular, have access to land in close proximity to the milking facilities. ICMSA believes that the Government in Budget 2012 must match aspirations contained in Food Harvest 2020 with effective land policy and taxation measures. In this context, ICMSA proposes a number of tax incentives to farmers to increase the scale of their farm unit and create a viable future in farming.

1. Stamp Duty

With the abolition of milk quotas in 2015, farmers wishing to expand milk production will need access to land in close proximity to their milking facilities, commonly referred to as the ‘milking platform’. The Government must address the difficulties facing farmers wishing to consolidate their holdings and this is the limiting factor for many individuals trying to expand their dairy enterprises.

ICMSA believes that it is crucial full-time farmers wishing to enlarge their holding to grow their farm business into a viable unit must be allowed to do so with the minimum application of Stamp Duty. The Government took a decision not to extend Farm Consolidation Stamp Duty relief beyond 30 June 2011. ICMSA believes that the whole issue of consolidation as part of a progressive agricultural land policy must be reviewed. It is essential that the Government reintroduces Farm Consolidation Stamp Duty Relief but also the restrictive guidelines regarding whole parcel transfer must be addressed. When the relief did operate many individuals were unable to avail of this relief due to the fact that sub-parcels are being transferred. ICMSA proposes that in addition to full parcel transfer, sub-parcel transfer should also be allowed when these are clearly identified on a map as per normal identification required for conveyance.

ICMSA supports the Commission on Taxation proposal to continue Stamp Duty Relief for transfers to young farmers beyond the current expiry date of 31 December 2012.

Where a farm is owned personally and the farmer has operated a farm company, then on subsequent transfer of the farm and farm company to a successor, the young trained farmer relief for stamp duty should apply on the underlying land.
 2. Capital Gains Tax

 It is crucial that the transfer of a typical family farm can take place without incurring any tax liability and current Government policy is effectively penalizing any farmer wishing to consolidate his/her holdings in order to grow and expand their business.

ICMSA believes that Capital Gains Tax Rollover Relief should be introduced on a limited basis to allow for farm consolidation and parcel swaps for individuals wishing to expand their enterprise. This relief could be confined to a fixed period for reinvestment in agricultural property. Currently, farmers are being severely penalised for consolidating their holding when Stamp Duty and Capital Gains Tax at 25 percent are charged.

ICMSA is extremely concerned with proposals outlined in the National Recovery Plan which indicate that the current 25 percent Capital Gains Tax will be changed in 2012 to a system of differing rates for different levels of gains. In the event of theses increases, ICMSA believes the Government must reintroduce reliefs such as Indexation and Rollover Relief which were withdrawn in 2002 as a result of a reduction in Capital Gains Tax to 20 percent at that time.

Additionally, the ICMSA fully supports the Commission on Taxation proposal that Capital Gains Tax rollover relief should apply on gains on disposals of farm land pursuant to a Compulsory Purchase Order where the proceeds are reinvested in farm land.

It is vital for the future of Irish farming that farmers are in a position to retire and pass on their farm to the next generation free of capital tax. In this context, ICMSA believes that Capital Gains Tax Relief for disposal of a business or farm on retirement should continue as proposed in the Commission on Taxation Report.

ICMSA is opposed to the proposal to discontinue the Capital Gains Tax exemption on disposal of a site to a child.

3. Capital Acquisitions Tax

 The tax-free thresholds for Capital Acquisitions Tax have been reduced twice, resulting in a reduction in the tax free threshold of nearly 40 percent since April 2009 and ICMSA believe that no further reductions should be applied to the current thresholds.

A key aspect of Budget 2012 should be to ensure that the early transfer of farms from one generation to the next is encouraged to ensure the competitiveness of the agricultural sector. In this context, ICMSA believes it is vital that the Agricultural Relief for Capital Acquisitions Tax is maintained at 90 percent of the value of the property because any downward movement from this will have a significant negative financial impact for farmers transferring land. If the current level is not retained it will result at best in the delay in transfer of land from one generation to the next or at worst turning farms into non viable operations. Any reduction in Agricultural Relief is in direct conflict with the attainment of the targets set in Food Harvest 2020.

4. Income Tax Relief and Leasing Land

 The ending of the Early Retirement and Installation Aid Schemes has significantly hindered early farm transfer. ICMSA believes that the early transfer of land is essential to secure the future of Irish agriculture. Under the current tax code the same tax relief is not available to related persons as non-family transactions in land leasing arrangements and ICMSA believes this anomaly must be addressed in Budget 2012.

It is essential the current Income Tax relief for farm land leasing income is continued to ensure early farm transfer and farm consolidation.

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 Section 3

1. Stock Relief

 Medium to long term prospects for the dairy and livestock sector are, in general, positive as outlined in Food Harvest 2020. In order to achieve these targets, farmers must be allowed to expand their dairy enterprise in a cost-efficient manner.

The current 25 percent stock relief means that farmers expanding their enterprise are taxed on 75 percent of the additional investment, which in many cases is a substantial amount. ICMSA propose that 100 percent stock relief for increases in stock numbers should be extended to those who increase their herd size on a permanent basis, in order to encourage farmers who are expanding in line with the aspirations of Harvest 2020, with a claw back of relief in the event of disposal of the herd before the end of a specific period.

The existing regime of 25 percent stock relief for farmers and 100 percent relief for young trained farmers should also continue.

2. Capital Allowances

The normal write-off period for capital allowances on agricultural plant and machinery currently stands at eight years. This means that only 12.5 percent of the value can now be written off per annum as opposed to 20 percent previously allowed. ICMSA believes that farmers should be given a choice to write-off capital expenditure on plant and machinery and farm buildings over a period of three to eight years. The grant of allowances over a shorter term will stimulate farmers to invest for expansion and will also stimulate economic activity within Ireland at no overall cost to the exchequer.

3. Tax Relief for the Purchase of Milk Quota

ICMSA is strongly opposed to the proposal in the 2009 Commission on Taxation Report that tax relief for the purchase of milk quota be discontinued. Milk quota is an integral tool in the expansion of any dairy business and farmers wishing to expand their current business must not be discriminated against.

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Section 4

1. REPS and AEOS

The success of REPS in Ireland is clearly evident across the countryside with the added benefit of many farmers now committed to farming in an environmentally friendly manner. ICMSA believes that the introduction of AEOS 1 and, in particular, AEOS 2, has failed to provide an effective continuation for farmers leaving REPS 3. In Budget 2011, the Government halved the budget for AEOS resulting in the uptake in the scheme being much lower than anticipated. ICMSA believes that it is crucial that there are no further cuts to the agricultural budget for funding of REPS/AEOS in Budget 2012 and that current payment rates are retained.

A properly funded AEOS Scheme must be made available in 2012 for those farmers that have completed REPS 3 and REPS 4 contracts.

2. Disadvantaged Areas Scheme

Disadvantaged Areas Payments are a necessary direct income support across the country and ICMSA is totally opposed to any further cuts to these payments.

3. Suckler Cow Welfare Scheme

ICMSA believes that the The Suckler Cow Welfare Scheme current payment rates must not be subject to any cuts in Budget 2012.

4. Targeted Agricultural Modernisation Schemes (TAMS)

Adequate funding must be provided for the reopening of the Dairy Equipment, Sheep Handling and Fencing, Water Harvesting and Pig Welfare Schemes. There is 50 percent EU funding available for these schemes up to 2013 and on-farm investment in these schemes will provide significant economic activity in rural communities.

 ICMSA Proposals

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Section 5

1. Value Added Tax

The EU Commission has prepared a Green Paper on harmonization of VAT rates across the EU. ICMSA believe that any move to impose uniform rates across Member States will have serious implications for many activities of indigenous industries that currently are zero or reduced VAT rated. In addition, if the Commission changes the reduced rate to the standard rate of 21 percent, this will have a direct impact on farming costs both in terms of the cost of agricultural diesel but also farm inputs such as contractor charges. ICMSA believes that the imposition of this 7.5 percent, being the increase from 13.5 percent to 21 percent, will have a significant negative impact on farming activity and therefore farm output.

The National Recovery Plan provides for VAT rates to be increased to 23 percent by 2014. ICMSA believes that it is essential that any increase in VAT rates must be reflected in the Flat Rebate for farmers.

Farmers, in particular, use a number of products and services such as the recycling of waste products, maintenance of hedgerows, spreading of slurry with a ‘trailing shoe’ spreader and fencing of watercourses that fall into the environmental goods and services category. ICMSA believes that the current standard 21 percent VAT rate should be reduced to 13.5 percent which would provide significant savings for farmers. ICMSA believes that unregistered farmers should be allowed to claim back VAT on unfixed facilities such as slurry spreaders or irrigation systems that are used for pollution control measures.

The Renewable Energy Sector has been ignored in terms of the provision of adequate tax incentives to ensure the achievement of our National Energy Plan, the implementation of EU Directives and the link to large scale infrastructure for energy transmission and generation. ICMSA believes that there is an opportunity to make investment in renewable energy generation a much more viable option for many farmers and offer a much needed means of off-setting or reducing our carbon footprint. Currently, a significant barrier to the installation of a Wind Turbine on-farm is the fact that the cost is prohibitive for many farmers due to the substantial level of VAT incorporated in the price. Most farmers are not VAT registered and under current Revenue guidelines are unable to claim back VAT on electricity generating equipment such as Wind Turbines under the flat rate system for non-registered farmers. ICMSA believes that all micro-generators on-farm should be deemed as a farm activity and qualify under this system.

 ICMSA Proposals

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Section 6

1. Higher Education Grants

ICMSA is extremely concerned by proposals contained in the Hunt Report on a capital asset test as part of the eligibility criteria for Higher Education grants. ICMSA contends that farm assets are productive business assets.  In addition, given the uniqueness of the assets particularly land, the market value of these assets bear little or no real relationship to the income that may be generated from the holding or the use of these assets.

ICMSA believes that thousands of farm families will be unfairly denied an opportunity to avail of third level education if farm assets are included as part of a means test.

Farm families must be treated in an equivalent manner to other sectors of society and ICMSA believes that family farm income must be the sole criterion used in any means test to establish entitlement to Higher Education grants where the family’s sole income is farm income.

We have made our points by letter to the Minister for Education and Skills, who stated in reply that statistics from the Higher Education Authority show that “39.7% of farmers’ children in first year were on higher education grants which is lower than ‘urban myth’ would have it”. He continued to state that “these new statistics should help inform a more reasoned debate, including the arguments that you make in your letter, about any changes that may be made in the present system to ensure greater equity. Let me assure you that I would not wish to see students from less well-off farm families excluded from grant eligibility”.

Section 7

1. Employer PRSI

ICMSA believes that the Government should honour commitments to reduce by 20 percent the 10.75 percent rate of employers’ PRSI on earnings up to €40k (effective rate of 8.75 percent).

2. Occupational Benefit

Given the high occupational risk faced by farmers as a result of constant contact with machinery and animals, it is the ICMSA view that the Occupational PRSI Risk Benefit should be extended to farmers.

3. Contributory Pensions and PRSI

An issue which must be addressed in Budget 2012, and will have minimal impact on the Exchequer, is the small number of previously self-employed persons that were compelled by law to make PRSI pension contributions from 06 April 1998. These individuals are now being excluded from a contributory pension because they did not have enough contributions made due to their age. ICMSA proposes that the Government should address the issue by providing those affected with less than five years contributions with the special 50 percent Contributory Old Age Pension which was introduced in 1999, for people with five (or more) but less than ten years PRSI contributions. ICMSA believes that those with five or more years contributions should qualify for the full Contributory Old Age Pension.

4. Jobs Initiative

ICMSA is in favour of the Governments jobs initiative. ICMSA believes that the inherent administrative complications within the social welfare system which act as an obstacle for employers looking to take on staff on a temporary basis should be removed. ICMSA understands that under current rules, persons in receipt of social welfare are reluctant to take on casual or temporary work due to delays in restoring their social welfare benefit at the end of that working period. ICMSA believes that this obstacle can be removed or reduced by allowing social welfare to continue and adjusting the tax credit or emergency tax credit system. This is an adjustment which will result in no loss to the Exchequer but will encourage recipients of social welfare back to work and thus actually reducing the cost of Social Welfare.

5. Farm Assist and Rural Social Scheme

Farm Assist is a vital means-tested income support for Irish farmers and has proven to be a life-line for many farm families due to the collapse in farm incomes in recent years and also the severe reduction in availability of off-farm income. ICMSA believes it is essential that Farm Assist is retained in its current form and rates.

The Rural Social Scheme has not only played a key role in the development of local communities but also provides much needed income for farm families in receipt of Farm Assist or other Social Welfare payments. ICMSA believes that the funding available for the Rural Social Scheme must not be targeted for reductions in Budget 2012.

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Section 8

1. Carbon Tax

Since the introduction of the Carbon Tax there has been considerable additional costs imposed on farmers through the purchase of fuel and indirectly through the purchase of essential farm services, such as contracting costs for silage making, slurry spreading and the transportation of milk and livestock.

Teagasc estimated the cost of the carbon tax to the agricultural sector at €24m annually and that was assuming no increase in fuel usage. Given the projections of Harvest 2020 for increased production and the potential escalation in fuel usage, the carbon tax situation is a considerable concern for the agri-sector.

The National Recovery Plan proposes an increase in the carbon tax rate of €10/tonne in 2012. ICMSA is totally opposed to this increase and contends that it will significantly increase the costs of production and ultimately damage the competitiveness of the sector and discriminate against Irish exports on the international market.

ICMSA believes that a sectoral allowance or limited exemption must be introduced for the agri-food sector in order to protect the one key sector in our economy with significant potential for growth. Furthermore there is a Government commitment that the current carbon tax rate on agricultural diesel will not be increased.

2. Capital Grants for Small Scale Renewable Energy Production

In May 2010, the then Minister for Communications, Energy and Natural Resources announced a proposed REFIT support scheme to be aimed at the use of biomass in electricity generation and heat production, however this scheme is yet to be introduced. ICMSA believes that this scheme must be introduced without delay.

The Programme for Government commits to the provision of a feed-in tariff for microgenerators producing electricity for their own homes, farms and businesses selling surplus electricity to the grid. ICMSA believes that if the Government is committed to a reduction in greenhouse gas emissions coupled with a reduced dependency on fossil fuels associated with micro-generation then a realistic feed-in tariff must be introduced that provides for a realistic return on investment in order to encourage a significant uptake in the implementation of renewable energy on-farm.