The Association of Farm Contractors in Ireland (FCI) has submitted its 10-point 2020 pre-budget plan to Minister for Finance & Public Expenditure, Mr. Paschal Donohoe
Its set of proposals relates to issues of taxation, the implications of a no-deal Brexit on the agricultural economy and “the continuing black economy within the sector”.
The FCI is seeking agri-taxation reliefs that incentivise agricultural/farm & forestry contractors to play an “even bigger and more important part in delivering on the national objectives of smart, green, and sustainable growth across all sectors of Irish agriculture”.
“We are aware that despite the important part that Agricultural/Farm & Forestry Contractors play in the food production process, accounting for a national annual turnover in the agri sector of more than €700 million.”
“We are not treated equally to farmers even though we are fully engaged, as our sole businesses, in supporting all aspects of modern Irish farming activities,” he added.
The FCI Pre-Budget proposals recently submitted to the Minister for Finance and Public Reform reads as follows:
- Changes to VAT rating for all Agricultural/Farm & Forestry Contracting charges
- FCI has requested that the Minister for Finance and Public Reform, being aware of the cash flow challenges facing Irish dairy and livestock farmers, and the significant 'Black Economy' issues in the Agricultural/Farm & Forestry Contractor sector, to consider two possible options towards reducing the VAT on vital services provided to farming customers of Farm/Agricultural Contractors.
These options include:
- Reducing VAT on all Farm/Agricultural Contractor services from 13.5% to 9%, for a period of a minimum trial period of two years. This will allow the agricultural sector to get the benefit of improved cash flow on farms and will support the opportunities for farmer re-investment in additional higher genetic worth dairy and beef animals as well as supporting the agricultural sector which is facing major world competitive challenges against the backdrop of Brexit.
- A special short-term two-year provision to allow farmers to have a full Value Added Tax (VAT) refund on all invoiced activities by Agricultural/Farm & Forestry Contractors, in a similar way to the operation of the VAT refund system on Farm Buildings and Land Drainage Works. This approach would return a more significant competitive opportunity to the agricultural sector which is facing major world market challenges against the backdrop of Brexit.
2. National Register of Farm Contractors
- The Association of Farm & Forestry Contractors in Ireland (FCI) has requested that the Minister for Finance and Public Expenditure, instruct the Revenue Commissioners to establish a national register of Agricultural/Farm & Forestry Contractors based on criteria to be agreed between the Revenue Commissioners and FCI to ensure compliance and fairness, while raising standards in the sector.
3. Accelerated Investment Allowances for Agricultural/Farm & Forestry Contractors
- FCI is requesting that registered Agricultural/Farm & Forestry Contractors be allowed Accelerated Investment Allowances (AIA’s) to invest in high capital cost machinery. Many of these expensive machines have a relatively short working life of 3 to 5 years in typical Irish conditions, which is shorter than the current allowed write-down period of 8 years.
- FCI believes that Agricultural/Farm & Forestry Contractor should get accelerated capital allowances for replacing high capital cost machines with new machines proven to deliver fuel economy and lower CO2 emission figures.
4. Changes to Form 11 Tax Return and Self-Assessment Form
- FCI has requested the Minister for Finance and Public Expenditure, Mr. Paschal Donohoe, T.D., to instruct the Revenue Commissioners to introduce an amendment to the annual Form 11 Tax Return and Self-Assessment Form to include a section where farmers will be required to provide a detailed breakdown of their annual agricultural diesel usage costs under a new and separate heading. FCI believes that amending the annual Form 11 Tax Return and Self-Assessment Form to include a section where farmers will be required to provide details of their annual agricultural diesel usage costs under a new and separate heading, will clearly show the scale off-farm agricultural contracting business are not in proportionate to the scale of the farming activities and will incentivise a more level business environment for contractors.
5. Income tax incentive scheme for seasonal agricultural workers
- FCI has identified the urgent need for a seasonal Income Tax Incentive or Special Seasonal Machinery Skills Allowance Scheme to allow farmers’ sons and daughters to work with a locally-based Farm & Forestry Contractor during the seasonal summer months and then to revert back to farm work during the lower demand winter period.
- FCI believes that it is important to working in a rural-based Agricultural/Farm & Forestry Contractor business an attractive seasonal employment option through a special allowance system tailored to meet the needs of weather-dependent seasonal agricultural work.
6. Contractors support for new environmental machine technology through farm subsidy
- FCI has requested the Minister for Finance and Public Expenditure, Mr. Paschal Donohoe, T.D., to provide funding for the extension of the Green Low-Carbon Agri-environment Scheme (GLAS) scheme to all farmers in the form of the current voucher worth €1.20/cubic metre where the slurry is spread by contractor-invoiced Low Emission Slurry Spreading (LESS) systems. This approach will ensure more efficient use of the State’s investment in this modern and skill demanding machinery while ensuring that a national LESS record is created and managed to make significant progress in the Government stated target of reducing Green House emissions from the sector.
7. Carbon tax rebate against tax for Agricultural/Farm Contractors
- Farm Contractors are not eligible for this Carbon Tax write-off, even though all of their work activities are for farmers. FCI requested that Agricultural/Farm & Forestry Contractors, who are Revenue Commissioners registered and employ a minimum of four full-time machine operators, should be allowed a similar annual Carbon Tax deduction against business profits.
8. Support for grass-based bio-digesters in Ireland
- The Association of Farm & Forestry Contractors in Ireland (FCI) requested that the Minister for Finance and Public Reform, through the offices of the Minister for Communications, Climate Action and Environment, provide support for the establishment of a grass-based bio-digester sector in Ireland.
- Agricultural/farm & forestry contractors are well equipped and have shown the capacity to carry out the efficient mechanisation work of harvesting large areas of high quality and energy-rich grass. Rather than using imported wood chip for any proposed Renewable Heat Incentive Scheme (RHI), FCI believes that using grass as Ireland’s most productive crop will mean additional rural-based jobs as grass harvesting cannot be outsourced to another country. It will allow for greater use of local labour and technology resources to produce an environmentally clean and sustainable energy source that is sympathetic to the Irish landscape.
9. Training programme for farm contractor employees
- FCI is requesting the creation of a dedicated Agricultural/Farm & Forestry Contractor Tractor Operator three-year apprenticeship programme along similar lines to that available in the Road Haulage sector. The FCI apprenticeship would cover every facet of tractor and machine operation for Irish conditions.
10. Meal allowance for employees of Agricultural/Farm & Forestry Contractors
- FCI is requesting that Agricultural/Farm & Forestry Contractors, who are Revenue Commissioner registered, should be allowed a daily meal allowance for all of their operators in the same way that road haulage contractor operators are allowed a similar tax-free daily meal allowance. FCI believes that the precedence set in the road haulage sector can justifiably be transferred to the Agricultural/Farm & Forestry Contractor sector due to the changed demographic structure of rural Ireland, where contractor teams now rarely get fed on farms where they are working on.