At least there was nothingtoo radical in the Budget
The Budget presented Tuesday by Minister for Finance and Public Reform Paschal Donoghue could be best described as tinkering at the edges without any radical reform of any sector.
There were so many leaks in advance of Budget day that the budget brief case might as well be a colander.
For a farmer having taxable income of €36,000 per year, tax savings from USC, income tax band, and Earned Income Credit changes in the Budget will amount to €404 per annum.
The changes to the USC apply from January 1, 2019 — a €502 increase to the €19,372 band ceiling, and the 4.75% rate reduced to 4.5%.
An increase of €750 in the income tax standard rate band, for all earners, takes it from €34,550 to €35,300 for single individuals and from €43,550 to €44,300 for married one-earner couples.
There’s an increase in the Earned Income Credit from €1,150 to €1,350.
There was some further good news for farmers with the extension of income averaging to farmers who have off-farm non-PAYE income.
Under current rules, farmers who have self employed income (including their spouse’s or civil partner’s income), or who are proprietary directors, are automatically excluded from income averaging.
How wide the scope of these changes is will be clarified when the Finance Bill is published in a couple of weeks.
Contrary to widespread expectations among the public, these was no increase in carbon tax, and this is relatively good news for farmers who are heavy users of fuel, and farmers will also save indirectly, because their agricultural contractors are spared a carbon tax price hike.
Those working in the renewable energy sector were hoping that an increase in carbon tax could kick-start a REFIT (renewable energy feed-in tariff scheme).
Instead, the lack of a REFIT scheme for smaller scale electricity generation units, be they photovoltaic (solar), hydro-power, or biogas units, continues and is blamed for a slow uptake in measures which could reduce the overall carbon footprint.
Given that there is expected to be a large overshoot in our greenhouse gas emission targets by 2020, and the need to bring climate change under control being reinforced in this week’s report by the UN Intergovernmental Panel on Climate Change (IPCC), the measures introduced in Tuesday’s Budget to address climate change are relatively minor.
For 2019, the Department of Communication, Climate Action and Environment will invest over €164 million in targeted measures to achieve Ireland’s energy efficiency and renewable energy objectives, in line with the Government’s National Mitigation Plan.
Emissions mitigation measures across other Departments in 2019 include:
n €103.5m in grant and premium rates for planting forests;
n introduction of the Beef Environmental Efficiency Pilot (BEEP) to further improve the carbon efficiency of beef production;
n €70m for the Targeted Agriculture Modernisation Scheme (TAMS);
n €70m for the Environment and Waste Management Programme.
In a total expected budget spend of €66.5bn for 2019, these specific actions for climate change are relatively small.
Meanwhile, for farmers, the extension of the three regimes of stock relief (the general scheme, registered partnership scheme, and young trained farmer scheme) to December 31, 2021, is welcome.
It was disappointing that the earned income credit has only been increased by €200 for year 2019, despite the Government’s Programme for Partnership committing to increase the self-employed tax credit to €1,850 to match the PAYE tax credit by 2018.
The extension of a “jobseekers” type payment to the self-employed is welcome, but is less likely to materialise for farmers.
The current Group A tax-free threshold which applies primarily to gifts and inheritances from parents to their children is being increased from €310,000 to €320,000.
While the increase is welcome, it again falls far short of the Government’s Programme for Partnership, which stated the intention to increase the tax band to €500,000.
Last year’s Budget sparked a furore over the increase in the standard stamp duty rate applicable on land, from 2% to 6%.
This year the pronouncements are stamp duty are much more positive, with an extension of the Young Trained Farmer’s stamp duty relief for a further three years, out to December 31, 2021.
An additional €23m will be paid to farmers in Areas of Natural Constraint (ANC), bringing the allocation for 2019 to €250 million.
This brings to 24% the increase over the last two years, and essentially restores ANC payments to the level prior to the economic downturn.
The Budget also saw the announcement of a €20m Beef Environmental Efficiency Pilot scheme (BEEP).
This is targeted at suckler farmers, designed to further improve the economic and carbon efficiency of Irish beef production.
Outside of farming, the HSE is to receive record funding, despite already being ranked fifth in terms of spend per capita in the EU-28, even before a 700m overshoot in expenditure this year.
It seems like the HSE is a perpetual black hole which has an insatiable appetite.
Yet, the World Health Organisation ranks us at only 14th place amongst our EU counterparts in their overall health efficiency survey.
