# CAT should be applied to transfers of businesses and farms.



## Brendan Burgess (12 Jan 2022)

Under the current regime if I inherit a property worth €1,335,000 from my father, it will be taxed as follows: 

Inheritance: €1,335,000
Threshold:   €   335,000
Subject to CAT: €1,000,000
CAT at 33% : €330,000

However, if I inherit a business worth €1,335,000, there will be no tax. 

Taxable value: €1,335,000
Less business relief: 90% €1,200,000
Taxable  value after Business Relief: €135,000 

As this is lower than the Group A threshold, I pay no tax.

The only condition is that I must retain it for 6 years. 
1) I don't have to have worked in the business.
2) I don't need to work in the business after inheriting it. 
3) I don't need to be a relative of the business owner making the gift.


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## Brendan Burgess (12 Jan 2022)

This is clearly inequitable.   
I don't think that there are any limits to this. 
If I inherit a business worth €100m,  I will get €90m Business Relief. 
So I will pay €3.3m CAT on the €10m of taxable income. 

This should be scrapped while making allowances for deferred payment so that the business or farm does not have to be sold to pay the CAT.


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## Brendan Burgess (12 Jan 2022)

Purple said:


> That would lead to the sale of every family farm and family business at the end of each generation as most of them don't have the cash to pay the tax.



Hi Purple 

Easy to accommodate this. 

Charge the CAT as normal on farms and other businesses.   
But allow payment to be deferred at an interest rate of ECB +2% annually. 
If the CAT is paid within 2 years - charge no interest. 

A lot of people inherit farms. They work them for the minimum period required to avail of the CAT relief. And then sell them on.

Likewise with businesses.  If someone inherits a business and keeps it, then they can defer the CAT. If they sell it, they pay the CAT. 

Brendan


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## Purple (12 Jan 2022)

Brendan Burgess said:


> Hi Purple
> 
> Easy to accommodate this.
> 
> ...


That would see the owner directors stuff any reserves of working capital into the pension funds and businesses would operate with the bare minimum cash reserves. In effect people who were prudent would be punished. 



Brendan Burgess said:


> A lot of people inherit farms. They work them for the minimum period required to avail of the CAT relief. And then sell them on.
> 
> 
> Likewise with businesses.  If someone inherits a business and keeps it, then they can defer the CAT. If they sell it, they pay the CAT.
> ...


And if the farm or business is kept within the family the CAT is never charged. Is that correct? That could mean a business has a CAT liability of far more than it's worth.


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## Brendan Burgess (12 Jan 2022)

Purple said:


> That would see the owner directors stuff any reserves of working capital into the pension funds and businesses would operate with the bare minimum cash reserves.




But the CAT charge is on the beneficiary and not on the company.  

Brendan


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## Brendan Burgess (12 Jan 2022)

Purple said:


> And if the farm or business is kept within the family the CAT is never charged. Is that correct? That could mean a business has a CAT liability of far more than it's worth.



You could probably put a limit of 10 years on it. Or increase the interest rate after 10 years. 

The CAT liability attaches to the beneficiary and not to the business.  

So if I am left a business worth €1m with a €350k CAT liability, I must pay that €350k eventually.   If I run the business into the ground, I still owe the €350k. 

Brendan


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## Purple (12 Jan 2022)

Brendan Burgess said:


> But the CAT charge is on the beneficiary and not on the company.
> 
> Brendan


Yes, the owners reduce the value of the company by stuffing their pension or just buying a big house or buying one for their kids that the children live in for more than 4 years before they inherit it or whatever. That way the company is worth less so the beneficiary has less to pay.


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## Purple (12 Jan 2022)

Brendan Burgess said:


> You could probably put a limit of 10 years on it. Or increase the interest rate after 10 years.
> 
> The CAT liability attaches to the beneficiary and not to the business.
> 
> ...


So nearly all family farms and most family businesses world have to be sold after 10 years in order to generate the cash to pay the CAT.


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## Brendan Burgess (12 Jan 2022)

Purple said:


> Yes, the owners reduce the value of the company by stuffing their pension or just buying a big house or buying one for their kids that the children live in for more than 4 years before they inherit it or whatever.



Well yes, they should do that anyway. 

As it is, they can artificially pump up the value of the company by retaining profits knowing that they can gift it to their children who will pay 3% CAT on it. 

So that is not an argument against it.

Brendan


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## Brendan Burgess (12 Jan 2022)

Purple said:


> So nearly all family farms and most family businesses world have to be sold after 10 years in order to generate the cash to pay the CAT.



Well most families have substantial assets other than their businesses.  So they can sell these assets to pay the CAT. 

And most farmers have substantial other assets. 

They will have plenty of time in advance of the gift to plan the payment of the CAT.

Brendan


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## Purple (13 Jan 2022)

Brendan Burgess said:


> Well yes, they should do that anyway.
> 
> As it is, they can artificially pump up the value of the company by retaining profits knowing that they can gift it to their children who will pay 3% CAT on it.
> 
> ...


That's not great news for the employees. The State would be encouraging employers to reduce the ability of their employer to ride out economic shocks.


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## Purple (13 Jan 2022)

Brendan Burgess said:


> Well most families have substantial assets other than their businesses.  So they can sell these assets to pay the CAT.
> 
> And most farmers have substantial other assets.


Do they? Do most farmers have substantial assets other than the value of their farm?


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## Brendan Burgess (13 Jan 2022)

Purple said:


> hat's not great news for the employees. The State would be encouraging employers to reduce the ability of their employer to ride out economic shocks.



So you are suggesting that we should tax large gifts at 3% just in case some owners of companies would take the profits out of their companies and make the companies vulnerable? 

I disagree.  People who receive large gifts should be taxed at the same rate as any other asset.  The recipient and the donor should plan ahead to pay this tax. But if that is not possible the payment of the tax can be deferred but subject to an interest charge.


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## Purple (13 Jan 2022)

Brendan Burgess said:


> So you are suggesting that we should tax large gifts at 3% just in case some owners of companies would take the profits out of their companies and make the companies vulnerable?
> 
> I disagree.  People who receive large gifts should be taxed at the same rate as any other asset.  The recipient and the donor should plan ahead to pay this tax. But if that is not possible the payment of the tax can be deferred but subject to an interest charge.


The current system allows that family members who work on the farms or in the businesses get a very large discount. If that remained the case then yes, go with your plan.


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## Brendan Burgess (15 Jan 2022)

I have moved this from the thread on CGT as it's probably a bigger issue.


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## cremeegg (15 Jan 2022)

Inheritance tax is a nonsense. Why should tax be charged on an asset just because a person dies.

Its origins in feudal law probably spring from the fact that the heir was vulnerable at the time of inheritance and needed the Kings support to succeed, so the King took advantage to extract a cut. We should be past this.

Any asset property or business should be taxed appropriately annually. A meaningful property tax each year and no sudden extra tax on he death of the owner. Similarly a business should pay tax appropriately each year and not be subject to a sudden one-off tax on death. 

Tying yourself in knots to propose a better way of levying a tax which is inherently ridiculous is a waste of time.


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## Brendan Burgess (15 Jan 2022)

I think that most people would feel that inherited wealth should be taxed. 

Children of wealthy parents already have a huge advantage over children of parents with no assets.  So I would have no problem with taxing them on any inheritance. 

Would an ongoing wealth tax achieve the same thing? An interesting idea. 

Generally speaking, wealth taxes don't seem to raise much money.  So even if you agree with them ideologically, they don't serve much purpose.

Brendan


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## Purple (17 Jan 2022)

cremeegg said:


> Why should tax be charged on an asset just because a person dies.


We'd end up with more and more wealth concentrated in one group. That's why.


cremeegg said:


> Its origins in feudal law probably spring from the fact that the heir was vulnerable at the time of inheritance and needed the Kings support to succeed, so the King took advantage to extract a cut. We should be past this.
> 
> Any asset property or business should be taxed appropriately annually. A meaningful property tax each year and no sudden extra tax on he death of the owner. Similarly a business should pay tax appropriately each year and not be subject to a sudden one-off tax on death.
> 
> Tying yourself in knots to propose a better way of levying a tax which is inherently ridiculous is a waste of time.


I agree that a wealth tax is a good idea but only if it is levied on pension assets  and family homes. If the person doesn't have the income to pay it then it could be rolled over in to an estate/inheritance tax with a reasonable interest rate accruing.


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## Nermal (17 Jan 2022)

Purple said:


> So nearly all family farms and most family businesses world have to be sold after 10 years in order to generate the cash to pay the CAT.



'Nearly all' is a major exaggeration but - so what?


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## Purple (18 Jan 2022)

Nermal said:


> 'Nearly all' is a major exaggeration but - so what?



Most family owned businesses are run by family members. It is their skill and their labour that makes the business viable. In both cases their greatest asset is their land or premises. 

How many family farms could generate the cash to pay CAT? I'd say very few could so I stand by my "nearly all".
If CAT is applied at the full rate then within a few decades most farms will be owned by corporations and there will be far fewer family businesses. Is that what we want?


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## Bluefin (18 Jan 2022)

As someone who lives in a rural area I'm amazed how any farmer purchasing land today can manage to make a return on the cost of land.. The only way I believe that this is possible at all is that they are taking a very long investment perspective.. Generational and not just the next one..


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## 24601 (18 Jan 2022)

cremeegg said:


> Inheritance tax is a nonsense. Why should tax be charged on an asset just because a person dies.
> 
> Its origins in feudal law probably spring from the fact that the heir was vulnerable at the time of inheritance and needed the Kings support to succeed, so the King took advantage to extract a cut. We should be past this.
> 
> ...



Ah yes, the tax system should definitely be set up to facilitate the unfettered transfer of wealth intergenerationally. That won't have any negative consequences for society at all.


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## Purple (18 Jan 2022)

24601 said:


> Ah yes, the tax system should definitely be set up to facilitate the unfettered transfer of wealth intergenerationally. That won't have any negative consequences for society at all.


If there was a meaningful wealth tax, which accrued with interest and was paid from their estate upon their death if the person didn't have income to pay it, then there is an argument for no inheritance tax.


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## Brendan Burgess (18 Jan 2022)

Hi Purple 

Most businesses are profitable in that they generate a profit in excess of market salaries paid to the owners.  If they weren't, it would make sense for the owners to sell the assets, close the business and get a salary elsewhere. 

A business is usually valued on the basis of a multiple of its profits.   But the break-up basis may be higher. 

Most business owners I know have taken profits from their companies on top of their salaries. 

And I know other businesses which have substantial property which would be better off if they rented it out.

So if Daddy gives Sonny a business in a  warehouse worth €3m, are you saying that there should be no CAT on it?  He can sell it after 6 years for €3m and pay nothing?  

It seems wrong to me. 

Brendan


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## Brendan Burgess (18 Jan 2022)

Farming is a problematic business for most forms of taxation. 

No one would go into farming as a business.  I wouldn't pay €14,000 an acre for 100 acres in County Kildare. Stock it up and employ a farm manager to run it. 

So based on a multiple of profits, it's probably worth nothing. 

If I inherit a farm worth €1.4m I don't think I should get it free of CAT.    Maybe defer the CAT indefinitely. When I sell it, I pay 33% of it in CAT.  If I pass it on to my son, he pays no CAT until he sells it. 

Brendan


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## Peanuts20 (18 Jan 2022)

Firstly, this is never going to happen, any rural TD who supports this would be booted out of office the next time around. And rightly so

It's spectacularly unfair on someone who may have worked in the business or farm all of their life, paid their taxes on their income and then to be suddenly hit with a 2% tax on the value of the assets in a business that they may have been involved in since childhood. Utter clueless nonsense is the only way to describe a proposal like this


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## Purple (18 Jan 2022)

Brendan Burgess said:


> Hi Purple
> 
> Most businesses are profitable in that they generate a profit in excess of market salaries paid to the owners.  If they weren't, it would make sense for the owners to sell the assets, close the business and get a salary elsewhere.
> 
> ...


If sonny has worked in the business for more than 5 years and will continue to do so, then the current Part 12 Business Relief should apply. Family members who do not work in the business should not get any relief. In other words the same rules should apply for family members that apply for non-family members (Section 12.5.2.2 of this).


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## Brendan Burgess (18 Jan 2022)

That is where we disagree.

I don't see why someone working in a business should be able to get a €3m gift free of tax. 

Brendan


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## Baby boomer (18 Jan 2022)

Bluefin said:


> As someone who lives in a rural area I'm amazed how any farmer purchasing land today can manage to make a return on the cost of land.. The only way I believe that this is possible at all is that they are taking a very long investment perspective.. Generational and not just the next one..


Three ways to make a good return.
1.  Intensive dairy on good land.
2.  Harvest subsidies like single farm payment.
3.  Harvest building sites.


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## Purple (18 Jan 2022)

Brendan Burgess said:


> That is where we disagree.
> 
> I don't see why someone working in a business should be able to get a €3m gift free of tax.
> 
> Brendan


Then most businesses would be sold after each generation to pay the tax.


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## cremeegg (18 Jan 2022)

Brendan Burgess said:


> Farming is a problematic business for most forms of taxation.
> 
> No one would go into farming as a business.  I wouldn't pay €14,000 an acre for 100 acres in County Kildare. Stock it up and employ a farm manager to run it.
> 
> ...


If you own a farm and cannot make a profit which represents a reasonable return on the value of the land and your work, you should sell it otherwise you are just hoarding land an depriving society of its potential contribution.


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## Zenith63 (18 Jan 2022)

Purple said:


> Then most businesses would be sold after each generation to pay the tax.


It would be interesting to see how many 'real' businesses (excluding farms) are passed down a generation these days and how many are just tax planning structures.  Transfers of 'real' businesses don't seem at all common any more.  I'd be keen for this exemption to be restructured.

Having said that even basic estate planning would have you put the shares of any business you setup directly in your children's names from day one to side-step CAT entirely.


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## Purple (19 Jan 2022)

Zenith63 said:


> It would be interesting to see how many 'real' businesses (excluding farms) are passed down a generation these days and how many are just tax planning structures.  Transfers of 'real' businesses don't seem at all common any more.  I'd be keen for this exemption to be restructured.


Good point.


Zenith63 said:


> Having said that even basic estate planning would have you put the shares of any business you setup directly in your children's names from day one to side-step CAT entirely.


Really?


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## Brendan Burgess (19 Jan 2022)

Zenith63 said:


> Having said that even basic estate planning would have you put the shares of any business you setup directly in your children's names from day one to side-step CAT entirely.



Hi Zenith

Most people setting up a business do so to earn a living for themselves.  They are not thinking of their children.   Even if they were thinking of their children, they would want to retain control of the business themselves, so they should not let the CAT wag the dog.  They might not have children when they are setting up their business.  

But is there a tax planning angle for a wealthy person to buy a business with money they don't need and gift it to their children (or friends.)? 

What conditions would they need to comply with?
1) If it's a gift the donor would have had to own it for 5 years 
2) The recipient must retain ownership for 6 years. 

Neither the donor nor the recipient is required to work in the business. 

So I could buy a building with a coffee shop in it.  Employ someone to run it. Gift it to my son after 5 years.  He can sell it after 6 years.  No CAT. 

Brendan


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## Zenith63 (19 Jan 2022)

Brendan Burgess said:


> Most people setting up a business do so to earn a living for themselves. They are not thinking of their children. Even if they were thinking of their children, they would want to retain control of the business themselves, so they should not let the CAT wag the dog. They might not have children when they are setting up their business.


I’m not saying most businesses are setup this way of course, but in my experience it is quite common.

The issue of control is easily resolved, but most people don’t think of their young child as ever being issue in controlling their small business. We’re not talking about the Sacklers here .

As for the question of income, the salary is still paid to the parent and should the company be sold, a structure of child-to-parent loans and the Small Gift Exemption can be used such that the parent has use of the money in their lifetime with no CAT issues and acts has a handy tax planning tool at inheritance time. Nothing illegal or especially aggressive required.

Analysis of the RBO data would probably be interesting to see how widespread this is.


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## T McGibney (19 Jan 2022)

Brendan Burgess said:


> So I could buy a building with a coffee shop in it.  Employ someone to run it. Gift it to my son after 5 years.  He can sell it after 6 years.  No CAT.


This is only true (more accurately half-true) in theory Brendan. In practice it's massively risky. You'll end up not only tying up a large capital sum in an illiquid asset, but also running a complicated going concern business (with its own working capital requirements), for all of 11 years, just to save CAT.

The more I think about it, the crazier it appears. You would probably lose your shirt on it.


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## Brendan Burgess (19 Jan 2022)

Hi Tommy

Fair points. 

Is it the coffee shop and property combination which is risky or the whole idea? 

Do people acquire or set up businesses as part of Estate Planning or is it just impractical because of the long-term nature of it. 

But if I had a son who wanted to set up a business. I could buy an existing business and hire him to work in it, and give it to him after 5 years.

Brendan


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## T McGibney (19 Jan 2022)

Brendan Burgess said:


> Is it the coffee shop and property combination which is risky or the whole idea?


Hi Brendan

Both, but the whole idea basically. It makes no sense to run any business for 11 years to obtain a tax advantage, no matter how lucrative.


Brendan Burgess said:


> Do people acquire or set up businesses as part of Estate Planning or is it just impractical because of the long-term nature of it.


I suspect it's rare enough. Maybe some do in specific sectors where they already have industry expertise , but I'd guess that almost every long-term plan like this turns out to be impractical.


Brendan Burgess said:


> But if I had a son who wanted to set up a business. I could buy an existing business and hire him to work in it, and give it to him after 5 years.


You could in theory, but it would be far less risky and better for everyone to let him live his own life and make his own successes and mistakes. Nobody who wants to go into business in their own right would relish being stuck under a parent's thumb and subject to their whims for another 5 years. And a lot can happen in 5 years.


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## NoRegretsCoyote (19 Jan 2022)

Brendan Burgess said:


> A business is usually valued on the basis of a multiple of its profits. But the break-up basis may be higher.


The issue is that farms attract EU and national subsidies of around €1.5 billion a year. They are to a large extent area-based payments, so once you can show that you have X hectares being farmed you get a direct payment. Non-dairy cattle farming is not very labour intensive and you can combine it quite easily with other work (dairy and tillage less so).

By now the majority of farms in Ireland are part time and in effect it is a very well subsidised hobby. You can look at CSO agricultural accounts. Farm output less non-labour inputs (net value added at basic prices) is in most years less than the income from subsidies. When you take out paid help farmers make about twice as much in subsidies as they do in profits on their farm activity.

In many ways farming is more passive than active income. The land is doing more work than the farmer is, mainly by attracting subsidies. If the subsidies disappeared a lot of land values outside dairy areas would collapse.

I can see a case for lower inheritance taxes on large, intensive farms that are essentially family businesses and worked intensively. For the hobbyists out there - and there are many - the inheritance tax regime is way too low.


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## T McGibney (19 Jan 2022)

NoRegretsCoyote said:


> The issue is that farms attract EU and national subsidies of around €1.5 billion a year. They are to a large extent area-based payments, so once you can show that you have X hectares being farmed you get a direct payment. Non-dairy cattle farming is not very labour intensive and you can combine it quite easily with other work (dairy and tillage less so).
> 
> By now the majority of farms in Ireland are part time and in effect it is a very well subsidised hobby. You can look at CSO agricultural accounts. Farm output less non-labour inputs (net value added at basic prices) is in most years less than the income from subsidies. When you take out paid help farmers make about twice as much in subsidies as they do in profits on their farm activity.
> 
> ...


Massive generalisations here, too many to list individually. 

Try running your small part-time farm as you would a hobby in the true sense of the word and you'll soon find yourself in non-compliance with a full battery of regulations and therefore no longer eligible for your subsidy payment.


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## Nermal (19 Jan 2022)

Purple said:


> How many family farms could generate the cash to pay CAT? I'd say very few could so I stand by my "nearly all".
> If CAT is applied at the full rate then within a few decades most farms will be owned by corporations and there will be far fewer family businesses. Is that what we want?



I don't 'want' it, but I don't really care if it happens. I don't see why the tax system should artifically prop them up.


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## NoRegretsCoyote (20 Jan 2022)

T McGibney said:


> Try running your small part-time farm as you would a hobby in the true sense of the word and you'll soon find yourself in non-compliance with a full battery of regulations and therefore no longer eligible for your subsidy payment.


There are lots of regulations around being a rally car driver or keeping a horse. They are still hobbies!


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## T McGibney (20 Jan 2022)

NoRegretsCoyote said:


> There are lots of regulations around being a rally car driver or keeping a horse. They are still hobbies!


Irrelevant comparisons both as neither of those activities constitutes a trading activity attracting compliance-dependent public subsidy.


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## NoRegretsCoyote (20 Jan 2022)

T McGibney said:


> Irrelevant comparisons as neither of those activities attract compliance-dependent public subsidy.


Any economic activity that would evaporate without 2/3 public subsidy of its costs is a hobby.


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## T McGibney (20 Jan 2022)

NoRegretsCoyote said:


> Any economic activity that would evaporate without 2/3 public subsidy of its costs is a hobby.


By your definition, the building of a road or bridge, the planting of a forest, or the running of a hospital would qualify as a hobby. That makes no sense.


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## _OkGo_ (21 Jan 2022)

Wow, what a deeply misguided understanding of agriculture you have and as @T McGibney said, there are so many sweeping generalisations in your comments that its hard hard to know where to start.



NoRegretsCoyote said:


> Non-dairy cattle farming is not very labour intensive and you can combine it quite easily with other work


You have clearly never set foot on a farm to hold this view. And for the majority of those smaller farmers, they don't combine it with other work by choice, it is by necessity. They are still putting in at least 20+ hours a week into their "hobby". How dare they try to earn some extra income to support their families.



NoRegretsCoyote said:


> By now the majority of farms in Ireland are part time and in effect it is a very well subsidised hobby.


As above, it is not a hobby, they earn extra income from it. Would you work overtime and then turn around to your company and say don't worry about paying me, I love what I do so I don't need to be paid. People are allowed to both enjoy what they do and make money from it.



NoRegretsCoyote said:


> You can look at CSO agricultural accounts. Farm output less non-labour inputs (net value added at basic prices) is in most years less than the income from subsidies. When you take out paid help farmers make about twice as much in subsidies as they do in profits on their farm activity.


This is a classic case of quoting an irrelevant statistic to validate an illogical conclusion. The reality is that it is you (all of us) that benefits from those subsidies through very reasonable food prices. If the subsidies did not exist, the price of meat and dairy would need to double/triple to make it economically viable for farmers. Are food producers going to pay this and in turn will distributors and retail groceries stock shelves with products that have increased massively in price? Would restaurants and the hospitality sector be able to cope with these increases?



NoRegretsCoyote said:


> In many ways farming is more passive than active income.


As above, you've never set foot on any type of farm to hold this view. Maybe an accountants salary can be considered passive because they have the audacity to let Excel do their calculations?? 



NoRegretsCoyote said:


> Any economic activity that would evaporate without 2/3 public subsidy of its costs is a hobby.


It would not evaporate, you the consumer would pay the price through massive increases in the price of produce. And as a side note, pretty much every sector has some form of subsidy through a tax relief or direct provision. That's not to say that there aren't inefficiencies in the agriculture sector or that there aren't a few who play the system but it is not the black/white picture that you paint

I say all this as someone who worked on such a farm growing up and I now sit comfortably and a reasonably well paid in a large private sector company. I'm quiet happy to know with certainty what my income is at the end of each month. There is no chance that I would want to get home from work and face 2 hours of feeding/tending animals in the middle of winter on the hope that I turn a measly profit from it.

You might spare a thought for the passive hobbyist farmer as you settle in for a very reasonably priced steak sandwich takeaway on Friday night


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## NoRegretsCoyote (21 Jan 2022)

_OkGo_ said:


> And for the majority of those smaller farmers, they don't combine it with other work by choice, it is by necessity.


My point is that many would not put in such work if there were not so many subsidies on offer. Suppose there was a system where if you knit a jumper and sold it for €30 the state gave you €60 more - you would see a lot more people knitting, and existing knitters knitting more


_OkGo_ said:


> This is a classic case of quoting an irrelevant statistic to validate an illogical conclusion.


It's a highly relevant and little-publicised statistic. It backs up my argument that a lot of farming is not commercially viable without subsidy.




_OkGo_ said:


> As above, you've never set foot on any type of farm to hold this view. Maybe an accountants salary can be considered passive because they have the audacity to let Excel do their calculations??


Without farmland you can't farm, and you can make money renting farmland and not farming it at all yourself. Farming is of course a mix of active and passive income, but the land is doing at least as much of the work as the farmer is. In comparison accountant's MS Office license is a trivial share of their turnover. 



_OkGo_ said:


> If the subsidies did not exist, the price of meat and dairy would need to double/triple to make it economically viable for farmers.


Perhaps, but without huge impact on the Irish consumer. It's not very hard to import food of any type - when was the last Irish-grown pineapple you ate? 



_OkGo_ said:


> There is no chance that I would want to get home from work and face 2 hours of feeding/tending animals in the middle of winter on the hope that I turn a measly profit from it.


And you would want it even less if there wasn't a subsidy cheque in the post either! 

My overall point is the tax treatment of inheritance is very gentle, particularly when you consider the subsidy regime on top.


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## Purple (21 Jan 2022)

_OkGo_ said:


> It would not evaporate, you the consumer would pay the price through massive increases in the price of produce. And as a side note, pretty much every sector has some form of subsidy through a tax relief or direct provision. That's not to say that there aren't inefficiencies in the agriculture sector or that there aren't a few who play the system but it is not the black/white picture that you paint


While I agree with the thrust of what you are saying there's no way farming would exist in its current form without the EU handouts. We'd pay more but not proportionately as farming now is grossly inefficient.  We'd have fewer much larger farms and, given the appalling track record of pollution from Irish farmers, it would probably be easier to regulate and control those fewer larger farms from an environmental and animal welfare perspective. More intensive farming is also better for the environment.


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## Purple (21 Jan 2022)

NoRegretsCoyote said:


> It backs up my argument that a lot of farming is not commercially viable without subsidy.


Almost no farming done in Ireland is commercially viable without subsidy.
Think of the handouts as a way of slowing down increased urbanisation.  There is a strong societal argument for subsidised farming. Unfortunately there is no environmental argument for it.


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## T McGibney (21 Jan 2022)

Purple said:


> More intensive farming is also better for the environment.


This contradicts my own understanding on this. Would you care to expand on it?


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## NoRegretsCoyote (21 Jan 2022)

T McGibney said:


> This contradicts my own understanding on this.


I am no expert, but one could imagine that one large farm is easier to supervise than ten small ones.

Scale generally means people with better training and expertise.


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## Purple (21 Jan 2022)

T McGibney said:


> This contradicts my own understanding on this. Would you care to expand on it?


This gives more details but water can be recycled, excrement can be processed into fuel, clean water and fertiliser and the land freed up can be used for trees (carbon farming) and re-wilding.
Vertical Framing used a fraction of the land and water of conventional farming and since crops can be produced in urban centres the transport, storage and refrigeration costs and environmental impact are greatly reduced.


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## T McGibney (21 Jan 2022)

Purple said:


> This gives more details but water can be recycled, excrement can be processed into fuel, clean water and fertiliser and the land freed up can be used for trees (carbon farming) and re-wilding.
> Vertical Framing used a fraction of the land and water of conventional farming and since crops can be produced in urban centres the transport, storage and refrigeration costs and environmental impact are greatly reduced.


Urban centre (!) crop production is unlikely within our lifetimes to dislodge an agricultural sector that produced €8.2 billion in output in 2020. And, sorry, that Cambridge study looks to be pie-in-the-sky stuff, as your link admits.


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## _OkGo_ (21 Jan 2022)

NoRegretsCoyote said:


> My point is that many would not put in such work if there were not so many subsidies on offer. Suppose there was a system where if you knit a jumper and sold it for €30 the state gave you €60 more - you would see a lot more people knitting, and existing knitters knitting more
> 
> It's a highly relevant and little-publicised statistic. It backs up my argument that a lot of farming is not commercially viable without subsidy.


Ok, the knitting is irrelevant (it's not a €7B sector) and the €30/60 split is not in line with the breakdown of figures from the CSO. It is also not a vital sector upon which other industries are reliant

Yes it is not commercially viable without subsidy. But without the subsidy, there is no other alternative other than to increase the unit price of the output to compensate and end up at the same profit margin. Agri is literally/metaphorically the bottom of the food chain. The €5B of intermediate consumption supports a raft of highly skilled/paid professionals (eg. accountants, veterinary etc) and other businesses. Are they going to take the hit by reducing their fees to compensate the lack of subsidy? Or will the meat/dairy producers increase the price they pay so that gross output goes up €2B? Would they absorb the cost or pass it on to the consumer.



NoRegretsCoyote said:


> Perhaps, but without huge impact on the Irish consumer. It's not very hard to import food of any type - when was the last Irish-grown pineapple you ate?


Lets import all our food and produce nothing in agri then? The intermediate consumption disappears and the big food producers (eg. Kerry group) no longer need to be here? That's not a great result for the wider economy. Yes there are some foodstuffs that we don't produce and they are imported for consumer choice like your pineapple. That is not the same as saying we can entirely replace all the meat/dairy and crops that we can produce



NoRegretsCoyote said:


> And you would want it even less if there wasn't a subsidy cheque in the post either!


You've missed my point on this. In my cushy office job, I don't need to financially rely on additional income earned from part time farming. I enjoyed farming but it was never a hobby hence I won't rock up to some random farm and start helping out. My anecdotal experience is that those part time farmers are usually not as educated or skilled to have high paying jobs. Yes, you'll get the occasional 3rd level educated professional but the majority have lower paid full time jobs and rely heavily on the income generated from farming. It's not their hobby, its their income.

I have no ties to farming any more but I've always found it odd that there is this perception that farmers are sitting back collecting all these subsidies and laughing all the way to the bank. The overall subsidies need to be viewed more in line with things like R&D tax credits or corporate tax rates. The farmer may be the direct recipient of the payment but it supports several layers of industry well in excess of the €7B output. In much the same way, many multinationals are allowed to use R&D tax credits with a very loose definition of R&D. The state foregoes that income in order to support and encourage employment within the sector with an overall benefit to the economy

But we have digressed massively from the CAT discussion (sorry mods). Maybe strip out some of these posts to a separate thread?


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