Budget and Farming
- Thread starter dewdrop
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It's strange that Landlords keep getting hammered even though there's a shortage of rental accommodation nationally, and in particular in Dublin. The Junior Minister for housing is talking about rent controls while the government keep pushing up the cost of providing rental accommodation. At the same time as giving farmers massive breaks they are forcing landlords to pay income tax on their business expenses (Local Service Charges, interest on loans etc.). It's crazy.
From a farming perspective the budget more or less kept status quo, other than incentivising long leasing of land, which they see as consistent with Harvest 2020 and increasing output - the theory being to put the land into the hands of full time farmers. So no massive tax break, a decent incentive for a fairly niche group who might consider leasing.
Re landlords - I gather the idea is to clear the market of investors to allow first time buyers a clear run at buying a house at a reasonable price. In itself no bad thing.
Re landlords - I gather the idea is to clear the market of investors to allow first time buyers a clear run at buying a house at a reasonable price. In itself no bad thing.
What proportion of farming income comes from grants and hand-outs (tax breaks, money for cutting their hedges etc.)? Why do people within one industry think it's ok to live off the backs of their fellow citizens?
1 in 3 households in this country live in rented accommodation. If the governments plan is as you say then god help us all as they are stupid beyond measure. If the plan is to incentivise first time buyers then they are penalising those that can't afford to buy houses in order to facilitate those who can.
Landlords are not evil people. Some of them aren't even part of that most vile of all groups in Irish society; "the rich". They provide an essential service to hundreds of thousands of people but they are also entitled to do so at a profit (I know, profit is a dirty word) so when the government increases their costs by making them pay income tax on their turnover rather than their income that cost will have to be passed on to their tenants.
In a market with more demand than supply the governments actions just further increase costs. The Irish solution is of course to increase costs further and use that money to subsidise rents. This just further increases rental costs but that's ok, they can just tax landlords more...
Purple - re farming, I havent all the stats, you just seemed to be under the impression that the budget was some massive giveaway - all I was pointing out was that on Tuesday there was no big giveaway. To debate to structural issues of farming I'm afraid you'd have to engage someone better informed than myself but I gather it goes something like "when we joined the EU we'd to give up lots, now this is just fair play".
On landlords, that is my impression of what they are about. I gather that the Bacon Reports, who presumably looked at this stuff in great detail, also wanted to discourage investors.
At the end of the boom wasnt everyone saying "why didnt we listen to Bacon, now look where we are". So I think they dont want to go down the same route as before - maybe they are wrong, again I'm no expert. I know there's a lag while 10,000 units are built but I gather that's where they see the solution coming in the end - people on low/no income cant really expect to participate in the private rental market (so we get away from rent subsidy & back to local authority units).
In the meantime, if first time buyers buy a place that comes up, presumably they move out of rented accommodation leaving it free for the next renter. If an investor had bought it a new rental unit it comes up for rental, one more in rental stock (as happened with the FTB), so is there any net difference???, maybe thats wildly simplistic.
On landlords, that is my impression of what they are about. I gather that the Bacon Reports, who presumably looked at this stuff in great detail, also wanted to discourage investors.
At the end of the boom wasnt everyone saying "why didnt we listen to Bacon, now look where we are". So I think they dont want to go down the same route as before - maybe they are wrong, again I'm no expert. I know there's a lag while 10,000 units are built but I gather that's where they see the solution coming in the end - people on low/no income cant really expect to participate in the private rental market (so we get away from rent subsidy & back to local authority units).
In the meantime, if first time buyers buy a place that comes up, presumably they move out of rented accommodation leaving it free for the next renter. If an investor had bought it a new rental unit it comes up for rental, one more in rental stock (as happened with the FTB), so is there any net difference???, maybe thats wildly simplistic.
When we joined the EU (or EEC as it was then) we shafted the fishing industry in order to get a good deal for the farmers.
Farming is an essential sector but it enjoys massive and disproportionate preferential tax treatment. That means that their fellow citizens have to pay more taxes. That's unfair.
The problem in the boom was speculators, not investors or professional landlords, i.e. people who made a living by renting out property rather than people who rented out property while waiting for it to go up in value so that they could sell it.
The first Bacon report caused a spike in the cost of rental accommodation. Screwing with sections of the market is not a good idea. The current central bank proposals to restrict mortgages to limited income multiples and to require a large deposit are a very good idea.
Farmers pay income tax, the tax breaks are on hand over of land to the next generation. The exact same reliefs (90% value reliefs) are there for other trading business people (not people with investment assets) passing on trading assets to the next generation - so its not just farmers. The point is that capital values can be high but income low. The majority of farmers in Ireland are small holding subsistence types. OK there are big farmers, no more than big any-other-occupation, but they pay tax too.
As regards money for nothing, at least the farmers get it from the EU (it is beyond my field of view to sympathise with Gunther & Chrisstos and whoever else that feel it might be unfair on them - I dunno, they agreed to it). In this fair land we have another sector who get money for nothing, from the Irish taxpayer, and cause a load of trouble into the bargain!!!!
The tax breaks I am talking about are those in relation to the lease of land to other farmers which have been increased in this budget.
While the farmers get big tax breaks on their net income from renting out land people who rent out houses have to pay income tax on a large proportion of their gross turnover.
The net effect is that working people who get no tax breaks for anything end up paying higher rents (the landlord has to pass on costs) while the income tax taken from those tenants is higher than it should be because farmers are paying lower rates than the rest of the population.
Who are they?
Re farmers leasing land. It would be like landlords having lots of houses but only renting the odd one, meanwhile there's a housing shortage and people are being made homeless, the landlord gets incentivised to rent out his vacant houses. In practice that doesnt happen in housing because rent is high, and there's typically borrowings that need repaying, and unless its occupied it can get damp etc - & sure what else are you going to do with it.
Re land, its there from generations back, no debt, v little rental value (c€100 an acre p.a.), you do have some marginal use of it (your few stock do wander around it). So the government thinks, on balance, you should be incentivised to rent it. The bigger issue was really the effect on capital reliefs. I'm not sure the income exemption was strictly necessary, but you're generally talking "small beer" anyway.
As to the group actually burdening the State, we have the wont work will claim benefits will protest wont pay will have a string of kids to get benefits will smoke wont have health insurance etc. etc. etc.
Re land, its there from generations back, no debt, v little rental value (c€100 an acre p.a.), you do have some marginal use of it (your few stock do wander around it). So the government thinks, on balance, you should be incentivised to rent it. The bigger issue was really the effect on capital reliefs. I'm not sure the income exemption was strictly necessary, but you're generally talking "small beer" anyway.
As to the group actually burdening the State, we have the wont work will claim benefits will protest wont pay will have a string of kids to get benefits will smoke wont have health insurance etc. etc. etc.
Supply and demand and market forces mean that people use their asset to generate income. Yes; that's the way it should work.
The big issue is why farmers who are rubbish at farming can are artificially kept in business through state distortion of the market to the detriment of the consumer, the tax payer and efficient and proficient farmers. There is little incentive to be good at your job when half your income is generated from harvesting grants instead of harvesting food.
At the risk of sounding "Daily Mail" I agree with you but the solution to that has to be centred on a good education system.
With farming, I suppose it you were designing it it wouldnt look like it does, but you cant re-write history and start with a blank slate - unless you go the highland clearances route about things - maybe SF will have lines of tractors sweeping through the plain in a Stalinist ideal, but other than that you cant just repossess land and go again. So there are the mother & father of legacy issues (if you'll pardon the pun).
Its not so much that they are rubbish but their kids arent into farming and they're not in the form for taking on huge debt at their age to go uber modern and productive.
The State (as in Ireland) isnt distorting anything its the EU, the taxpayer isnt bearing the cost (this rental exemption is no biggie, and I pretty much agree with you that I'm not convinced of the need for that exemption), the consumer isnt bearing the cost to benefit the farmer- have you not seen the protests, the price of the raw material (beef mainly) is on the floor, you probably dont notice that at the butcher counter because the consumer price hasnt dropped, but it aint cos the farmer is coining it....
As to our other friends, I think, sure, put all the supports there (arent they there already), but also influence behaviour with consequences - misdemeanors result in welfare docking - e.g. child truancy, ASBO type stuff etc. Sure you have to protect the kids, which is why there's something to be said for the Californian thing of not allowing welfare be spent on fortune tellers etc. (was liquor on that list??, it should have been). How many kids breakfasts get routinely spent on lager & ciggies??
Its not so much that they are rubbish but their kids arent into farming and they're not in the form for taking on huge debt at their age to go uber modern and productive.
The State (as in Ireland) isnt distorting anything its the EU, the taxpayer isnt bearing the cost (this rental exemption is no biggie, and I pretty much agree with you that I'm not convinced of the need for that exemption), the consumer isnt bearing the cost to benefit the farmer- have you not seen the protests, the price of the raw material (beef mainly) is on the floor, you probably dont notice that at the butcher counter because the consumer price hasnt dropped, but it aint cos the farmer is coining it....
As to our other friends, I think, sure, put all the supports there (arent they there already), but also influence behaviour with consequences - misdemeanors result in welfare docking - e.g. child truancy, ASBO type stuff etc. Sure you have to protect the kids, which is why there's something to be said for the Californian thing of not allowing welfare be spent on fortune tellers etc. (was liquor on that list??, it should have been). How many kids breakfasts get routinely spent on lager & ciggies??
T McGibney
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No they weren't. (I could add 'speak for yourself' but I won't).
Maybe if I'd put in a question mark I could have gotten away with it....
Anyway, I think its safe to say there were very few happy bunnies about the situation circa September 2007 onwards. While blaming the banks is the no-brainer bit, was there not a general acceptance that our property market had gone 'buck ape' (the use the LSE characterisation)?
Were the Bacon reports (3 of them??) not designed to curb rampant speculation in the property market? They're a bit before my time but that's the sense I have.
So whether they were talking about it not (up Cyavan way the conversation probably never got past the Quinns
), maybe they should have said "If only we'd followed the Bacon Reports" (said he desparately trying to regain ground....).Or put it another way, educate me, in 5 lines what were the Bacon reports really about and fire in an auld speculative (puntastic) account of where we'd be if we'd followed them or if they have any relevance now as we try to cope with housing shortages and spiralling prices (didnt think I'd write that phrase for many's a long year yet)!!
T McGibney
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I've posted repeatedly on these pages how the implementation of the 1998 Bacon Report proposals created a massive spike in rents and drove house price inflation to crazy levels. The rates of house price inflation actually tapered off once Bacon was scrapped from 31/12/01 onwards.
And I'm not talking about Cavan, the main inflation was in Dublin.
It may be worth your while re-reading these threads to get a flavour of what actually went on. Here's one example: http://www.askaboutmoney.com/showthread.php?t=176467
And I'm not talking about Cavan, the main inflation was in Dublin.
It may be worth your while re-reading these threads to get a flavour of what actually went on. Here's one example: http://www.askaboutmoney.com/showthread.php?t=176467