The Government has been asked to give tax incentives to farmers who lease land for long-term productive use to help the industry cope with the changes in the Common Agricultural Policy.
In its pre-Budget submission, the Irish Farmers Association has argued that this would be necessary to sustain a strong core of full- time farmers with the capacity and scale to continue farming in the difficult environment ahead.
Speaking before a meeting with the Minister for Finance, Mr McCreevy today, the IFA president, Mr John Dillon, said the tax changes were needed as the most radical policy shift for agriculture in the history of the EU were about to become a reality.
"Secure longer-term land leases would provide safeguards for both the landowner and the lessee. In the long term, as a nation, we must harness land as a productive resource and avoid unduly dwelling on the owner and asset issue, which can best be separated in a leasing programme.
"The income tax codes provide a means to incentivise land-leasing on a medium- to long-term basis as an effective and realistic option to allow farmers to improve competitiveness and secure long-term viability," Mr Dillon said.
The IFA proposed the age restriction of 55 should be removed from the existing tax relief on rental income and relief should be increased to €10,000 for leases of five years or greater. It was also seeking the reinstatement of capital gains tax "roll-over" relief and a reduction in stamp duty on land swaps as an aid to the consolidation of farm holdings.
The Irish Creamery Milk Suppliers Association's pre-Budget, submission, which was presented earlier this week, also urged Mr McCreevy to use the tax system to facilitate the land transfer to farmers and reduce the cost burden on farming.
"In the 2003 book of estimates and budget 2003, the Government imposed costs of over €70 million on the farming sector. This is clearly unacceptable and this situation must be changed," the president of the ICMSA, Mr Pat O'Rourke, said.
He said ICMSA had called for increases in the VAT rebate to farmers, a reduction in disease levies and changes to the stamp duty and capital allowances regimes to reduce costs on farmers.
"The Government has committed itself in the Sustaining Progress agreement to ensuring a fair and balanced taxation system and in order to achieve this, Minister McCreevy must finally abolish the PAYE tax credit in Budget 2004 and replace it with improved personal tax credits for all taxpayers," said Mr O'Rourke.
"The Minister must take a number of steps in Budget 2004 to both help farmers through the severe income crisis crippling the sector and to renew the confidence of farmers in the Government".
He said Mr McCreevy now had an opportunity to gear this Budget towards ensuring the future viability of farm families.
"The farming sector is also now facing the implementation of the mid-term review and full decoupling of direct payments which will place additional income pressures on many farmers."
Mr O'Rourke said improvements in the capital taxation system to facilitate the land transfer to farmers was of key importance to the association.
Farm business incentives and tax incentives to increase scale, including quota purchase and the upgrading of facilities were also important.