Politics

Ways to ease impact of residential zoned land tax on farmers set to be considered before budget

Minister for Agriculture pushing for resolution on issue that IFA and rural TDs say will pose significant difficulties for farmers

There has been renewed pressure to bring in an exemption for landowners actively farming on land that will fall under the scope of the tax as part of the upcoming budget. Photograph: Alan Betson
There has been renewed pressure to bring in an exemption for landowners actively farming on land that will fall under the scope of the tax as part of the upcoming budget. Photograph: Alan Betson
Cormac McQuinn
Mon Jul 29 2024 - 06:00

Ways of easing the impact of the residential zoned land tax (RZLT) on landowners who are actively farming on fields zoned for housing are set to be considered in advance of the budget.

The tax is due to kick in next year, with landowners facing an annual 3 per cent payment on the market value of land that is earmarked for housing and also serviced by infrastructure that would allow residential development.

Farming organisations and rural TDs have said the RZLT will pose significant difficulties for farmers.

There are concerns over the cost of the tax compared with the income farmers can derive from the land being farmed.

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In recent weeks there has been renewed pressure to bring in an exemption for landowners actively farming on land that will fall under the scope of the tax as part of the upcoming budget.

The Irish Times understands that RZLT was discussed at the first pre-budget meeting between Minister for Agriculture Charlie McConalogue and Minister for Finance Jack Chambers.

A source said Fianna Fáil TD Mr McConalogue has pushed for the issues surrounding the RZLT “closed off as a priority”.

[ Irish farmers see income drop sharply in 2023, notes Teagasc survey ]

He is said to recognise the importance of progressing housing policy but is concerned that while RZLT will impact other landowners, it affects farmers’ livelihoods.

Areas expected to be discussed in advance of the budget include some form of relief from RZLT for landowners who can show they are actively farming the land.

It is also understood that Mr McConalogue believes that the current dezoning system is not sufficient for active farmers and a resolution that allows them to continue to farm is “imperative”.

The RZLT, first announced in 2021, is designed to encourage the activation of residential zoned land that is also serviced by infrastructure such as roads, water and electricity.

The tax was due to take effect this year but it was announced as part of last year’s budget that it would be deferred for a year until February 1st, 2025.

This was to allow landowners more time to submit requests for a change in the zoning of their land to local authorities as part of the 2024/2025 annual mapping process associated with the RZLT.

Landowners had until the end of May to make submissions on the annual draft maps in relation to land they wished to make a rezoning request for. Local authorities are the decision-makers for rezoning requests.

A pre-budget submission from the Irish Farmers Association (IFA) published this month says farmers are “not speculators, nor have they caused the current housing problems”.

It wants “all genuinely farmed land” to be exempted from RZLT, saying: “As it currently stands, many farmers will be forced to sell their land.”

The IFA also said: “Farmers challenging the RZLT maps and applying to local authorities to have their land dezoned must be accommodated without being disadvantaged.”

Earlier this month Fine Gael made a commitment to exempt working farmers from the RZLT after Mayo TD Michael Ring brought a motion on the issue to a meeting of its parliamentary party.

Asked about calls for exemptions, a Department of Finance statement said the RZLT “aims to bring those lands which have benefited from investment in services and are capable of being developed forward for housing”.

It highlighted how the tax is an action contained in the Government’s Housing for All plan aimed at increasing housing supply.

The statement also said the Department of Finance regularly engages with the Departments of Housing and Agriculture on the implementation of the RZLT.

Cormac McQuinn

Cormac McQuinn

Cormac McQuinn is a Political Correspondent at The Irish Times