A demand by the Irish Farmers' Association that farmers should pay 12.5 per cent tax on their farm business operations by 2003 was rejected yesterday by the Tanaiste, Ms Harney.
In its pre-Budget submission, the IFA said that its members should be treated the same as IDA grant-aided multinationals which repatriate their profits out of the State. Mr Tom Parlon, the organisation's president, said that while the Government, with EU approval, had underwritten a phased reduction of corporation tax, indigenous Irish industry, including farming, must have the same reductions.
"This would allow farmers reinvest in their businesses so they can remain competitive in a world which is growing more competitive every day," he said.
Mr Parlon added that farmers would continue to pay the same tax as everyone else on their personal drawings, but the farm business should be separated from the farmer's personal income.
He said farmers were not looking for anything different from anyone else.
"We want the same treatment as international companies which are grant-aided to set up here," said Mr Parlon, who will present his organisation's Budget submission tomorrow.
He said there were suggestions that, in the future, the number of commercial farmers could be as low as 20,000.
"Despite all the hype about the economy, it should not be forgotten that Irish agriculture and the food industry still account for 20 per cent of national employment and 30 per cent of net foreign exchange earnings.
"It is absolutely vital we have a system where farmers are allowed invest substantially in their future, or the viability of the farm sector will be placed in jeopardy," he said.
He said farmers faced a daunting challenge within a rapidly growing economy which included the need to build a modern, commercial core to lead the industry into the next century.
The IFA has set an income level of £20,000 as the threshold for farm viability and targeted productivity gains, increased competitiveness and structural reforms to achieve this standard after meeting investment needs.
Ms Harney said she was not in favour of any individual or group incorporating themselves to lower their taxes.
What was needed was the implementation of the Government's commitment to reduce all taxes which, it had been found, increased the tax take. She did not favour the IFA proposal.