Ireland – For farmers, August can mean one thing: harvest season.
And in Leinster House, crops are being eyed up too.
This week’s Government row over the long-promised Residential Zoned Land Tax has all the hallmarks of a pre-election fight between political partners who are now as worried about maximizing their votes as they are about keeping the coalition peace.
For so long in relative lockstep with each other, Fianna Fáil and Fine Gael now appear to be at odds over how to resolve an issue that risks affecting their key farming voter base – and on who gets to play hero to that potentially crucial demographic.
Meanwhile, the Green Party has been back in coalition watchdog mode, like it said it would be when it entered Government in 2020, insisting the tax must not be deferred if Ireland is serious about addressing land hoarding and the housing crisis.
The Opposition has separately labeled the entire episode as electioneering and orchestrated shadow-boxing.
And the key farming and rural Ireland demographics that could make or break a potentially bountiful general election crop yield?
Well, they’ve been given a lot to think about, as the date with the ballot box looms on the horizon.
What is the new tax?
While the Residential Zoned Land Tax row erupted this week, in reality, its roots stretch back three years.
In 2021, all three coalition parties agreed to the tax as a high-profile way to push developers and landowners to develop land already zoned and serviced for housing.
The introduction of this tax was committed to in the Government’s Housing for All action plan, the Government’s housing plan to 2030, with the Residential Zoned Land Tax due to impose an annual 3% tax based on the market value of the land if no action was taken.
Another reason for the proposed tax was simple: there was concern that some developers and speculators may be holding onto land banks until prices reach their peak, thereby stifling attempts to build new homes.
But there was a complication, as some farmers with land adjacent to urban areas would also be potentially liable for huge tax bills as the land is zoned for residential use by local authorities even though it is being actively farmed.
Due to the concerns, a decision was made in 2021 to create a two-year run-in period for the tax, meaning it would not be introduced until last October’s budget and not implemented until spring 2024.
However last year that plan was delayed by another 12 months to give what was described at the time as “breathing space” to those involved to either use their land or sell it.
While the concerns over the potential impact on “active” farmers were still bubbling beneath the surface, with Sinn Féin raising the matter in the Dáil and farming organizations lobbying against farmer inclusion in recent months, it appeared the plan to introduce the tax in this October’s budget and implement it from next spring was a sure thing.
That was until this week when a problem – either real or contrived – pushed its head up through the soil.
Government positioning
“New tax on land hoarders shelved ahead of budget,” the Irish Independent front page headline read on Tuesday morning, sparking a week of wobbles in the coalition.
The story outlined how while there was a desire to implement the tax as soon as possible, new concerns had suddenly been raised over the potential impact the plan could have on “active” farmers.
The deferral plan was being pushed by Fianna Fail’s deputy leader and Minister for Finance Jack Chambers, who later told RTÉ News: “I’m working on proposals to defer the Residential Zoned Land Tax for a further year, and this is to exclude active farmers from this tax.
“It would place a disproportionate and unfair burden on active farmers if this tax was to be imposed annually, and I’m listening to the concerns of farmers and rural communities about this tax.”
One person who was also listening was Taoiseach Simon Harris, who told reporters at a Fine Gael media event hours later that he too understood the concerns of rural Ireland, saying “As long as I’m Taoiseach no active farmer” will have to pay the tax and that “whether they decide to defer it for another year, or amending legislation, I’m open to engagement”.
The positions may sound similar, but there is an important distinction in both comments.
While Minister Chambers – who was later backed up by party colleagues Minister for Education Norma Foley and Minister of State for sport, Physical Education and the Gaeltacht Thomas Byrne – agrees “active” farmers need to be protected and says ways to do so are being examined, he feels it is unlikely this will be possible in time for the budget meaning a deferral of the tax.
But while the Taoiseach – who has been supported privately, and firmly, by Fine Gael officials – also says active farmers need to be protected, he believes these protections can be found either in time for the Budget or in the post-budget finance bill, meaning a deferral is not necessarily needed.
While both parties insist this is just about ensuring active farmers are not accidentally hit with a new tax that is not meant to target them, it has been suggested that the simmering stand-off has far more to do with party concerns about picking up the largest share of the farmer vote by taking the credit for helping out the demographic.
Fianna Fáil parliamentary party sources suggested to RTÉ News that Fine Gael is bristling over the deferral suggestion because Fianna Fáil grabbed the ‘protect farmers’ spotlight first, while Fine Gael sources have hit out at Jack Chambers by saying he went on “a solo run”.
Speaking at the Virginia Show in Co Cavan on Wednesday, the Taoiseach stressed that any decision by the Cabinet is a “collective” decision rather than an individual one, again saying that he would like the Department of Finance to put forward “sensible” solutions to the issue, and quickly.
The message was clear: Fine Gael is working to help resolve the issue for farmers just as much as Fianna Fáil, and just to make the point crystal clear we’re saying it at the Virginia Show, no less.
While Fine Gael insists it was blindsided by the Fianna Fáil deferral maneouvre – a claim Fianna Fáil insists could not be true as the farmer’s issue was known for some time – that jostling for position was of little significance to the Green Party, which has its priorities in the dispute.
When it entered Government in 2020, the Green Party argued it would be a watchdog towards its coalition partners, particularly on issues like housing and developers.
The Residential Zoned Land Tax is therefore high on its agenda, as the long-planned tax is meant to address land hoarding by developers and speculators which, the argument goes, is stopping the housing crisis from being fully addressed.
With the general election on the horizon, the deferral suggestion meant the Green Party had to show its teeth, with three of its TDs coming out in separate interviews on Wednesday to warn in no uncertain terms the tax must be included in the budget.
Speaking on RTÉ’s Morning Ireland, Green Party TD and spokesperson on finance Neasa Hourigan warned deferring the tax during a housing crisis would be “like hiding food in a famine”, adding: “We’re in the run-up to an election and we know that what we’re seeing right now is a step back from something that was agreed five years ago.”
Her party colleague and Oireachtas housing committee chair Steven Matthews agreed, telling newspapers “Do they [Fianna Fáil] not realize there is a housing emergency” and that while the tax is “not a silver bullet” abandoning it “is cash in hand for land-owning speculators”.
And Minister of State Ossian Smyth added to the public Greens anger, telling RTÉ’s Today With Claire Byrne program the tax must be introduced, before side-stepping a question on whether the Green Party might pull out of Government if the tax is deferred by saying: “I’m sure they won’t [defer it], how could they, that’s not going to happen”.
Opposition response
With positioning of its own to look after, the opposition response has been equally fierce, chief among them Sinn Féin’s finance spokesperson Pearse Doherty.
“Today [Wednesday] we had the farcical situation of a faux debate over the airwaves, with a Green Party minister of state adamant that the Residential Zoned Land Tax would not be deferred, directly contradicting statements made by the Fianna Fáil Finance Minister. Which one is it?
“This smacks of farcical shadowboxing between Government parties, and points to political opportunism at the heart of Government. They must immediately clarify their position,” he said.
Deputy Doherty also took the opportunity to highlight how his party has raised the issue of active farmers several times in recent months, saying he introduced an amendment to last year’s finance bill which called for Government to “exempt actively farmed land from this tax”.
However, he said the Government “instead took no action”, before arguing the current deferral suggestion “is another sop by Fianna Fáil to land hoarders and property speculators”.
Not to be outdone, the Social Democrats also got in on the action, with the party’s housing spokesperson Cian O Callaghan saying in a statement on Thursday that if the tax is deferred it will show that the Government “is not serious about tackling the housing crisis”.
“The Government’s cynical u-turn on this tax, which was due to be introduced next February, is nothing more than a blatant attempt to win votes in rural Ireland in the run-up to the general election,” Deputy O Callaghan argued.
“No one is arguing that farmers should be penalized by the introduction of this key piece of legislation, which is aimed at tackling land hoarding and increasing housing supply.
“By kicking the can down the road to the other side of a general election, the Government has shown themselves to be completely incapable of getting to grips with Ireland’s housing crisis and, yet again, have let developers off the hook,” he said.
Where to now?
It should be noted, of course, that Government sources across all three coalition parties have been trying to change the mood music in the latter part of this week, as they attempt to calm the row before it gets worse.
Fianna Fáil, Fine Gael and Green Party sources have all said privately to RTÉ News that no one disagrees that active farmers need to be protected from the tax.
And they have said there is potentially room for a “mechanism” to be included either before the Budget or in the post-Budget finance bill that could ensure farmers are not targeted.
That, however, is only half the story, with ongoing suggestions in Leinster House and Government Buildings that this week’s all too public spat is more evidence that the coalition parties are increasingly focused on winning votes rather than on keeping the three-party peace.
The Residential Zoned Land Tax proposal may still be deferred for another year or it may be amended in some fashion to exclude active farmland.
Either way, the focus on farmers and housing in recent days has shown that less than six weeks away from the final budget of this Government, rival political parties are deeply sensitive to any perceived solo runs or land grabs by their competitors.
And with a general election looming, they will all be aware that when it comes to shoring up votes and appealing to key demographics, parties – just like farmers – will always reap what they sow.
