Greens claim victory on ‘land hoarding’ tax as farmers gain minimal exemption

The budget announcement that the Residential Zoned Land Tax (RZLT) will go ahead with a minimal exemption for active farmers was being portrayed by the Greens as a win for the party.
In August, Minister for Finance Jack Chambers announced he intended to defer the tax for another year because of its potential impact on “active” farmers. He was supported by Taoiseach Simon Harris. However, the Green Party strongly resisted a deferral, arguing it had already been deferred twice. There was intensive wrangling between the three parties in the run-up to the budget.
RZLT imposes a charge of 3 per cent of the market value each year on land that has been zoned for residential development and has services in place to develop housing. It was designed to prevent speculation rather than as a means of raising revenue.
An issue arose over a number of active farms zoned residential. Farm organisations and rural TDs have lobbied for exemptions on their behalf. In his budget statement, Mr Chambers said the only way that farming landowners could avail of the exemption was if they sought to have their land rezoned from residential to agricultural. The Green Party said the statement validated a fundamental principle that land hoarding had to be deterred.
“If we had not taken a stand on this, it would have been kicked down the road for another year, and who knows after that,” said a source.
Green Party whip Marcus Ó Cathasaigh described it as a crucial step to address the housing crisis.
“Going ahead with the land hoarding tax is essential for new homes to be built on land that is already zoned for residential use, with the right exemptions for land being actively farmed,” he said.
There were mixed views within the other two Government parties. Fianna Fáil TD for Tipperary Jackie Cahill said he supported the change.
“Farmers cannot have the jam on both sides of their bread. Active farmers can keep farming and get the land zoned back to agriculture. It can’t be kept as residential. That’s all I ever asked for.”
Independent Senator Victor Boyhan criticised the decision, saying it was a clear victory for the Greens and would severely disadvantage farmers financially.
“In effect this means farmers will have to downzone from a valuable residential zoning to agricultural zoning,” he said.
The 6 per cent “mansion tax” on residential properties worth over €1.5 million – one of the few measures not flagged publicly beforehand – came with a muted response from Government TDs and from the Opposition. A Fine Gael TD based in Dublin said nobody was really concerned about it.
“It only affects a small group who can afford to buy a house worth over €1.5 million. If you are in that space, people will expect you to take it on the chin,” said the TD.
“People were happier to see the threshold for inheritance tax being increased to €400,000, which is more pertinent to ordinary people’s lives.”
The property site MyHome.ie listed 442 properties worth €1.5 million or more for sale in the State as of Tuesday at 2pm.
[ Residential zoned tax to go ahead as planned in February, as pre-Budget deal struckOpens in new window ]
Separately, Mr Cahill said another budget measure aimed at wealthy individuals could have unintended consequences.
Agricultural relief, which greatly reduces the inheritance tax burden for people inheriting farmland, will now be subject to a six-year active farmer test. This was to address concerns that the relief was being used as part of tax planning strategies by wealthy individuals, Mr Chambers said.
A number of prominent businesspeople have bought large tracts of land in Leinster and Munster in recent years.
However, Mr Cahill said that some active farmers had set up companies to which they had leased the land, and they could find themselves running foul of the changes announced in the budget.