FARMING WITHOUT DROUGHT RELIEF: TIME TO REVISIT AN INCOME EQUALIZATION DEPOSIT SCHEME? / 'N EKONOMIESE EVALUASIE OOR DIE AANVAARDING VAN 'N INKOMSTE GELYKSTELLINGSDEPOSITO SKEMA VIR KOMMERSIËLE BOERE

Abstract

In a recent report to government, an Income Equalisation Deposit (IED) Scheme for commercial farmers and crop insurance for small scale farmers have been recommended as risk management strategies. An IED has been considered in the past in South Africa but rejected largely due to tax implications. Conditions have now changed as various countries (Australia, Canada and USA) strongly promote such a scheme as a risk management strategy while the South African crop insurance program has failed to attract farmers. A main criticism of an IED in the past was that if it is used in conjunction with the In/Out farmer' tax provision, that farmers can obtain tax benefits if they destabilise their incomes. This can be avoided by adopting a tax rule that farmers may only invest the positive difference between their current taxable income and their moving average taxable income in an IED. It is further recommended that the Land Bank deposit scheme (Income Tax Paragraph 13A) be abolished and be replaced by an IED that covers both livestock, crops and horticulture.

In 'n onlangse regeringsverslag is 'n Inkomste gelykstellingsdeposito (IGD) skema vir kommersiële boere en oesversekering vir kleinskaalse boere voorgestel as risikobestuursmaatreëls. 'n IGD is al voorheen oorweeg in Suid Afrika maar verwerp hoofsaaklik weens belastingsimplikasies. Toestande het egter verander en verskeie lande (Australië, Kanada, VSA) beveel die skema aan terwyl die oesversekeringskema in Suid Afrika misluk het om boere te lok. 'n Deurslaggewende kritiek teen 'n IGD in die verlede was dat, indien dit saam met die In/Uit landboubelastingstoegewing gebruik word, boere 'n belastingvoordeel kan kry as hulle hul inkomste destabiliseer. Dit kan vermy word deur 'n reël te aanvaar dat 'n boer alleen die positiewe verskil tussen die huidige belasbare inkomste en die skuiwende gemiddelde belasbare inkomste kan belê in so 'n skema. Dit word verder aanbeveel dat die Landbank skema vir lewendehawe (Inkomstebelasting Paragraaf 13A) herroep word en dat 'n enkele IGD vir beide vee-, gewas- en tuinbouboerdery geld.