The Tenant Farmers Association in Wales has highlighted the need for the Welsh Government to have a clear strategy for how it will use its new tax raising powers.
From 2018 the Welsh Government will have increasing control of Welsh tax revenues for the first time in over 800 years. Previously it has relied on a UK Government block grant.
TFA Cymru Chairman, Dennis Matheson said: "Releasing tax powers to the Welsh Government is a measure of its maturity within UK democratic structures.
"However, it must understand its responsibility to use these revenues wisely and to consider future policy on taxation as more fiscal levers are transferred from London to Cardiff."
"Devolving powers, not just in relation to taxation, should not be taken lightly.
"The Welsh Government has already devolved responsibility for agricultural matters including agricultural tenancy issues but to date has not set out its policy goals for agricultural tenancies.
"However, as part of the recently established Partnership Group for the strategic development of agriculture within Wales, TFA Cymru hopes to be able to influence the way in which policy towards farm tenancies is developed.
"Likewise, this group must play a role in assisting the Welsh Government in deciding how it should spend newly devolved tax revenues within the agricultural and rural sectors," said Mr Matheson.
"TFA Cymru would also encourage the Welsh Government to consider its policy on the taxation environment within which landlords make decisions on letting land.
"As part of the Tenant Farmers Association’s campaign for longer term tenancies it has advocated changes to inheritance tax relief, income tax and the land transactions tax to encourage longer lettings.
"Although the Welsh Government will not immediately have responsibility for Inheritance Tax TFA Cymru will be lobbying for the Welsh Government to look at the other taxes to create a better environment to encourage longer term tenancies," said Mr Matheson.
As part of its Farm Business Tenancies (FBT10+) campaign the TFA has advocated the following changes to taxation:
• Restricting the generous 100% relief from Inheritance Tax, currently available to all landlords regardless of the length of time for which they are prepared to let land, only to those prepared to let land for at least 10 years or more.
• Clamping down on those land owners using share farming, contract farming, share partnerships and grazing licences as thin veneers of trading activity to gain tax advantage when in practice they take no risk, have no entrepreneurial input and lack any management control.
• Offering landlords prepared to let for 10 years or more the ability to declare their income as if it was trading income for taxation purposes.
• Providing landlords prepared to let for 10 years or more with easier mechanisms to end tenancies where the tenant is in breach of the terms of the agreement or where landlords have the opportunity of development – subject to proper compensation to the departing tenant.
• Reforming the Land Transactions Tax to end discrimination against longer tenancies.
