In the center of London, England, there are demonstrations of farmers in front of Parliament after the Labour Party’s government’s plan to force their farmers to pay an inheritance tax. Last year, the European Union (EU) levied several different policies which affected their farming population. From the Dutch government who wished to reduce nitrogen emissions from farms by halving numbers of livestock to the German government reducing diesel subsidies. It has become a political movement across the continent, garnering support from all citizens and even sparking growing concerns over how the government is managed. Tractors were driven into every city across the EU to showcase the farming communities’ displeasure and how these regulations will in fact harm them instead of allowing them to thrive.
In the U.K., the Labour Party is pushing an inheritance tax as it passes from one generation to the following generation. The government believes that it will raise around $617 million dollars (converted from Pounds to USD) in additional revenue for the government to use, primarily for public welfare needs. Though farmers are fearing that once they pass on their farms, their inheritors will have to borrow money to pay for the taxes or be forced to sell parts of their land. However, the Labour Party argues that only 500 farms would be affected by this tax, but there is a concern that was raised in one of the several interviews.
There is a point to be made that farmers are exempt from inheritance tax, whereas a non-farmer must pay inheritance tax of around 40%. The bill proposed is supposed to tax farmers 20%, though still a reduction is a hefty amount when you consider the difference between assets and cash. However, according to the British public records, 30%of British farms made no profit or even lost money. Twenty-five percent of British farmers made around or less than $31,487.50 in the past year. There are no records regarding farms that may have made a profit with revenue leftover to be able to pay this specific tax.
The fact of the matter is that several farmers, though privileged to have several acres of land, on several occasions are asset rich and cash poor. This means that all their value is within their tangible assets, and by owning these assets, there is a lower amount of liquidity to cover their daily expenses, operational expenses and debts. This is a capital-intensive industry, with needed investments upfront, but with low profit margins. The average annual salary of British farmers in 2024 is equivalent to $35,266 USD yearly, with an hourly rate of around $17 dollars an hour USD. Whatever profits farmers make, they are reinvesting their capital back into their farm to maintain operations. In order to create cash profits, farmers will need to sell off their land. Though, the land which is sold is never often put into operation again, but mostly used for the development of houses or roads.
This is a growing concern across Europe about certain policies affecting their farming communities. These next few years will help give us a broader picture on how these policies are impacting Europe. Hopefully, there will be an ability to compromise between the government and farmers which can benefit both parties. Though with the tanks and tractors rolling into the center of London, the farmers have made it clear they are not going anywhere.
