Lord Chelwoodasked Her Majesty's Government:
What is their estimate, assuming inflation at 3½ per cent. a year, of the cost to the taxpayer of subsidising the planting of 36,000 hectares of woodlands with more than 50 per cent. broadleaves in the next three years, and their maintenance for 30 years, and by how much this exceeds the estimated annual gain to the taxpayer of over £10 million a year had commercial woodlands not been taken out of the income tax system.
§ The Parliamentary Under-Secretary of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington)Under the proposed Farm Woodland Scheme a maximum of 36,000 hectares of woodlands may be planted over the next three years. The cost of the planting grants will depend on the actual size of woodlands planted and the proportion of broadleaves in each. Assuming that the whole of the 36,000 hectares is planted and that all woodlands are between 3 and 10 hectares in size and contain exactly 50 per cent. broadleaves, the total cost of planting grants would be about £29 million. This includes the second and third instalments, which are payable after 5 and 10 years respectively. The total cost of the subsequent annual payments would be approximately £6 million per annum at 1988 levels, depending on where and on what type of land the planting took place. These costs will be offset over time by savings in agriculture support expenditure, since planting under the Farm Woodland Scheme will be limited to land previously in agricultural production, mainly arable land and improved grassland.
1612WAThe figure of £10 million was the estimate of tax foregone by allowing the costs of traditional forestry operations to be offset against other income from tax purposes prior to the changes announced in the Budget. It is by removing commercial woodlands from the income tax system that the gain to the taxpayer will come about.