Labour’s U-turn on the Family Farm Tax (Chalk one up for the good guys, Editorial, Cambrian News, 7 January) is good news for Welsh farmers. Here in Ceredigion, the increased allowance before Inheritance Tax kicks in, and the interspousal transfer should exempt most farms from this totally unaffordable tax raid. £5 Million sounds a lot of money but this is the realistic value of a typical farm in West Wales supporting two working and one semi-retired generations of family farmers. These families are not cash rich; meeting even a reduced rate of IHT would mean land has to be sold and the business would then be rendered non-viable.

Some bigger farms with recent investment are still going to be caught up in this, especially if they have diversified, into holiday lets for example. Unfairly, single farmers only get half the allowance. An unintended consequence may well be significant damage to the tenanted sector representing 30-35 per cent of Welsh farmland; some may see that as fair punishment for landlords, but as one wise tenants’ representative points out, “no landlords, no tenants”.

The visible farmers’ protests against this tax may have had an impact, but perhaps more importantly has been the very persistent lobbying work put in by the NFU (including NFU Cymru), FUW and others. I know just how hard the whole NFU team have worked and the leadership has been exemplary. Of course this has taken a huge amount of time and effort with costs to match. That is also true for individual farming families, and the anxiety has driven a few to consider suicide. What sort of Government inflicts that on decent hardworking people? A lot of money has been spent on legal and accountancy advice, and that includes money from Farming Connect (taxpayers). Following the U-turn, that money has effectively been wasted.

Bear in mind also the five million family businesses in the UK, employing sixteen million people and contributing close to £1 trillion to the economy. The vast majority are micro businesses employing less than 50 people. But you don’t need much property, plant or stock to be worth more than £5 million. A dividend will have to be paid to cover the IHT, so the real rate of tax will be 40 per cent.

It is said that death and taxes are the only two certainties in life. None of us much like paying tax, although most of us accept that we need to. But taxes have to be affordable and also seen as reasonably fair. If too high, either they destroy the activity being taxed, or alter behaviour and people just give up. Google the Laffer Curve if you haven’t heard of it. The point is that higher tax rates don’t automatically equate to a higher tax take. In fact it can be the reverse.

Perhaps the Family Farm/Business Tax was driven by socialist dogma. The alternative is that someone was either too ignorant and/or lazy to even bother with some very basic fact finding. That’s a big worry, because it shows just how out of touch socialist politicians are with wealth creating businesses, including farms.

Instead of learning from this, the socialists are now attacking the hospitality sector, employing 146,000 people here in Wales. Massive increases in business rates on top of a big hike in wages and National Insurance may well prove to be the final straw not just for pubs, restaurants and small hotels, but also for high street shops. A friend in the trade tells me that if you pay £5 for a pint, £3 goes straight back to the Treasury; quite literally he is being taxed out of business and is having to shed jobs to try to survive. The Chancellor says she is looking to provide support; better still not to impose the daft taxes in the first place!

No doubt some of our politicians have worked very hard to earn money. But too many are economically illiterate. They have never made money, and sadly they are unable to understand the difference.