May 05, 2009. /Lesprom Network/. Irish forestry growers stand to lose more than Euro 9 million this year after confirmation that premium payments will be cut by 8% and will also be liable for the new income levy, as Irish Independent informed Lesprom Network. The double blow will send shockwaves through the sector, which is already struggling to meet ambitious planting targets. More than 16 thousand private growers will be hit as the Department of Agriculture moves to reduce overall forestry spending. The cuts and levy could take as much as Euro 500 from the average forestry premium payment of Euro 4,000. The reduction in forestry spending was flagged in the aftermath of last month's emergency budget, with the Department stating that total funding would fall from Euro 125.5 million to Euro 118 million. The Government subsequently indicated that the decision to focus solely on premium cuts was being reconsidered and that possible savings from the capital spending element of the overall forestry budget were being examined. This would have seen planting grants and payments for the building of forest roads being slashed. However, this option has now been ruled out by the Department and growers will take the hit as a consequence. Hundreds of farmers will feel the impact of that decision this week when the Department releases premium payments that had been delayed for more than a month. A Department spokeswoman admitted that the 8% reduction will be imposed on the payments, which will be lodged to bank accounts tomorrow. Industry sources have warned the decision to cut and tax, premium payments will deastate the sector. Plantings are already running well behind the 16 thousand ha-a-year target that was set by the Government. It is estimated that less than 6,000 ha will be planted this year. However, a total collapse in planting levels in 2010 is being predicted. The reduction in forestry funding has serious implications for forestry employment. It is estimated that 18 thousand people make a living from forestry and associated activities such as sawmills and nurseries. Many of these jobs are now under threat and industry officials claim that confidence in the sector will be totally eroded by the latest cuts. Nurseries and companies involved in forestry planting are likely to be immediately affected, but there are also fears that the long-term viability of the sector will be undermined should planting levels fall further. The impact of the premium reductions has been compounded by confirmation that the payments will be liable for the income levy. The levy will take between 2% and 5% of gross disposable income from growers. The move will infuriate growers, many of whom opted to plant ground because the various forestry schemes were initially marketed as tax free.