The Association of Farm and Forestry Contractors in Ireland (FCI) has said that Budget 2023 will do “little or nothing” to support the viability of contractors and will instead increase costs.
The association said that the decision by government to press ahead with a hike in the carbon tax will place a further burden on the sector.
Minister for Finance Paschal Donohoe yesterday (Tuesday, September 27) confirmed that the rate per tonne of carbon dioxide emitted for petrol and diesel will increase from €41 to €48.50 from October 12.
He said this will be offset by cutting the National Oil Reserves Agency (NORA) levy.
The FCI said that this will be “insignificant” when the excise reduction on marked gas oil (green diesel) expires next February, followed by a further carbon tax increase scheduled for May.
The association claimed that that this will result in more than 12c/L being added to green diesel.
“These increased fuel taxes are a direct tax on Irish farming through their contractor service charges, at a time when no alternative power sources are commercially available to replace fossil fuel powered machines,” FCI said.
The association noted that its members have embraced climate and biodiversity action through investment in machinery and technology.
“These actions too have not been acknowledged, while farmers uniquely retain their double tax refund benefit when it comes to carbon tax costs, and farm and forestry contractors do the work and use the fuel,” it added.
FCI is disappointed that contractors have been excluded from any compensation for the significant increases in their energy costs.
“Green diesel costs have increased by 100% since the autumn of 2021 and there is no acknowledgement of how farm and forestry contractors have continued to deliver services worth more than €800 million annually to farming with minimal support other than a small and temporary reduction in excise duty and the NORA levy,” John Hughes, FCI national chair and Kilkenny-based contractor, said.
“There is no recognition of the actual day-to-day activities taking place on Irish farms and of the vital role that farm and forestry contractors play in delivering valuable services that have resulted in achieving increasing levels of output in a sustainable way on thousands of Irish farms.”
The association said that a request to allow farmers claim a full VAT refund on contractor services was not included in Budget 2023, while the VAT rate on newspapers was cut from 9% to zero.
However, the FCI did welcome some aspects of the budget, including the €8 million liming scheme and the €500 million Growth and Sustainability Loan Scheme (GSLS).
The association also welcomed more resources for farm safety, a 12% increase in the forestry budget and the €10 million Tillage Incentive Scheme to maintain and grow the sector.
FCI is seeking clarification from the Department of Agriculture, Food and the Marine (DAFM) if contractors will be eligible for the tillage support funding for machinery investment.