The Association of Farm and Forestry Contractors in Ireland (FCI) has criticised Budget 2027 for failing to address the "carbon tax burden" facing agricultural and forestry contractors.

The association has again called on the government to take urgent action and introduce a carbon tax rebate scheme for contractors.

Contractors currently pay €172.14 in carbon tax for every 1,000 litres of marked gas oil (MGO) or green diesel that they buy, according to the association.

While the FCI welcomed the continuation of the Fuel Income Support Scheme, it noted this was announced two weeks ago and funds were already in place from the first tranche.

Therefore, the association said it does not represent a new measure in Budget 2027.

Carbon tax

Norman Egar, chair of the FCI, said that agricultural and forestry contractors are essential to Irish farming and rural communities.

"The significant cost increases experienced in 2026 alone have made operating contractor fleets unsustainable.

"They invest millions of euro in modern, efficient machinery that keeps Irish agriculture and forestry operations moving.

"FCI has repeatedly highlighted the unequal treatment facing contractors and has called for a fair and workable Carbon Tax Rebate Scheme," he said.

The FCI estimates that the cumulative carbon tax cost associated with green diesel consumption by the agricultural and forestry contracting sector exceeded €200 million between 2020 and 2025 alone.

"This substantial contribution that contractors have made to the carbon tax fund has helped fund schemes such as ACRES, environmental initiatives and housing refurbishment programmes, with none of the fund is allocated directly to agricultural and forestry contractors, who are one of the largest contributors," Egar added.

HVO

In his Budget 2027 speech, Tánaiste and Minister for Finance Simon Harris confirmed the government is engaging with the European Commission to establish a more favourable tax treatment for hydrotreated vegetable oil, or HVO, "to assist people transitioning to a greener alternative".

Ann Gleeson Hanrahan, FCI managing director, said that the association's members support the transition towards greener fuels "where those alternatives are practical, available and economically viable".

"However, agricultural and forestry contractors cannot simply transition to an alternative fuel that is not yet practical, affordable or universally available for the larger-output machinery on which their businesses depend," she said.

She questioned why the Department of Finance was not prepared to engage with the EU Commission to identify "a lawful mechanism" to address the carbon tax burden on agricultural and forestry contractors who currently have no practical, affordable alternative fuel across their operations.

FCI is calling on the Minister for Finance and the Minister for Agriculture, Food and the Marine to clarify whether government has formally examined the mechanisms available, already used by farmers, to provide targeted carbon tax relief for agricultural and forestry contractors.