Ahead of Budget 2027 being announced tomorrow (Tuesday, October 6), the government is being urged to introduce a carbon tax rebate scheme for agricultural contractors.

According to the Association of Farm and Forestry Contractors in Ireland (FCI) contractors currently pay €172.14 in carbon tax for every 1,000 litres of marked gas oil (MGO), or green diesel, that they buy.

The country's agricultural contracting sector uses an estimated 350 million litres of MGO each year.

As a result, the FCI said Irish contractors have paid out an estimated €200 million of carbon tax over the past 6 years.

The association has argued that contractors have no viable alternative to diesel fuel for their operations.

Unlike farmers, the FCI said contractors do not qualify for current schemes concerning MGO, which allows farmers to claim a tax deduction of €130.84 for every €172.14 they spend on carbon tax for MGO.

Budget

Norman Egar, FCI national chairperson, has claimed that contractors are treated like "a second-class citizen" under the current carbon tax system.

"When a farmer turns the key in his tractor he ultimately pays 4c in carbon tax for every litre of diesel he uses, but if a contractor is hired into the very same farmyard he pays 17c per litre in carbon tax," he said.

Ahead of the budget, the FCI presented a proposal for a rebate scheme to TDs in Leinster House.

The association said that registered agricultural contractors should be included in a targeted diesel rebate scheme, which would provide a mechanism to recognise the particular fuel-intensive nature of contracting businesses.

Carbon tax

Ann Gleeson Hanrahan, FCI managing director said there needs to be a greater recognition of the significant contribution that contractors make through carbon taxation.

She said the FCI's stance is "not about questioning the environmental objectives of carbon taxation, but rather about recognising the contribution made by agricultural contractors through a targeted rebate scheme".

"The substantial contribution that contractors have made to the carbon tax fund has helped fund schemes such as ACRES, environmental initiatives and housing refurbishment programmes, yet none of these funds are allocated directly to agricultural contractors, she added.