Carbon tax hike ‘will force’ 5% rise in contractor charges

Minister for Agriculture, Food and the Marine Michael Creed has been urged to immediately facilitate a meeting with the Farm Contractors of Ireland (FCI) over carbon tax concerns.

Two independent TD, Mattie McGrath and Carol Nolan, made the calls to the minister.

Deputy McGrath called for the meeting for the contractor representative organisation to resolve its concerns around the decision to apply the €6/t carbon tax increase to the use of green agricultural diesel.

Noting the organisation’s concerns, the Tipperary TD said:

“The analysis provided by the FCI clearly demonstrates that the carbon tax on green diesel will add a minimum of €0.02/L to agricultural green diesel prices from May 2020.

This in turn will force the FCI to increase all contractor charges to Irish farmers for 2020 by 5% given that the contractors consume close to 350 million litres of green diesel annually valued at €262 million.

“As I understand it this works out at about 62% of the energy bill for the entire Irish agricultural sector,” deputy McGrath added.

“The FCI have also informed me that from its perspective there is a rebate inequality in the system that needs to be addressed.

They point to the fact that currently, farmers are allowed a carbon tax rebate on their purchases of agricultural diesel, as a write-off against their annual tax bills, but that this is not available to farm contractors.

The TD said that this is despite the fact that FCI members “employ close to 10,000 people operating machines on farms”.

“Minister Creed needs to meet with the FCI leadership as a matter of urgency in order to find some equitable pathway toward a resolution to this issue,” deputy McGrath concluded.

‘Lose-lose scenario’

Independent TD for Offaly Carol Nolan said: “This is a lose-lose scenario for everyone concerned and it must be reconsidered.”

The TD urged both Minister Creed and Minister for Finance Paschal Donohoe to immediately re-examine the carbon tax decision from last month.

“Rebate on fuel must be a key component in terms of maintaining financial viability for all sectors that cannot operate without it.

On a related matter, I would also say to the ministers that they should avoid even contemplating the removal of the fuel rebate for the hauliers in light of the comments made by one Dáil Deputy last week.

“During statements on the Finance Bill, Deputy Paul Murphy described the fuel rebate as inherently unfair and said the money should be used instead to grow the transfer of goods by rail.

“This kind of thinking, while it certainly has some role to play, is simply unsustainable at present and if implemented would have a devastating impact on the hauliers which would also adversely affect rural Ireland,” concluded deputy Nolan.

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