The Farm and Forestry Contractors of Ireland (FCI) has written to the Minister for Finance, Paschal Donohoe, asking for a postponement of the €6/t increase in the Carbon Tax that is due to take effect on May 1.
In a letter, signed by FCI chairperson Richard White, the organisation said that contracting businesses around Ireland were “experiencing huge cash-flow difficulties” as a result of Covid-19, partly due to increasing debts owed by farmers.
“Our concern now is for the future impacts on many contracting businesses, as there is huge uncertainty around farm product prices. This has significant consequences for payments for contracting services during 2020,” the letter said.
The FCI asked Minister Donohoe to take a number of steps, including:
- Postpone the €6/t Carbon Tax increase due on May 1;
- Include farm and forestry contractors in stakeholder meetings to review the issue of Carbon Tax on agricultural diesel in advance of Budget 2021;
- Allow farm and forestry contractors equal access to the ‘double deduction’ for Carbon Tax already offered to all farmers in Ireland;
- Provide Irish farmers with financial support mechanisms that are ring-fenced to fund the payment of their contractor services during 2020.
In response to a query from AgriLand, the Department of Finance said that there are no plans “at this time” to change the current arrangements for the Carbon Tax increase.
“All farm and forestry contracting operations will continue to be open for business during the period of the Covid-19 pandemic, sowing thousands of hectares of crops; spreading fertilisers and animal manures on thousands of Irish farms; and preparing for the national grass silage harvest starting in May,” the letter said, highlighting that contracting is deemed to be an “essential service”.
The letter also highlighted that some FCI members are not able to receive payment face-to-face from farmers, due to social distancing guidelines, and the fact that older farmers may be unfamiliar with making online payments.
The FCI outlined the possibility that the current restrictions would continue into the silage harvesting season, and that cash-flow requirements for contractors would be “enormous” at that time.
This additional cost [the Carbon Tax increase] will soon become an issue of critical importance to the Irish farming and food industry as it struggles to cope with the new challenges of Covid-19 during 2020.
The FCI also highlighted in the letter that the increase would be “more costly then we [the FCI] had originally calculated”.
“The €6/t increase from May 1, when converted from euro per tonne of carbon to the buying price per litre of green diesel, works out at €15/1,000L, or 1.5c/L extra plus VAT, based on figures recently supplied to us by the Revenue Commission,” the letter said.
According to the FCI, this will increase the annual fuel bill for a typical contractor (consuming 150,000L of agricultural diesel per year) by €2,250 – a cost that will have to be passed back to the farmer, the FCI said.
The FCI is estimating that, ultimately (by the time the tax increases to €80/t by 2030), the total increase in contractor fuel bills around the country between now and then could be close to €100 million.
The letter concluded by calling on Minister Donohoe to postpone the increase in the tax “to give the farming and food industry, supported by farm and forestry contractors, a real chance of recovery”.