The review into providing agricultural contractors with a similar status to farmers regarding the relief on green diesel carbon tax increases, will be completed in quarter three of this year (2022).
The Minister for Finance Paschal Donohoe provided the update as he was responding to a parliamentary question posed by Sinn Féin TD Rose Conway Walsh last Thursday (April 28).
Deputy Conway Walsh raised the issue of the increasing carbon tax in relation to agricultural contractors, and asked the minister if he would provide a timeline and make a statement on the matter.
The minister previously indicated that he expected the review would be completed just in time for Budget 2023, when a similar question was posed by Deputy Matt Carthy last month.
However, he told the Dáil that he has since been updated and now expects that it will be finished early in the third quarter of the year, which points to some time in July or August.
Despite the early conclusion of the review, Minister Donohue indicated that no decisions would be made in advance of Budget 2023 in October. Responding to the question, he said:
“As the deputy will appreciate, decisions regarding taxation measures are made as part of the annual Budget and Finance Bill process at the appropriate time and having regard to the sound management of the public finances and my department’s tax expenditure guidelines.”
The minister also added that consideration must be given to the need to meet the country’s climate action plan targets when designing or amending any tax measures.
Currently, agricultural contractors are not entitled to avail of relief from increases in the carbon tax on agricultural diesel as the measure is aimed at those that are ‘farming’.
Under the Taxes Consolidation Act 1997, farming requires the occupation of farmland, which agricultural contracting does not involve. According to Minister Donohoe, this is stipulated because “the measure is specifically targeted at the farming sector to address the particular problems faced by family farms”.
Within his answer, the minister pointed out that those who incur green diesel expenses throughout their trade as an agricultural contractor, can claim income or corporation tax deductions for the expenses. This also includes any carbon tax charged in respect of the diesel.