Machinery contractors demand a U-turn on fuel tax hike

Minister Paschal Donohoe
Minister Paschal Donohoe
Derek Casey

Derek Casey

Farm contractors are threatening to take tractors onto the streets to protest over the imposition of higher carbon taxes on green diesel.

They have also warned of a 5pc hike in contractor charges next year as a result of the carbon tax hike.

Under plans announced in the Budget the carbon tax on green diesel will increase by €6/t from May 2020. This will add around 2c/litre to green diesel prices.

The Association of Farm and Forestry Contractors in Ireland (FCI) has written to the Minister for Finance, Paschal Donohoe, and the Minister for Agriculture, Michael Creed, seeking clarity following confusion on the issue of carbon taxes on green diesel.

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Following Budget 2020 the FCI released a statement welcoming the fact that contractors would be able to get a rebate on the carbon tax when using green diesel.

However, it later emerged this was not the case, with the contractor body blaming Minister Creed for the confusion.

FCI chairman, Richard White, said contractors could not absorb the additional charges which the carbon tax will impose.

"Contractors should be allowed a similar annual carbon tax deduction/rebate as that available to farmers," Mr White said.

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The introduction of the carbon tax just as the silage harvest kicks off next May is a further source of contractor anger, he added.

FCI pointed out that the silage harvest accounts for consumption of around 214 million litres of green diesel, with total annual consumption by farm contractors exceeding 350m litres.

The hike in the carbon tax of 2c/l will cost the farm sector around €4.3m for the silage harvest alone, and close to €7m for the entire year.

"Next May is the month when the Government propose to enforce this penal stealth carbon tax on Irish farming. The timing could not be less appropriate," Mr White said.

Alternative fuels

"Irish farm contractors do not have the option of using alternative fuels. Hybrid or LPG as alternative fuel options are not currently available to power modern agricultural machines," he explained.

"Farm contractors are now so outraged by this further increase in fuel costs, coupled with the ongoing inequity of not being allowed to avail of a carbon tax rebate, that they will be forced to increase all contractor charges to Irish farmers for 2020 by 5pc," he added.

Given that the annual turnover in the Irish farm contractor sector is in the region of €700m, the FCI estimates that a 5pc increase in contractor charges will cost farmers €35m.

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