The increase in carbon tax of €7.50/t announced in the 2021 budget is set to come into play on 1 May, bringing the total carbon tax on diesel used by agricultural contractors to €33.50/t.
The tax now equates to 8.93c/l of agricultural diesel.
The Association of Farm and Forestry Contractors in Ireland (FCI) said the hike will cost contractors €13,455 per annum, based on a typical annual fuel consumption of 150,000l.
?Michael Moroney, chief executive of the FCI, said that contractors do not have the benefit of double taxation carbon tax relief or a rebate scheme like road hauliers and farmers.
FCI predicts that its members will have no option but to increase existing charges by 14%.
Irish contractors consume close to 350m litres of green diesel annually, valued in excess of €262m.
In response to a recent parliamentary question from Sinn Féin’s Pearse Doherty, Minister for Finance Paschal Donohoe said he was aware of the hardship many people in the agricultural community face in light of Brexit and the pandemic.
“The ongoing challenges that members of the agricultural community face, regarding the costs and impact of the carbon taxation on the bills they need to pay, are reflected in the taxation treatment provided for with respect to carbon tax.
“It is my understanding that not only farmers, but also agricultural contractors who incur expenses on farm diesel in the course of their trade, are able to claim this back as a business expense against their income tax or their corporate tax bill,” the minister said.