The carbon tax increased by €7.50/t from midnight on Tuesday, applying to car fuel after the budget was announced. This will increase the carbon tax to €33.50/t. That will add 1.5c to a litre of diesel.

The carbon tax hike will apply to green diesel and home heating oil from 1 May 2021.

It will add 1.937c/l to the cost of a litre of green diesel, bringing the total carbon tax on agri diesel to 8.97c/l. If a typical tank fill is about 2,000l, the expected increase will cost a farmer €38 every time the tank is filled.

The extra tax will add just over €85 to the cost of filling a 900-litre tank of oil for the house.

Agricultural contractors have warned this will lead to an increase in contracting charges.

The Association of Farm & Forestry Contractors in Ireland (FCI) said the tax will cost contractors€13,455 per year.

“FCI members will have no option but to pass on this substantial 28% carbon tax cost increase directly to our farmer customers,” said its national chair John Hughes.