Action needed on diesel rebate for farm contractors – Matt Carthy TD


Sinn Féin spokesperson on Agriculture Matt Carthy TD has said that farm contractors deserve a commitment to action from government following consistent delays to a review to their tax status in relation to the carbon tax.


While farm contractors were first promised a review of their status regarding the rebate in 2019, this has been delayed on a number of occasions since then with the Minister for Finance now promising delivery of the review in the early stages of Q3 of this year in a parliamentary question response to Deputy Carthy.


However, Carthy said that ‘the simple facts of the matter is that farm contractors carry out the exact same work as farmers, and the refusal of government to commit to reform simply results in these charges being passed on to their farming customers.’


Teachta Carthy said:


“It has been incredibly frustrating to see the Minister for Finance repeatedly delay this review.


“It is yet another example of the challenges facing those involved in Irish agriculture today being compounded by the lethargic attitude of this government towards resolving long-standing inconsistencies.


“Currently, farmers can avail of a rebate on the carbon tax if their income is sufficient.  However, the same provision is not in place for Farm Contractors despite the fact that they are carrying out agriculture work.


“Contractors have no choice but to pass on the charge to their customers – effectively making it an additional cost to farmers.


“It is particularly galling that in the most recent response to parliamentary question the Minister for Finance has said that he must ensure that tax measures are aligned the ‘the need to meet our Climate Action Plan’.


“Would the Minister believe it to be more beneficial if every single small-to-medium sized farmer in the state set about purchasing a personal fleet of agricultural machinery?


“That would seem wasteful to me, as opposed to the current framework whereby farm contractors fill that gap and ensure that each piece of individual machinery is used to the maximum.


“That we would penalise both farmers and farm contractors for this type of approach is beyond belief and makes no sense from the perspective of meeting our climate obligations.


“The Minister has confirmed he intends to complete the review exercise prior to the budget, though will not commit to bringing forward measures in the budget arising from that review.


“There can be no further delays.  During a period of escalating input costs, farmers need support.  One such support must be through a rebate of the carbon tax for those doing essential agriculture work for which there is no fuel alternative yet.”


NOTE TO EDITOR – Response to Parliamentary Question


For Written Answer on : 24/05/2022
Question Number(s): 163 Question Reference(s): 26254/22
Department: Finance
Asked by: Matt Carthy T.D.


To ask the Minister for Finance when he expects a review into the status of farm contractors regarding the carbon tax to conclude; the timeframe which he may bring forward proposals arising from said review; and if he will make a statement on the matter.


The present position is that agricultural contractors are not entitled to avail of relief from increases in the carbon tax on farm diesel under section 664A of the Taxes Consolidation Act 1997. This is because farming, which is defined in section 654 of the Taxes Consolidation Act, requires the occupation of farmland. Agricultural contracting does not involve the occupation of farmland. The measure is specifically targeted at the farming sector to address the particular problems faced by family farms.

However, it should be noted that, currently, those who incur expenses in relation to farm diesel in the course of their trade of agricultural contracting may claim an income tax or corporation tax deduction for these expenses, including any carbon tax charged in respect of the diesel.

My officials met with contractors’ representatives in December 2019 and advised that my Department was intending to schedule a review of the scheme (and related aspects) in the context of a wider report on agri-tax reliefs and the Government’s Climate policy.

The onset of the Covid-19 pandemic in the intervening period caused the review to be deferred and the formal elements of same have yet to take place. In the meantime, the status quo has remained in relation to the application and scope of section 664A. I have since received further correspondence from contractors’ representatives, most recently on 15 February 2022.

I indicated to the Deputy during the Committee Stage of the Finance (Covid-19 and Miscellaneous Provisions) Bill 2022 on 6 April this year, that I expected that the review would be completed in advance of Budget 2023. As indicated to Deputy Conway-Walsh in response to a Parliamentary Question on 28 April last, the exercise is likely to be completed by the early part of Q3 this year.

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. Furthermore, I must also have regard to ensuring that any tax measures are broadly aligned with the need to meet our Climate Action Plan targets.




Action needed on diesel rebate for farm contractors

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