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Carbon tax increase will raise contractor’s annual fuel bill by ‘at least’ €2,250

The Association of Farm & Forestry Contractors of Ireland (FCI) have warned that the proposed rise in carbon tax, effective from May 5th, will lead to an unaffordable increase in the agricultural contracting fuel bill.

The FCI has submitted a request to Paschal Donohue, Minister for Finance, Public Expenditure and Reform, to immediately postpone the upcoming proposal.

Increased fuel bill

Carbon tax is due to increase by €6/tonne on all green diesel used for agriculture on Tuesday, May 5th, which converts to an added 1.5c/litre, plus VAT, based on recent figures from Revenue Commissioners.

The FCI said that, for a typical farm or forestry contractor, whose fleet of modern, sophisticated and fuel-efficient machines consume in the region of 150,000 litres of agricultural diesel per year, this will raise the cost of agricultural fuel bill by at least €2,250.

With the current COVID-19 situation in mind, the association stated that neither contractors nor their customers can afford this increase.

Richard White, FCI national chairman, stated: “It is now clear that imposition of the proposed €6/tonne carbon tax increase on agricultural diesel will result in a 2.1% increased fuel cost to farm & forestry contractors.”

“All of which will have to be passed on directly to our farmer customers which will be difficult given the significant decline in farm incomes,” he explained.

The 2% increase in contractor charges, due to the carbon tax increase alone, will lead to an additional cost of close to €14 million to the Irish agricultural industry in 2020, according to FCI calculations.

In light of this, the farm and forestry contractor representatives have requested that the increase be postponed subject to a stakeholder review in advance of budget 2021, saying this will defray the need for additional cost increases from contractors for their services to Irish farmers in 2020 and beyond.

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