The FCI has revealed that carbon tax increases will add at least €30 million to contractor fuel costs in 2022.
It has based its calculation on the consumption of more than 350 million litres annually by the sector.
This hike comes on top of the existing 50% increase in agricultural diesel costs already incurred this year.
In a statement on Tuesday, October 12th, 2021, FCI national chairman John Hughes said:
“FCI members will be forced to significantly increase service charges to their farmer clients in 2022 in advance of the further increase in diesel fuel costs, which have been specifically designed to hit our sector in the days ahead of facing into the 2022 silage harvest.”
“This is a direct hit on Irish agriculture. Contractor charges will have to increase to cope with the spiralling increases in fuel, machinery and tyre costs, or we will be rapidly forced out of business.”
“Without farm & forestry contractors, the Irish agri-food system would simply not exist, and this undermines the objectives of the agri-food strategy reports,” he added.
Carbon Tax inequity
Meanwhile, the association is “bitterly disappointed” that Budget 2022 did not allow for a rebate scheme for agricultural contractors for the increased carbon tax costs.
Also, it did not provide for changes in the inequality of the double carbon tax refund that remains only available to farmers.
“This comes despite the Tax Strategy Group’s Climate Action and Tax report. It confirmed that arguments can be made in support of the continuation of section 664A as a targeted sectoral relief, but that such an approach gives rise to issues of equity for agricultural contractors.”
“The Tax Strategy Group had identified that in the context of increases in carbon tax envisaged in the Programme for Government, certain sectors of the economy, namely agricultural contractors, may be asked to bear the full costs of carbon tax increases, while other sectors, such as farmers, maybe in a position to avail of tax reliefs that mitigate the impact of these increases.
Hughes said this budget did nothing to “rebalance the situation”. He said it continues to make agricultural contractors “marginalised” compared with farmers in terms of carbon tax refunds.
The proposals that the Revenue Commissioners would amend its Form 11 (and Form Ct1) in to facilitate the gathering of data concerning the levels of tax relief being availed of under the 664A section, were also not mentioned in the budget.
“The data gathered in this way would assist in the examination of the costs and benefits of the measure and highlight the current inequality for agricultural contractors,” Hughes added.