The carbon tax will cost agricultural contractors close to €30m in additional fuel costs in 2022 and will push up charges for farmers, the Association of Farm and Forestry Contractors in Ireland (FCI) has claimed.

FCI said the tax increase, allied to a lift in diesel prices, will result in a significant hike in contractor charges next year.

The latest €7.50/t increase in the carbon tax takes the overall charge to almost €41/t of CO2 and will come into force from May 1 next year.

FCI said it was “bitterly disappointed” that the budget did not allow for a “rebate scheme for agricultural contractors for the increased costs of carbon tax, nor did it provide for changes in the inequality of the double carbon tax refund that remains only available to farmers.”