The carbon tax rebate on agri-diesel for farmers may come under political pressure, following a report from the Government’s Tax Strategy Group. On the grounds of equity, the case for a continuation of section 664A (the carbon tax rebate scheme) for farmers is not a strong one,” it states.
The carbon tax rebate on agri-diesel for farmers may come under political pressure, following a report from the Government’s Tax Strategy Group.
On the grounds of equity, the case for a continuation of section 664A (the carbon tax rebate scheme) for farmers is not a strong one,” it states.
“In a more benign set of circumstances for farm enterprises, a clear recommendation to remove section 664A [...] might be appropriate.”
The suggestion is that this would occur “on a phased basis over a number of years”.
It is only the price hike on fuel and other inputs that is preventing this happening, it seems. The carbon tax rebate is worth about €12m a year to farmers. Contractors who are not farming in their own right are excluded from the scheme.
Contractors
The Farm Contractors of Ireland (FCI) has been lobbying the Government for inclusion in the carbon tax rebate scheme, and is unlikely to be any happier than farmers at this latest recommendation.
“Our sole motivation is to achieve parity for contractors as farmers, but a backward step on fuel prices for contractors or farmers would be detrimental to food production,” said an FCI spokesperson.
Excise duty
The reason agri-diesel, known as marked gas oil (MGO), is cheaper than other fuels is twofold. Firstly, VAT is levied at 13.5%, as opposed to the 23% VAT rate applicable on petrol and road diesel.
Secondly, the mineral oil tax (excise duty) is normally much lower, being €47.36/1,000l as opposed to €541.84 for petrol and €425.72 for road diesel.
These excise rates were lowered in May and agri-diesel was lowered to0. However, the Tax Strategy Group sees those reliefs as purely a temporary measure.
This is a subscriber-only article
SHARING OPTIONS: