Dáil Éireann Debate, Wednesday - 21 April 2021
460. Deputy Matt Carthy asked the Minister for Finance the engagement with the Minister for Finance with regard to the issue of the definition of independent agricultural contractors regarding section 664A of the Taxes Consolidation Act 1997; if he has requested the Minister for Finance to seek to resolve the situation in a manner which would allow farm contractors to avail of the same tax framework; and if he will make a statement on the matter. [20276/21]
View answer522. Deputy Matt Carthy asked the Minister for Finance further to Parliamentary Question No. 60 of 31 March 2021, the status of work on the issue of the definition of independent agricultural contractors regarding section 664A of the Taxes Consolidation Act 1997; and if he will make a statement on the matter. [20082/21]
View answerI propose to take Questions Nos. 460 and 522 together.
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.
An additional tax measure for farmers was introduced in Budget 2012 to compensate for carbon tax increases at the time. The statutory basis for this tax relief is section 664A of the Taxes Consolidation Act 1997. It is available to individuals and companies that carry on a trade of farming and are entitled to claim an income tax or corporation tax deduction in respect of farm diesel. I have received requests from representatives of the agricultural contractors to extend the relief to them.
As I stated during the Committee Stage of Finance Bill 2019, agricultural contractors are not entitled to this relief as they are not carrying on a trade of farming. This is because farming, which is defined in section 654 of the Taxes Consolidation Act 1997, requires that the occupation of farmland and 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.
My officials met with agricultural contractor 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 Climate Action Plan approved by Government in June 2019. The onset of the Covid-19 pandemic in the intervening period has influenced the timing of such a review which has yet to take place.
While I appreciate the difficulties facing many sectors as a result of increases to the carbon tax, I must be mindful of the public finances and the many demands on the Exchequer, as well as the need to progress the Programme for Government commitments on the environment. The introduction of new tax reliefs - or indeed the extension of existing targeted reliefs - reduces the tax base and makes general reform of the tax system that much more difficult.
