Dáil Éireann Debate, Thursday - 28 April 2022
44. Deputy Rose Conway-Walsh asked the Minister for Finance when he will conclude the review into providing agricultural contractors with a similar status to farmers regarding the carbon tax on green diesel; and if he will make a statement on the matter. [21406/22]
View answerThe present position is that agricultural contractors are not entitled to avail of relief from increases in the carbon tax on farm diesel under section 664A of the Taxes Consolidation Act 1997. This is because farming, which is defined in section 654 of the Taxes Consolidation Act, requires the occupation of farmland. 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.
However, it should be noted that, currently, 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.
My officials met with contractors' 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 Government's Climate policy.
The onset of the Covid-19 pandemic in the intervening period caused the review to be deferred and the formal elements of same have yet to take place. In the meantime, the status quo has remained in relation to the application and scope of section 664A. I have since received further correspondence from contractors' representatives, most recently on 15 February 2022. I indicated to Deputy Matt Carthy during the Committee Stage of the Finance (Covid-19 and Miscellaneous Provisions) Bill 2022 on 6 April last, that I expected that the review would be completed in advance of Budget 2023. In fact, the exercise is likely to be completed by the early part of Q3 this year.
As the Deputy will appreciate, decisions regarding taxation measures are made as part of the annual Budget and Finance Bill process at the appropriate time and having regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines. Furthermore, I must also have regard to ensuring that any tax measures are broadly aligned with the need to meet our Climate Action Plan targets.
