In my Budget 2020 speech, I announced an increase from €20 to €26 in the carbon tax. Following the approval of the Dáil, this increase has been applied to Mineral Oil Tax (MOT) rates for mineral oils used as auto-fuels (for cars and trucks) from midnight on 9 October 2019. All other MOT rates remain at their current levels until 1 May 2020 when new rates will take effect subject to the enactment of the Finance Bill 2019.
The current rate of MOT for marked gas oil (MGO), also referred to as “green agricultural diesel”, is €102.28 per 1,000 litres, comprised of a carbon charge component of €54.92 and a non-carbon charge component of €47.36 per 1,000 litres. These rates did not increase from Budget night. From 1 May 2020 the MOT rate for MGO will be €117.78 per 1,000 litres, arising from the increase of the carbon component from €54.92 to €70.42; the non-carbon component will not change from its current level of €47.36 per 1,000 litres.
I am advised by Revenue that agricultural contractors 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 those expenses, including any carbon tax charged in respect of the diesel.
When carbon tax was increased in Budget 2012, provision was made for a separate and additional tax measure for farmers to compensate them for the increase. 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. However, it should be noted that 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 the occupation of farm land and agricultural contracting does not involve the occupation of farm land.
The Diesel Rebate Scheme (DRS) was introduced in 2013 and offers a partial refund to qualifying road operators on the excise paid on diesel when the retail price is €1.00 (Vat exclusive) or above. The maximum rebate is 7.5 cents per litre when the retail price is €1.25 (Vat exclusive) or above.
Certain qualifying criteria apply, for example, auto diesel must be purchased in the State, either in bulk (over 2,000 litres) or via a Revenue approved Fuel Card, and used in a qualifying vehicle for the purpose of business transport activities. Operators with a licence issued in other EU Member States are also eligible to claim on diesel purchased in the State subject to meeting all the other scheme criteria.
In recognition of the challenges facing the road haulage sector due to the uncertainty surrounding Brexit, I announced in my budget speech that the Diesel Rebate Scheme is being enhanced. The publication of the Finance Bill today will set out the details of the enhancements to the Scheme. This is intended as a temporary support measure, to be reviewed as part of the annual budgetary process.
Full details regarding the Diesel Rebate Scheme and qualification criteria are available on the website of the Office of the Revenue Commissioners: