Dáil Éireann Debate, Tuesday - 27 September 2022
115. Deputy Matt Carthy asked the Minister for Finance the status of a review into farm contractors regarding the carbon tax; if he intends to introduce any measures arising from such in Budget 2023; and if he will make a statement on the matter. [46661/22]
Amharc ar fhreagraFinance Act 2012 introduced section 664A of the Taxes Consolidation Act 1997 which provides that a farmer may take an income tax or corporation tax deduction for farm diesel (including any carbon tax charged in respect of diesel) and then a further deduction for farm diesel which is equal to the difference between the carbon tax charged and the carbon tax that would have been charged had it been calculated at the rate of €41.30 per 1,000 litres of farm diesel (the 2012 baseline).
The measure was reviewed as part of the Tax Strategy Group and part of the Climate Action and Tax Paper which is available at: assets.gov.ie/231224/4d31b697-1bfb-4177-bb96-a744bbdfba99.pdf.
The relevant TSG paper concluded that:
"On the grounds of equity, the case for a continuation of section 664A for farmers is not a strong one. In a more benign set of circumstances for farm enterprises, a clear recommendation to remove section 664A, perhaps on a phased basis over a number of years, might be appropriate. The fact that the normal business deduction in respect of input costs would remain in place as well as the VAT refund scheme for business diesel expenditure should also be kept in mind.
However, the war in Ukraine has caused fuel prices to increase and has raised concerns domestically about food security and the supply of fodder. The Minister for Agriculture, Food and the Marine has tasked a National Fodder and Food Security Committee to prepare an industry response to the emerging crisis in feed, fodder, fertiliser and other inputs, and to develop contingency plans and advice to assist farmers in managing their farm enterprises. Against this background, the 2022/2023 autumn-winter period would not seem to be the appropriate time to make a change. It may be preferable to consider signalling a policy change in the current year but to defer action until a later date.
At the same time, a move to extend the scope of section 664A beyond the current cohort of beneficiaries might be seen to undermine the desired objective of putting in place a policy approach which is more aligned across different goals. If it is considered that farm contractors require support, this might best be addressed in the context of a longer-term policy for agriculture."
The position is that I have not made any change, either to extend or curtail the so called double deduction for farm diesel, in today's Budget.
