Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Deputies. I propose to take amendments Nos. 80 and 85 together.

Amendment No. 80 was submitted by Deputies Fitzmaurice and Mattie McGrath. It refers to the purchase of marked gas oil by agricultural contractors for work carried out on behalf of farmers being claimed against income tax payable.

Amendment No. 85 in the name of Deputy Michael McGrath refers to a report on a potential diesel rebate scheme for agricultural contractors similar to that in operation for road hauliers.

Marked gas oil used by agricultural contractors is already subject to an exceptionally low rate of mineral oil tax, much lower than that applied to auto diesel. The rate of mineral oil tax on marked gas oil is currently 10.2 cent per litre, which will increase to 11.8 cent next May following the application of the increase in the carbon price.

In terms of agricultural contractors, individuals 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. Deputies Fitzmaurice and Mattie McGrath alluded to the existing additional tax measure for farmers, which 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 the trade of farming and are entitled to claim an income tax or corporate tax deduction in respect of farm diesel. 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.

The legal basis for the diesel rebate scheme to which Deputy McGrath is referring originates in the energy tax directive. There is no legal basis to extend the diesel rebate scheme beyond hauliers and bus operators as there is no legal basis for operating a parallel marked gas oil rebate scheme.

As the Deputies will be aware, the introduction of new tax reliefs and the extension of existing targeted reliefs reduces the tax base and makes general reform of the tax system that much more difficult. However, I have agreed with the Minister for Agriculture, Food and the Marine, Deputy Creed, that our Departments will engage on potential measures to assist the agricultural sector in meeting the challenges and obligations set out in the climate action plan and to incentivise better health and safety in the sector. These measures may include the review of some of the tax reliefs available to the sector. This work will feed into the budget planning cycle for next year.

I am not in a position to accept the Deputies' amendments but I want to indicate now that I will be carrying out and working with the Minister, Deputy Creed, to examine potential measures and areas that we need to examine to see how we can support the agricultural sector in meeting its challenges and obligations under the climate action plan. This process will offer a way of at least debating the issues being raised by the three Deputies.