Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

The Government is aware that the cost of transport in Ireland remains high and that fuel costs are a major factor in the input costs of farmers. Ireland has to import a large quantity of its fuel for transport and, as such, we are subject to world oil prices and the risk of adverse exchange rate fluctuations. The price of oil can increase as a consequence, for example, of tensions in Gulf states, a fire on a major oil rig or speculation in futures markets. Transport costs are also a factor for our exporters. As an island nation, we have higher transport costs for our exported goods than many of our competitors.

Transport costs are primarily a matter for the Minister for Transport, Tourism and Sport and the Minister for Finance. Nevertheless, I have had regular contact with the latter concerning such costs in regard to agriculture and the cost of agricultural inputs in general. One of the measures introduced as a result of recent budget changes is a new double-income tax deduction in respect of the increased costs arising from the change in carbon tax. The Government gave a commitment to the farming sector in 2011 that it would not suffer further costs due to increases in carbon charges, and this relief from the carbon tax increase was given in fulfilment of that commitment last year. Farmers are also allowed to claim a flat-rate addition to the costs incurred by non-VAT-registered farmers based on their imputed VAT costs. Included in this calculation, which currently provides for a rebate of 5.2% in 2012, is the cost of fuel and farm machinery, including tractors. This is a further allowance to farmers on their fuel costs. In addition, the long-standing reduced rate for farm diesel remains in place. This is of significant benefit to farmers, who are not the only users of marked gas oil.

Although the global economic recession continues to impact seriously on Ireland's finances, I assure the Deputy that we are aware of the challenge posed by high input costs for farmers. We will continue to bear these issues in mind in the framing of the upcoming budget.

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