Martin Browne (Tipperary, Sinn Fein)
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416. To ask the Minister for Finance his views on farmers having to pay carbon tax while fishing boat operators do not have to do so; the reason for same; his views on this discrepancy given the technologically advanced tractors and other machinery farmers are investing in; and if he will make a statement on the matter. [15616/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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Ireland’s excise duty treatment of fuel used for motor and heating purposes is based on European Union law as set out in Directive 2003/96/EC on the taxation of energy products and electricity, commonly known as the Energy Tax Directive.

Mineral Oil Tax (MOT) is an excise duty and is comprised of a carbon and a non-carbon component. The carbon component is often referred to as carbon tax, but it is only one part of the overall tax  that applies to mineral oils and other fuels used for motor and heating purposes.  MOT as applied in Ireland is subject to the requirements of the Energy Tax Directive.

I am taking it that the Deputy, in referring to “carbon tax”, is enquiring about the application of MOT to agricultural purposes compared to the exemption from MOT that applies in the case of fuel used for fishing boat operators.

The main agriculture exposure to excise duty comes from the fuel inputs primarily through the use of Marked Gas Oil, which is currently subject to a rate of MOT of  11.8 cent per litre.  This compares to the current full rate of MOT for auto diesel used as a propellant of 51.5 cent per litre.

I also note that when my predecessor increased Carbon Tax in Budget 2012 he made provision for a double income tax relief for farmers to compensate for the increase. This relief continues to apply.  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.  The legislation provides that a farmer may take an income tax or corporation tax deduction for farm diesel (including any carbon tax charged in respect of the 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 4.1 cent per litre of farm diesel (the 2012 baseline).

In the case of fishing boat operators, the requirements of the Energy Tax Directive apply.  The Directive provides for a mandatory exemption from taxation on all fuels that are used for navigation within Community waters, other than fuels used for private pleasure navigation. This is binding on Ireland and all other EU member states and means that fuels used for sea-fishing and for commercial freight and passenger vessels must be exempt from taxation under the Directive. In line with the Directive, Ireland’s MOT legislation provides for a full relief from MOT for fuel used for commercial sea navigation, including sea-fishing. I am advised by Revenue that, subject to conditions, this relief is operated by way of remission or repayment through Revenue’s online services. Full details on the operation of this relief are available on Revenue’s website at: .