Agri-diesel to cost more under new carbon tax

A CARBON tax of €15 per tonne was introduced on fossil fuels, and applied to petrol and diesel since last Thursday. It will apply to kerosene, marked gas oil (for agricultural use), liquid petroleum gas, fuel oil and natural gas from May 1, 2010.

Agri-diesel is expected to cost 4.7 cent per litre extra from May, estimated by IFA ú Padraig Walshe to add €13m per year to farm production costs.

The Irish Dairy Industries Association (IDIA) warned that the carbon tax will undermine the competitiveness of Irish exporters, give a price advantage for imported food products, and place more jobs at risk in the food sector.

IDIA director Michael Barry said: “The tax will increase costs at all stages of the food production process. The farmer will pay a carbon tax on the fuel used in producing the food, the transportation of raw materials will be taxed, food processing will be subject to a carbon tax and packaging, storage and distribution will be taxed.” He called for carbon tax revenues to be used to reduce costs for business.

Legislation will be made for its application to coal and commercial peat. A vouched fuel allowance scheme will offset the increases for low income families. Exemption will apply only to EU Emissions Trading Scheme participants.