Louth's Reilly calls for urgent overhaul of VAT and tax policies surrounding HVO

Louth Fine Gael Councillor John Reilly, who says he is also a small farmer in Faughart, and who previously worked in the oil industry, has passionately called on the Government to urgently overhaul the VAT and tax policies surrounding Hydrotreated Vegetable Oil (HVO) biofuel.

Cllr Reilly emphasised that HVO is “a proven, low-emission, drop-in replacement for diesel” and is capable he said, of reducing greenhouse gases by up to 90%, according to several independent industry assessments.

The Dundalk-Carlingford councillor shared that Louth County Council is already leading the way by switching to HVO biofuel for its operations. This early adoption he said, highlights the pressing need for the Government to realign its tax policies with Ireland’s environmental goals.

“As a small farmer, this is the busiest and most fuel-dependent time of the year,” Cllr Reilly told the Dundalk Democrat. “Ploughing, sowing, and preparing the land, demand long hours and significant fuel. Having spent years in the oil sector, I know the current fuel tax system — and right now, it penalizes farmers who choose cleaner, greener fuel.”

Cllr Reilly said that under current VAT rules, farmers using HVO face a “hefty” 23% VAT, while traditional green diesel is taxed at just 13.5%.

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“It’s illogical that the cleanest fuel is taxed the most. Farmers are urged to reduce emissions, but when they try, they’re hit with higher costs”, Cllr Reilly pointed out.

He highlighted that while sectors like haulage, logistics, local authorities, and emergency services are quickly adopting HVO, Irish farmers are being left behind due to “outdated tax policies”.

“With Ireland facing a looming fuel supply challenge, it’s critical that duties and VAT are reviewed immediately”, he urged.

“Farmers are already battling rising costs, and yet, for choosing a fuel that can cut emissions by 90%, they face the highest VAT rates.”

Cllr Reilly called on the Minister for Finance and the Minister for Agriculture to take action by:
- Lowering the VAT rate on HVO for farmers.
- Introducing incentives to help farmers switch to cleaner fuels.
- Ensuring farmers aren’t penalized financially for reducing emissions.

He added, “If the Government truly wants to lead on climate action in agriculture, it cannot continue to treat the cleanest fuels as luxury products. This policy must change, now”, he insisted.