HOME heating bills and motoring fuel costs will soar after the Government yesterday indicated that the carbon tax would be increased in the Budget.
The tax already adds more than 5c to a litre of diesel and €60 to annual houshold gas bills, and could be doubled as part of efforts to shore up the State's finances.
The Mid-Term Economic Review, published by the Department of Finance yesterday, said the carbon tax was being "examined".
"Carbon taxes and excise duties on energy products are being examined with a view to protecting revenues, while encouraging behavioural change and reducing our greenhouse gas emissions," it said.
The current tax is based on a €15 charge per tonne of carbon dioxide produced. Less polluting fuels like gas attract a lower tax of 6pc, while coal attracts an 11pc charge because it produces more carbon dioxide -- a primary cause of climate change.
The tax generates €330m a year, but any increase would have a serious impact on household finances.
The AA said yesterday that the average motorist used 1,800 litres of fuel a year, but that Irish drivers were among the most taxed in Europe with all motorists forced to pay VRT, motor tax, tolls and a 3pc levy on motor insurance premiums.
The tax currently adds 6.3c to a litre of diesel, or €113 a year. If the tax is increased by just 50pc it could add another €56 to annual motoring bills.
Home heating costs would also soar. The tax currently adds €68 to oil-fired central heating and €60 for gas. A bale of briquettes incurs a 39c levy.