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Tuesday 2 September 2014

Carbon tax increase to send heat and motor costs soaring

Paul Melia

Published 05/11/2011 | 05:00

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HOME heating bills and motoring fuel costs will soar after the Government yesterday indicated that the carbon tax would be increased in the Budget.

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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.

A condition of the EU/ IMF bailout is that the tax is increased next year and the last government's four-year plan proposed doubling it by 2014.

Irish Independent

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