Tuesday 18 December 2018

Carbon tax bill rise report way off the mark – Leo Varadkar

The Taoiseach responded days after he promised to cut taxes over the next five years if Fine Gael is re-elected.

Leo Varadkar (Niall Carson/PA)
Leo Varadkar (Niall Carson/PA)

By Michelle Devane, Press Association  

Taoiseach Leo Varadkar has described a new economic report suggesting households could face a hike in carbon tax bills of up 3,000 euro (£2,674) a year as “way off the mark”.

Analysis from the Economic Social Research Institute (ESRI) has outlined that dramatic tax increases would be needed unless the Government implemented new policies to tackle climate change.

Mr Varadkar said: “In terms of carbon tax the ESRI is way off the mark. Certainly this government of Fine Gael and independents does not intend to raise carbon tax to the kind of level suggested in that report.”

He added that the Government had not yet worked out what those tax increases would be.

You will not be able to reduce income taxes by 600 million euro a year without increasing taxes elsewhere ... I think you need to be honest with people Micheal Martin

The ESRI found taxes would need to rise from 20 euro (£17) per tonne currently to at least 300 euro (£267) by 2030 if Ireland was to avoid hefty European Union (EU) fines.

It would mean considerable tax rises for households when it comes to home heating and motoring costs.

At present, householders typically pay about 200 euro (£178) a year on carbon taxes, but that figure could be hiked to 3,000 euro a year, according to the ESRI.

Under EU rules, Ireland is required to reduce carbon emissions by 20% over 2005 levels by 2020.

However, it is unlikely to meet the targets as Irish carbon emissions are among the highest in the EU.

The report comes within days of Mr Varadkar promising to cut taxes over the next five years if Fine Gael is re-elected to Government.

Mr Varadkar was responding to Fianna Fail leader Micheal Martin, who said Ireland was failing in terms of its climate change targets and asked whether the Taoiseach could give a trajectory of how much carbon taxes would rise each year over the next five years.

He added it was not possible for the Government to cut income taxes without increasing taxes elsewhere.

“You will not be able to reduce income taxes by 600 million euro (£534 million) a year without increasing taxes elsewhere … I think you need to be honest with people,” he said.

Mr Varadkar claimed Mr Martin was “wrong” in his analysis, adding that the Government should follow the Canadian model where the money is giving back to people in the form of tax reliefs.

The research body recommended a range of policies needed to be introduced including the phasing-out of fossil fuel use, retrofitting properties and electrifying the transport fleet.

Press Association

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