Wednesday 16 October 2019

Carbon tax to increase by €6 a year for the next decade despite fears among rural ministers

‘Trajectory’ of increases: Paschal Donohoe. Photo: Gareth Chaney, Collins
‘Trajectory’ of increases: Paschal Donohoe. Photo: Gareth Chaney, Collins
Kevin Doyle

Kevin Doyle

Carbon tax could be raised by €6 every year for the next decade under plans being concluded as part of Budget 2020.

Finance Minister Paschal Donohoe intends to outline a "trajectory" of increases that will ultimately bring the charge from €20 per tonne of carbon to €80 in 2030.

By the time the repeated increases have hit, the price of a 60-litre fill of petrol will have risen €13.76, while diesel will be up €15.72 including VAT.

Filling a 900-litre tank with home-heating oil will jump €207. A bag of briquettes will cost €2.08 extra and a 40kg bag of coal will come with a €9.60 tax bill.

Mr Donohoe is set to begin this 'journey' tomorrow when he announces the first products to be hit will be petrol and diesel.

Although it has been long-flagged that some increase would take place in this Budget, there is growing concern among rural ministers over the impact on voter sentiment.

The Government backed down on an increase last year amid angst from rural Fine Gael TDs and the business community, especially hauliers.

Mr Donohoe will definitely proceed with some hike tomorrow, but it's expected the new rate will not apply to home heating fuels until after the winter period.

One minister told the Irish Independent: "It's all right for lads in Dublin who can take a bus but in rural Ireland there's no infrastructure."

Ministers want a significant proportion of the €130m in new income to be collected through carbon tax next year to be spent outside of urban areas.

It's understood Mr Donohoe and Fianna Fáil's Budget negotiators, Michael McGrath and Barry Cowen, have been in engaged in robust debate over how carbon tax should be applied.

While both sides have signed up to increases, there were disputes over the amount and how the income would be redistributed.

An increase to the fuel allowance paid to vulnerable people is expected to be in the region of €2 per week. However, sources said this was still under discussion last night.

A €6-per-tonne hike in 2020 would add around €15 to a domestic tank of kerosene.

Petrol and diesel prices are expected to go up by close to 2c per litre from midnight tomorrow.

It comes as a new study suggests almost half of households don't realise they are already paying carbon tax.

The tax was introduced in 2010 and applies to kerosene, marked gas oil, liquid petroleum gas, fuel oil, natural gas and solid fuels.

Work carried out by iReach Insights on behalf of the Irish Offshore Operators' Association (IOOA) shows that 49pc of people have no awareness of the extra charge on their purchases.

The study of 1,000 people nationally during September shows the average household is spending €112 on home energy per month. Another €113 is allocated for fuel on transport.

The first 'Offshore Energy Index' found that most people do take steps to save energy at home (85pc) with the over-55s more likely to conserve than young adults aged between 18 and 34 years olds.

Mandy Johnston, CEO of the IOOA, said the index will over time help inform people on the role individuals have to play "to bring about real change to conserve energy".

Interestingly, it estimates there are 6.2 million unused or replaced smart phones and devices lying idle in Irish homes. It is estimated that 85pc of energy used by a device is during manufacturing.

Irish Independent

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