FG TD warned Donohoe to protect farmers from carbon tax hike

Hildegarde Naughton: Wrote letter to minister. Photo: Karen Morgan
Hildegarde Naughton: Wrote letter to minister. Photo: Karen Morgan
Philip Ryan

Philip Ryan

The Fine Gael chair of the Oireachtas Committee on Climate Action told Finance Minister Paschal Donohoe he should consider introducing measures to protect older people, renters, farmers and those living in rural communities to ensure there was "political momentum" behind increasing carbon taxes.

Galway West TD Hildegarde Naughton wrote to Mr Donohoe to examine the issues faced by those who will be most impacted by the increase in the tax before it was raised in the last Budget. In the letter, which was released under the Freedom of Information Act, Ms Naughton said carbon pricing was an important part of the State's response to climate change and noted that it was "widely proven to be an effective tool" in reducing emissions.

The deputy said the cross- party committee support for increasing carbon tax to €80 per tonne by 2030 had been "heavily negotiated and hard won". She said the committee's backing of the plan should be seen as "critical in supporting and garnering public acceptance for the Government's future action on this important area".

However, Ms Naughton said the cross-party support was contingent on the Government carrying out a review of the impact of a tax increase on a wide range of people. She said it should examine the short, medium and long-term impacts of the tax increase.

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She also told Mr Donohoe that her committee would be inviting the Department of Finance to appear before it to discuss the carbon tax

Ms Naughton said the committee would discuss the impact the increase would have on people on "low income/the fuel poor, renters in badly insulated homes, rural commuters who drive large distances, hauliers, and small businesses and farmers".

She added: "In order to ensure political momentum the committee has achieved in support of carbon tax increase is maintained, I want to highlight the importance that the above measures have been undertaken adequately in advance of any increase of the carbon tax in Budget 2020."

On Budget day, Mr Donohoe increased carbon tax by €6 to €26 per tonne, which he said would raise €90m in 2020. This added €1.02 to the cost of filling up a 60-litre tank of petrol, €1.17 for diesel, €1.44 per 40kg bag of coal and 31.2c per bale of briquettes. He also increased the weekly fuel allowance by €2 to €24.50 and raised environmental retrofitting grants.

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Mr Donohoe insisted the carbon tax increase was not a "cash grab" and said the €90m raised would be ring-fenced to protect the most vulnerable in society.

However, he faced Opposition's criticism over the tax increase, which TDs said targeted the most vulnerable in society.

Before the Budget, Fine Gael ministers feared the tax could result in a public backlash similar to the Yellow Vest demonstrations in France - but there has been very little protest since the measures were introduced.

In response to queries about Ms Naughton's warning, Mr Donohoe's spokesperson said the Economic and Social Research Institute (ESRI) carried out a series of studies in conjunction with the Department of Finance on the impacts of an increase in carbon tax.

The ESRI report welcomed the carbon tax increase but noted that it would impact more on people with lower incomes.

The minister's spokesperson said: "The reports have underpinned the Government's budgetary decisions to use the additional revenues from the increase to mitigate the effects in the area of fuel poverty through an increase in the winter fuel allowance and increased SEAI grants for retrofitting, as well as providing resources for a just transition."

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