Petrol, diesel, coal to go up in Budget

Stealth taxes: Carbon tax a priority for 2019

Even a modestly sized contracting outfit can very quickly run up a fuel bill of €80,000 or €90,000.

Kevin Doyle and Laura Larkin

October 02 2018 02:30 AM

Diesel, petrol, coal and cigarettes are set to go up in Budget 2019 as Finance Minister Paschal Donohoe looks for money to fund social welfare hikes and income tax reductions.

A series of stealth taxes on workers and businesses is being planned in order to satisfy spending demands from ministers and Fianna Fáil.

Carbon tax is understood to be top of the list, driving up the cost of home heating and motoring. He will also give himself at least €100m by reducing Mortgage Interest Relief and hiking the education levy paid by businesses.

Excise duty on cigarettes will also rise - but it is not yet decided if last year's 50c hike will be repeated. There will also be some change to the 9pc VAT rate for hotels and restaurants.

But last night Fine Gael was dealt a blow when Louth TD Peter Fitzpatrick resigned - reducing the party's Dáil strength from 50 to 49. It leaves FG increasingly dependent on Tipperary Independent Michael Lowry to ensure the passage of Budget 2019.

The Government has €3.4bn for new spending next year, but €2.6bn of this has already been committed for public sector pay hikes and demographics.

This leave just €800m, which will be split 2:1 in favour of spending over tax cuts.

Sources confirmed that substantial efforts are underway to find ways of raising revenue.

"Carbon tax is a definite but we need to be careful. It could backfire because workers and people in rural Ireland will be hit worst," one Cabinet source told the Irish Independent.

It is believed talks are taking place to find ways of mitigating the impact of carbon tax rises on low-income families and the elderly.

One option being looked at is an increase in the weekly fuel allowance of €22.50, which is paid to people who are dependent on long-term social welfare payments.

The Government is also likely to push the line that Ireland is viewed as lagging behind when it comes to actively tackling climate change.

Carbon tax is used internationally as a way of changing habits and encouraging people to use more green energy.

In Ireland it applies to kerosene, marked gas oil, liquid petroleum gas, fuel oil, natural gas and solid fuels - but the rate, which is €20 per tonne, has remained unaltered since May 2014.

The Society of the Irish Motor Industry (Simi) is already campaigning against higher fuel costs.

There has been some speculation that as well as hiking carbon tax, Mr Donohoe could raise the excise duty on diesel in a bid to promote electric vehicles.

Director general of Simi Alan Nolan said: "Given the importance of diesel cars for those living in remote areas, any such negative moves would impact unnecessarily harshly on rural Ireland.

"Diesel is also the fuel of business, and increasing diesel tax will increase the cost of doing business in Ireland which will also be challenged by the fall-out from Brexit."