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€200 electricity grant will be wiped out in just one bill as TDs now look to defer carbon tax

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In just the first two months of 2022, the carbon tax raised €136m, Finance Minister Paschal Donohoe said. Photo: Paulo Nunes dos Santos

In just the first two months of 2022, the carbon tax raised €136m, Finance Minister Paschal Donohoe said. Photo: Paulo Nunes dos Santos

Energy companies have been hiking electricity and gas prices. Stock image

Energy companies have been hiking electricity and gas prices. Stock image

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In just the first two months of 2022, the carbon tax raised €136m, Finance Minister Paschal Donohoe said. Photo: Paulo Nunes dos Santos

The €200 Government electricity credit being paid from this month will not even cover the cost of one bill, after another week of crippling price hikes.

The one-off credit was vaunted as a bulwark against runaway energy price rises which are putting a massive squeeze on household budgets.

The Irish Independent can reveal that Panda Power is the latest energy suppliers to announce double-digit price hikes.

It comes as SSE Airtricity, Bord Gáis, Energia, the ESB’s Electric Ireland and PrepayPower have all already announced plans for price rises this year.

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Each bimonthly bill is now calculated to come in at close to €270 after the latest round of rises, meaning an annual bill of around €1,600.

The €200 grant will be wiped out in just one bill.

Further measures, such as a reduction in VAT and an additional energy credit to be paid in advance of next winter, look increasingly likely to be needed, according to Daragh Cassidy, of price comparison site Bonkers.ie.

When the price of petrol and diesel topped €2 per litre in recent weeks, the Government introduced a temporary reduction in excise duty. That saw 20c knocked off the price of a litre of petrol and 15c off diesel.

But there remains frustration over the political response to the cost-of-living crisis as customers were hammered with a further series of major energy price hikes this week.

A rump of Government TDs are now plotting a revolt against the carbon tax.

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A group of TDs from both Fine Gael and Fianna Fáil are ramping up pressure to defer the tax hike – which will raise the cost of fuel and home heating oil – until energy prices decrease.

The move could put the two parties on a collision course with the Green Party who are insistent on carbon tax increases so that the Government can meet its climate action targets.

A group of Fine Gael backbenchers yesterday submitted a motion to their parliamentary party seeking a debate and a vote on delaying the carbon tax increase. This weekend, they are privately seeking support from colleagues.

Former Rural Affairs Minister Michael Ring, who is supporting the motion, said the country has turned into a “rip- off republic” again.

In Fianna Fáil, Carlow-Kilkenny TD John McGuinness said he will this weekend contact colleagues over whether a similar motion should be put down.

Limerick TD and former minister Willie O’Dea said he would be raising the issue with the Taoiseach.

“If there is a carbon tax increase, there should be countervailing measures put in place from May 1 which will offset its impact on people,” he said.

The Government raised €652m from its carbon tax last year. Finance Minister Paschal Donohoe has revealed the huge tax haul, which is nearly a third more than the €493m that was raised in 2020.

Early figures also reveal that tax take will spiral further towards €1bn this year if current trends continue.

In just the first two months of 2022, the tax raised €136m, Mr Donohoe said in response to a parliamentary question from Sinn Féin TD Matt ­Carthy.

The carbon tax was introduced in 2009 as the government tried to reduce Ireland’s carbon emissions.

The tax – which is applied to fuels, from petrol and diesel to gas and kerosene – was increased by Mr Donohoe in the last budget. But the increase isn’t due to come into effect for home heating fuels such as gas, solid fuel and ­kerosene until May 1.

However, the increase was applied immediately to motor fuels last October, adding about 2c per litre to petrol and 2.5c to diesel.

The Government insists that the money is ring-fenced and helps to reduce fuel bills by compensating low-income households.

It is also used to aid a “just transition” for workers in energy sectors such as peat-fired power stations that have been closed or which will close.

Energy companies including state-owned ESB have been hiking electricity and gas prices.

The ESB’s Electric Ireland unit announced this week that it will raise the price of electricity by 23pc and gas by 25pc from May 1.

SSE Airtricity also announced increases in electricity and gas from the start of next month.

Electricity is going up by 24pc, in a move that will add €338 to the typical annual household bill. Gas is rising by 32.3pc, which will add €333 to the typical annual bill.

Panda Power, which announced five price rises last year, is again pushing up electricity prices by 14.7pc in May, and gas by 14.9pc.

This will add €290 a year to the average electricity bill and €207 to the average gas bill.


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