Monday 16 September 2019

Finance Minister Paschal Donohoe plays down likelihood of €10 hike to carbon tax in Budget

Minister for Finance Paschal O’Donohoe at the Fine Gael’s Parliamentary Party's annual think in at the Garryvoe Hotel in Ballycotton Co. Cork. Photo: Douglas O’Connor.
Minister for Finance Paschal O’Donohoe at the Fine Gael’s Parliamentary Party's annual think in at the Garryvoe Hotel in Ballycotton Co. Cork. Photo: Douglas O’Connor.
Kevin Doyle

Kevin Doyle

FINANCE Minister Paschal Donohoe has played down the likelihood a €10 hike to carbon tax in the upcoming budget.

Despite being advised by his own officials that he should start to increase the tax on fossils fuels, Mr Donohoe appears reluctantly to move too quickly.

Last year he failed to add anything to the current rate of €20 per tonne of CO2 following a backlash from rural TDs within his own party.

However, the rise of the Green Party in the local and European elections, as well as the launch of the Government’s Climate Action Plan, led to expectations that he would add €10 this year.

Fianna Fail leader Micheal Martin (Brian Lawless/PA)
Fianna Fail leader Micheal Martin (Brian Lawless/PA)

The Government is committed to charging at least €80 per tonne by 2030.

Fine Gael TDs discussed the issues at their parliamentary party think-in in Cork today, with Mr Donohoe saying afterwards that he wants to try build a consensus.

He suggested the money collected from carbon taxes should be ring-fenced for projects linked to climate action or else repaid to householders through other means.

“I would view carbon taxation as being very different to other tax changes that I've made in the past or might make in the future.

There was no hike in the carbon tax as expected, but a 1pc surcharge was imposed on the purchase of new diesel cars as a sop to environmentalists. Stock image
There was no hike in the carbon tax as expected, but a 1pc surcharge was imposed on the purchase of new diesel cars as a sop to environmentalists. Stock image

“If we do decide to make a change in carbon taxation in Budget 2020, that revenue will then be used in a way to either help people cope with the change they have to make to deal with climate change and changing their behaviour or we will use it in investing in the kinds of funds, the kinds of plans that are helpful for families and for businesses making a change,” he said.

"So I see any changes in carbon taxation being very different to other the tax choices that I've made.

"We have not made a decision yet in relation to going for the fee route or the investment route. If we were to go down the fee route, there would be ways of handling that kind of a system. But we are a little bit away from making a decision on it.”

Earlier this week Fianna Fáil leader Micheál Martin indicated he does not want the tax to be hiked by €10. He suggested €5-€6 might be a more reasonable jump.

Mr Donohoe said the figure would be discussed with the Opposition party as part of the Budget negotaitons.

“For a change in the price of carbon, which is something that is very sensitive to families and to businesses all over the country we are better off having clarity regarding a set of gradual increases, than making a very big change and finding out that the argument cannot be won in relation to it,” he said.

“I met Fianna Fáil earlier on in the week. We had a preparatory discussion in relation to the Budget and I'll be meeting them across next week.

"I now have work under way regarding if we going to make a change in carbon taxation, which I'll decide, and if we are how that revenue could be used.”

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