Thursday 20 June 2019

Fuel tax hike to push up household bills

Opposition puts pressure on Government to increase social welfare in the Budget

Taoiseach Leo Varadkar. Photo: PA
Taoiseach Leo Varadkar. Photo: PA
Laura Larkin

Laura Larkin

Householders face a rise in their fuel bills in the upcoming Budget after Taoiseach Leo Varadkar signalled plans to increase carbon tax.

Mr Varadkar has said Ireland needs to "grasp the nettle" in increasing the levy over the coming years to meet climate change targets.

However, he has pledged to introduce "compensatory measures" for those who would be worst hit by a hike in the tax.

Carbon tax applies to carbon dioxide emissions from the burning of turf, coal and other fossil fuels. It is charged at €20 per tonne of CO2, which is applied at the point of sale and directly affects consumers.

Ireland has faced increasing pressure from the EU to introduce measures to encourage greener energy practices and changes in behaviour to combat the effects of climate change.

A review of the carbon tax is under way in the Department of Finance, with the help of the ESRI, which will guide changes to be made in the upcoming Budget.

The Climate Change Advisory Council - an independent body established to track Ireland's progress on meeting its climate change targets - has called for the tax to be raised to €30 per tonne in Budget 2019, rising to €80 per tonne by 2030.

"We are very much of the view that if we are going to meet our climate change obligations, then we will have to grasp the nettle in increasing the carbon tax over the next couple of years, but very much recognising that some people who are in poverty or who are the most vulnerable can be the worst affected by that, so there will have to be compensatory measures," Mr Varadkar said.

Any increase in the tax will have to be cleared by Fianna Fáil - but Mr Varadkar has said it "is necessary as part of our climate change obligations" to address the tax.

There are also plans to increase social welfare payments above inflation to "retain their value" but the actual increase has not yet been decided.

Fianna Fáil's Willie O'Dea broke ranks in recent days to call for a 'fiver for all' approach in the Budget and said he would be "very slow" to support a budget without such increases.

The Limerick city TD is seeking a €5 State pension increase and a similar increase in benefits for widows, carers, lone parents and the sick. He will not be seeking increases in the Jobseeker's Allowance.

Social Protection Minister Regina Doherty previously appeared to move to play down the prospect of such increases in the Budget.

There are plans being teased out on a form of jobseeker's for self-employed people, Mr Varadkar said.

He said the Government plans to restore the carers' support grant, increase carers' allowance and disability allowance, and introduce a 12-week draw-down period after someone stops being a carer in order for them to adjust.

Focus on supporting families will include proposals for two weeks' paid parental leave, a period that new parents can share between them.

As expected, workers are not in line for a tax giveaway in the upcoming Budget, but it is expected the Government will work to raise the threshold at which a person begins to pay the highest rate of tax.

"People on very modest incomes pay the highest rate of income tax," Mr Varadkar said.

He added that the tax package in this year's Budget will be "modest" along the same lines as last year.

Mr Varadkar said during his summer briefing the Government plans to go beyond the 2:1 split on investment in public services versus tax cuts which was set out in the confidence and supply agreement.

Budget negotiations are at an early stage and the Government is facing a tough balancing act to ensure measures to satisfy Fianna Fáil and the Independent Alliance.

Concern is increasing that demands from both sides - including for a so-called 'granny grant' from Minister Shane Ross to pay grandparents a €1,000 allowance for minding their grandchildren - mean the Budget now has the potential to force a general election.

Irish Independent

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