Tuesday 22 October 2019

Kevin Doyle: 'Brexit will be key focus of Budget, but expect the row over carbon tax to be a close second as dispute heats up'

Finance Minister Paschal Donohoe. Photo: Collins
Finance Minister Paschal Donohoe. Photo: Collins
Kevin Doyle

Kevin Doyle

The carbon tax could be rebranded as 'the green tax' as the Government seeks to avoid a repeat of the water charges debacle.

Finance Minister Paschal Donohoe is strongly veering away from a €10 hike to the tax in the Budget - despite repeated warnings that he must take action.

Instead, the rise is likely to be around €6-€7 per tonne of carbon which will see a litre of petrol and diesel rise by close to 2c. A number of Fine Gael ministers are deeply worried the increase could spark a public backlash ahead of a general election.

Mr Donohoe was expected to raise carbon tax in last year's Budget but blinked at the last minute following intense lobbying from rural ministers and backbenchers.

On Budget Day, he cited Brexit and the need to secure a political consensus as the reason for not hitting carbon.

This year's Budget is being prepared on the basis that a no-deal Brexit will happen on October 31 and will also come against the backdrop of already rising fuel costs.

Mr Donohoe has already said any monies collected through carbon tax will not be treated in the same fashion as other Exchequer takings.

In the past he has ruled out ring-fencing certain incomes, such as sugar tax, for specific initiatives. However, in the case of carbon tax the minister says the revenue will be used "to either help people with the change they have to make, to deal with climate change and changing their behaviour, or we will use it investing in the kind of funds and plans that are helpful for families and for businesses making a change".

The Green Party has suggested every worker and social welfare recipient should get a 'carbon tax dividend' by way of a cheque in the post.

Party leader Eamon Ryan has called for the tax to be hiked by €20 next year - with the payback to every household to be €180.

However, Fianna Fáil is much more cautious. It has a strong say in the formation of the Budget due to its confidence and supply arrangement with Fine Gael.

It is clear it will fight against the long-predicted hike of €10 in favour of a smaller hit now combined with a longer-term trajectory.

Michael McGrath, Fianna Fáil's finance spokesperson, said yesterday they want the income to be looked upon as an environmental fund that can only be used to help reduce Ireland's carbon footprint.

"Some people say you should send it back as a cheque in the post or an electronic transfer into the bank account of every household. But from our perspective, we see such a need for additional investment and expenditure in that area that we believe there should be, in essence, a carbon budget within the overall fiscal budget," Mr McGrath said.

The money should be used to fund home energy schemes and to assist those on basic welfare who might face fuel poverty, he said.

"We need to protect the most vulnerable, and we need to make sure that those supports are there for people who need that essential work to be done so they can have an alternative and a substitute for fossil fuels."

It was Fianna Fáil and the Green Party that introduced the carbon tax in 2010 - but it has largely gone undisputed for the past decade.

There is now some concern within Fine Gael that it could become the central issue in Budget 2020.

One Cabinet minister said they plan to table a discussion on whether it should be rebranded as a 'green tax'.

The idea was debated by some at the Fine Gael think-in last week where Mr Donohoe circulated a survey in the hope of finding a consensus within his own party before taking on the rest of the Dáil.

A minister said: "Let's see how many of those backing the green wave and driving SUVs in the city will feel about a green tax."

Nobody suffered more from the water charges debacle than the Labour Party, which was reduced to just seven TDs in the 2016 election.

Its leader, Brendan Howlin, says the Government must learn from that experience and "bring the people with us" this time around.

"The only way to do that is to ensure that nobody is in fear that they won't be able to heat their home, or they won't be able to put diesel or petrol into the car," he said.

Brexit may be the key focus in the Budget but expect the row over carbon to come a close second.

Irish Independent

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