Financial Resolution No. 3: Carbon Charge on Mineral Oils

Tánaiste and Minister for Foreign Affairs and Trade (Deputy Eamon Gilmore)

I move:

(1) THAT for the purposes of the tax charged by virtue of section 95 of the Finance Act 1999 (No. 2 of 1999), that Act be amended, with effect as on and from 7 December 2011—

(a) in section 96(1B) (inserted by section 64(1)(f) of the Finance Act 2010 (No. 5 of 2010)), by substituting “A is the amount to be charged per tonne of CO2 emitted, being €20 in the case of petrol, aviation gasoline and heavy oil used as a propellant or for air navigation or for private pleasure navigation, and €15 in the case of each other description of mineral oil in Schedule 2A” for “A is the amount, €15, to be charged per tonne of CO2 emitted”,

(b) by substituting the following for Schedule 2 to that Act (as amended by section 42 of the Finance Act 2011 (No. 6 of 2011)):

"SCHEDULE 2

RATES OF MINERAL OIL TAX

(With effect as on and from 7 December 2011)

Description of Mineral Oil	Rate of Tax
Light Oil:
Petrol	€587.71 per 1,000 litres
Aviation gasoline	€587.71 per 1,000 litres
Heavy Oil:
Used as a propellant	€479.02 per 1,000 litres
Used for air navigation	€479.02 per 1,000 litres
Used for private pleasure navigation	€479.02 per 1,000 litres
Kerosene used other than as a propellant	€38.02 per 1,000 litres
Fuel oil	€60.73 per 1,000 litres
Other heavy oil	€88.66 per 1,000 litres
Liquefied Petroleum Gas:
Used as a propellant	€88.23 per 1,000 litres
Other liquefied petroleum gas	€24.64 per 1,000 litres
Coal:
For business use	€4.18 per tonne
For other use	€8.36 per tonne

and

"SCHEDULE 2A

CARBON CHARGE

(With effect as on and from 7 December 2011)

Description of Mineral Oil	Rate
Light Oil:
Petrol	€45.87 per 1,000 litres
Aviation gasoline	€45.87 per 1,000 litres
Heavy Oil:
Used as a propellant	€53.30 per 1,000 litres
Used for air navigation	€53.30 per 1,000 litres
Used for private pleasure navigation	€53.30 per 1,000 litres
Kerosene used other than as a propellant	€38.02 per 1,000 litres
Fuel oil	€45.95 per 1,000 litres
Other heavy oil	€41.30 per 1,000 litres
Liquefied Petroleum Gas:
Used as a propellant	€24.64 per 1,000 litres
Other liquefied petroleum gas	€24.64 per 1,000 litres

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

This resolution provides for an increase in the carbon charge component of the mineral oil tax on petrol and auto-diesel, with effect from midnight tonight. The carbon charge for those fuels is being increased from the equivalent of €15 per tonne of carbon dioxide emitted to €20 per tonne. When VAT is included, the increase on petrol is just under 1.5 cent per litre, and the increase on diesel is just over 1.5 cent a litre. The increase also applies to the mineral oil tax rate for aviation gasoline, which is aligned to the petrol rate, and the rates for heavy oil used for recreational flying and boating, which are aligned to the auto-diesel rate. It is intended that the same increase from €15 to €20 per tonne of carbon dioxide emitted will be extended to all other types of mineral oils and to natural gas from 1 May next year, and the necessary provisions for this will be included in the Finance Bill.

The yield from the carbon charge increase across all fuels is expected to be around €80 million in 2012 and €109 million, inclusive of VAT, in a full year. The impact on the consumer price index is estimated at around 0.09% in a full year.

Deputy Billy Kelleher

There has been a six-week reduction of the fuel allowance but has this been poverty proofed by the Cabinet? There has been a strong policy commitment to increase carbon taxes but there was always a requirement for poverty proofing to ensure it would not impact on the quality of life of the most vulnerable. Has the Cabinet taken on that broad belief that we should poverty proof? If so, will it publish the documentation on this particular issue, including the impact it will have, which was highlighted to the Government when it made the decision to increase carbon tax?

Deputy Caoimhghín Ó Caoláin

I absolutely oppose this proposition to increase excise duties on petrol, diesel and other fuels, which will have a serious impact. Once again, as with the previous proposition and indeed with the next, the target is almost the same. It will have a particularly negative impact on those involved in Border communities, including filling station owners and employees. We are creating a further imbalance in the cost of fuels north and south of the Border, thus kinking everything. The next proposition concerning VAT will further fuel — not wishing to pun — matters at this point in time. All the points I made about the last proposition apply once again to this one. It is a further tax on access to work and must be seen in the context of an ever-depreciating economic situation. People are currently finding it impossible to survive and the Government is making a bad situation even worse. We vehemently oppose this proposed increase.

An Leas-Cheann Comhairle

I call Deputy Seamus Healy. I ask Deputies to be brief because we are short of time.

Deputy Seamus Healy

The implementation of this carbon tax on home heating oils from May 2012 is obscene because it is an attack on the elderly. Yesterday, we saw a 20% reduction in the fuel allowance and, in addition, gas and electricity allowances were cut from 1 September this year. Independent professional research has shown that the lack of heat in wintertime leads to the deaths of elderly people from hypothermia. Age Action Ireland has already ask how low this Government can go. I would like to see this proposal withdrawn immediately.

Deputy Catherine Murphy

People on the front line, such as the Society of St. Vincent de Paul, have specifically mentioned the issue of fuel poverty. In this regard, they have asked that the fuel allowance rate should not be cut. The number of weeks for the fuel allowance has been cut while fuel costs have been increasing excessively, so people must pay more. I am completely opposed to this measure which will subject people to terrible hardship. Ordinary families are terrified of utility bills.

The Tánaiste did not specify how this carbon tax will be used. My understanding was that carbon taxes, if applied, were supposed to be used progressively. For example, will it be ring-fenced for retrofitting houses? If so, at least something could be gained from it rather than just having a straight tax.

Deputy Timmy Dooley

Will the Tánaiste let us in on the thinking that decided not to introduce this home heating oil levy until next May? What advance knowledge does he have of next winter's weather conditions that makes him expect that things will be any different next winter?

Deputy Jerry Buttimer

Does the Deputy mean this winter?

Deputy Timmy Dooley

Has the Tánaiste had some advance sighting of a weather forecast or does be believe that economic matters will be so much better by then? Could he let us in on that, please?

Deputy Noel Coonan

The price is going down next May.

Deputy Timmy Dooley

The Deputies opposite will get plenty of opportunity to vote before the night is out. Was any serious consideration given at Cabinet to the issue of marked fuel oil in the agricultural sector? A number of organisations provided information to the Cabinet about this. They showed that if there was an equalisation of duty on agricultural and motor fuel, together with a rebate system for approved users, it could have raised in the region of €160 million. That would thereby take out this illicit trade which causes major environmental problems along the Border. In addition, it surely has a significant impact on the State's capacity to levy appropriate taxes. Will the Tánaiste let us in on his discussions about that? Was any serious consideration given to the implementation of this matter?

Deputy Michael Healy-Rae

I am totally opposed to this measure, as are all the motorists in Ireland travelling the roads. The price of petrol and diesel is currently double what it should be, but if prices were halved they would still be costly enough for the public. If the Tánaiste thinks it is okay to put off the heating oil increase until May 2012, is he expecting every other winter to be mild so that the elderly will not need any home heating oil? I am totally opposed to this measure. I would like to see Government Deputies doing the right thing and voting against it.

Deputy Richard Boyd Barrett

Deputies Seamus Healy and Catherine Murphy have made the point that this measure will lead to more winter deaths. Delaying it until next May does not make it any more palatable. It is a vicious attack on the most vulnerable sector of society. There is a double whammy on petrol, which will be economically damaging because VAT is also being increased. All these cuts will disproportionately hit the least well-off.

Deputy Pádraig Mac Lochlainn

I have been listening to some of the Deputies heckling, but they represent rural constituencies so I would like to ask them a question. Do they believe they have a world-class public infrastructure in their rural constituencies? Do they believe it is fair to impose a carbon tax on those in rural areas when there is no public transport alternative in many parts? Do they believe in their hearts that there are adequate bus services to workplaces, schools or post offices in their communities? There have been cutbacks to all those rural transport schemes. If this money was being ring-fenced for a revolutionary approach to public transport infrastructure in rural areas, we could buy into it, but that is not happening.

Have Government Deputies been listening to hauliers in their rural constituencies? Many hauliers have had to close their businesses due to the crazy cost of diesel in recent years. Where is the support for them? How can we build the economy on that type of approach?

The cost of home heating oil will hit families who are struggling. Deputies opposite are filling up their oil tanks too, but they should try to imagine what it is like for somebody living on the dole or trying to keep a roof over their head on a basic wage. I am challenging rural Deputies on the Government benches who will have to answer for themselves when they go back to their constituencies.

Deputy Brendan Griffin

How much is it in the North?

Deputy Pádraig Mac Lochlainn

They will have to answer all those questions from their constituents when they go home.

(Interruptions).