Over the past number of years, budgets have reduced income tax and the universal social charge, USC, modestly by approximately €300 million per year. To do that and maintain increased spending, there had to be increases in taxes elsewhere. Last year, for example, commercial stamp duty went from 2% to 6%. That yielded approximately €400 million, which paid for the tax reductions on that occasion. In this year's budget, income tax and USC reductions of approximately €300 million, or €350 million in a full year, were paid for by a significant increase in VAT on food, accommodation and hotels, raising about €560 million from the hotel and food sector in a full year.
Last weekend, the Taoiseach promised to raise the income threshold at which people paid the higher rate from €35,000 to €50,000 over the next five years, amounting to approximately €3 billion in that time or anything from €500 million to €600 million per year. That is double the tax packages of the past two or three years. Clearly, other taxes will have to increase just like this year and last year.
We know that carbon tax was on the agenda this year, but the Government decided not to increase it. The ESRI in its study has stated that there will have to be dramatic increases in carbon tax to make up for our failure in terms of our climate change agenda. Currently, households are paying about €200 in carbon tax. According to the ESRI, that could go to €3,000 per year per household by 2024. That will happen over the next five or six years as income tax is reduced. All of the scenarios in the ESRI's study are stringent ones, with the figure I cited at the bottom end of the scale. There could potentially be higher carbon tax increases.
On 5 August, the Taoiseach said that, if we were going to meet our 2020 climate change targets, which we clearly will not, we would have to grasp the nettle in pricing carbon and increasing the carbon tax in the next couple of years. He stated that next year's budget, which is the one we have just passed, had to include an increased carbon tax - it did not for some reason - if Ireland was to meet its obligations on tackling climate change and that the Government was working on a set of proposals. The Minister for Finance, Deputy Donohoe, has also stated that carbon tax would have to be increased.
Can the Taoiseach give us the trajectory of how much carbon tax will rise each year over the next five years? Can he give the House the same precision on annual carbon tax increases over that time as he has given us regarding income tax reductions over the next five years?