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Dáil Éireann debate -
Thursday, 28 Apr 2022

Vol. 1021 No. 3

Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions

Tax Code

Pearse Doherty

Question:

1. Deputy Pearse Doherty asked the Minister for Finance the categories of energy for which he sought flexibility in relation to VAT in his written correspondence with Commissioner Gentiloni on 10 March 2022 and any subsequent correspondence or communication with the European Commission; and if he sought a special derogation or flexibility on VAT applied to home heating oil. [21562/22]

I extend my condolences to the Minister, Deputy Donohoe, and that of my party on the passing of his mother, Caitlin Donohoe. Our thoughts and prayers are with him and his extended family at this difficult time for him.

I welcome the Minister of State to take oral questions this morning. The first question is to ask the categories of energy for which the Minister sought flexibility in regard to the VAT in his written correspondence with Commissioner Gentiloni on 10 March 2022 and any subsequent correspondence in communication with the European Commission, and if he sought specifically a special derogation or flexibility on VAT applied to home heating oil.

I thank the Deputy for raising this, and I join other Members in giving condolences to the Minister, Deputy Donohoe, on the sad passing of his mother.

In regard to the question at hand, the Minister for Finance and the Government are very conscious of the negative impact the rapid rise in energy costs is having on society. The Government is doing everything within its powers to address the issue. However, it is not possible to insulate people completely from these increases as factors causing them, such as the war in Ukraine, are outside our control. We believe, however, that the tax reductions introduced strike a balance between passing a significant benefit to consumers while managing the tax base and respecting the constraints of the energy tax and VAT directives at EU level.

In regard to the Minister's engagement with Commissioner Gentiloni, the Deputy should note that, in his correspondence, the Minister outlined the various actions he had taken to mitigate the cost of energy for households and businesses in budget 2022 as well as the additional €505 million package in February. He also outlined the further March package of measures providing for a reduction in excise duty on petrol of 20 cent, on diesel of 15 cent, and on marked gas oil of 2 cent.

The Minister acknowledged the importance of the energy tax and VAT directives, in particular the framework they provide for a consistent application of these taxes across all member states. However, in the context of the significant increases in energy prices, he outlined the limitations of the recent changes to Annex III of the VAT directive, given the reduced rates may only be applied to gas and electricity. Therefore, other fuels remain outside the scope of the reduced rates. In this context the Minister asked the Commission to consider allowing member states to respond to the crisis with greater flexibility than is permitted under the directives. On 23 April, Commissioner Gentiloni wrote to all ministers of finance in regard to energy and energy prices, responding to the points the Minister, Deputy Donohoe, and his European counterparts had raised. The Commissioner highlighted the current flexibility provided by EU directives, including the newly agreed amendment to VAT rates. The Commissioner indicated the Commission does not envisage any further revisions of the EU taxation framework to respond to the current crisis. The Minister, Deputy Donohoe, and his officials will continue to engage with the Commission and with other European counterparts to seek the maximum degree of flexibility for member states to respond to the current energy crisis.

As the Minister of State will know, Sinn Féin has been calling for the Government to engage with the Commission to secure a VAT reduction on household energy bills since November of last year. We did that because we understand and are aware of the provisions of the EU VAT directive and the imperative to retain our existing derogations, and that is why we called for engagement back then. We understood the process takes time, but I remind the Minister of State that these requests were met with opposition and derision from Government benches and indeed Government backbenchers. While I welcome the fact the Government has belatedly adopted our position, I regret it was not until 10 March of this year that the Minister formally wrote to the Commissioner in this respect. We have not seen the letter, we do not know the specifics of the request he made, and what the Minister of State read into the record in regard to this question, which is about home heating oil, did not mention anything in that regard. I will ask again whether the Minister, in any of his engagements with the Commission, sought any flexibility with regard to VAT as it applies to home heating oil.

Our context did mention the issue of VAT and the VAT directives in that correspondence from the Minister, and as the Deputy is aware, following lengthy negotiations, amendments to the VAT directive were provisionally agreed in December 2021 with final sign-off on the amended text at ECOFIN, in April 2022. This new arrangement came into effect on 5 April, so the Deputy can see discussions in regard to this were ongoing well before the end of last year. Under the new arrangement, Annex III of the VAT directive was expanded to include gas and electricity. This means Ireland can apply the reduced 9% rate to these products in line with other goods and services. The Government has made the decision to avail of the flexibility from 1 May, which is the start of the next period.

In regard to VAT on the heating oil, this new arrangement on VAT rates also preserved Ireland's historical derogation in regard to fuel and oil, despite it not being included in Annex III. It is on this basis that Ireland applies the 13.5% reduced VAT rate to supply of fuel and oil for domestic and commercial purposes. The current 13.5% rate applies to energy products known as a part rate, and I think the Deputy is aware of that.

We are going to go for it now for the third time and let us see if we can make any progress on this, because the question is very simple. Did the Minister at any time in his correspondence with the Commissioner on 10 March seek flexibility or a reduction in regard to VAT as it applies to home heating oil?

Home heating oil is the source of energy that has gone through the roof most. It has increased by 127% in the past 12 months. It has more than doubled. A third of households in the State use home heating oil as the primary source of heating their homes, and that increases to two thirds in the west and north west. Two thirds of households on the Border use home heating oil as their primary source of heat, compared with 8% in Dublin. Some 69% of households in Dublin use gas compared with 4% in Border counties. We must look at the regional disparities here.

I am coming back to the Minister of State again. The Minister wrote on 10 March, but we already knew from December, because it was in draft form, that he would be able to reduce VAT on energy and on electricity and gas. The question relates to home heating oil. Did the Minister ask in that correspondence for flexibility on a reduction on home heating oil? If he did not, will the Minister now do the job he should have been doing for the past six months?

As the Deputy will be aware, the current VAT rate of 13.5% applies to energy products. It is a part rate and cannot be reduced below 12%. It should be noted that member states must apply their standard rate of VAT to this product. Our historical derogation covered electricity, gas, fuel and oil. This meant Ireland applied the rate of 13.5% to those products in comparison with other European countries which applied it at a rate of more than 20%. Had Ireland adopted the reduced rate on the basis of Article 102, it would have automatically removed gas and electricity from the historical derogation, meaning they would have reverted to the standard rate at the end of the temporary period. The VAT directive now provides for the necessary flexibility for gas and electricity. As the Deputy has highlighted, home heating oil is the heating source of choice for many households in Ireland, including many in his constituency and mine. The Government has introduced a large range of other measures to help people with the cost of living, which also includes those measures.

So the answer is no, is it? The Minister did not ask.

Tax Code

Gerald Nash

Question:

2. Deputy Ged Nash asked the Minister for Finance if he intends to introduce a windfall tax on the extraordinary profits of energy companies to fund measures to combat the rising cost of energy for households and enterprises; and if he will make a statement on the matter. [21422/22]

Pearse Doherty

Question:

3. Deputy Pearse Doherty asked the Minister for Finance if he will consider introducing a windfall tax on excess profits made by energy suppliers in the context of the rising cost of energy; if his Department has undertaken any preparatory work on the introduction of such a tax and the revenue it could raise; and if he will make a statement on the matter. [21563/22]

Does the Minister for Finance intend to introduce a windfall tax on the extraordinary profits of energy companies to fund measures to combat the rising cost of energy for households and enterprises? Earlier this month the Minister indicated that he was finally, as it was put, evaluating the potential of slapping energy suppliers with windfall tax bills. I want to know if that will come to fruition.

I propose to take Questions Nos. 2 and 3 together.

I am aware the European Commission has confirmed that EU member states can consider imposing temporary tax measures on windfall profits of energy providers and use the revenue generated to provide consumers with relief from high prices. Officials in the Department and in the Department of the Environment, Climate and Communications are evaluating the potential for such a proposal. The Deputy will appreciate that significant work would have to be undertaken as part of any such evaluation.

With regard to tax generally, the trading profits of companies in Ireland are typically taxed at the standard corporation tax rate of 12.5%. Some of the main features of the current regime are its simplicity and that it applies to a broad base. Changing this rate or imposing additional levies on certain sectors could have unforeseen consequences. There is a risk of such taxes leading to higher consumer costs and negative impacts on investment in the energy sector, in particular in the area of renewables. These are the factors that must be taken into account in terms of whether it will affect investment.

The Government has taken a number of measures to reduce the burden on consumers in relation to the cost of energy. This includes providing €200 worth of energy credit to every household in the country, reductions in fuel excise duty, and a reduction in the VAT rate for electricity and gas.

In relation to energy policy, which is the remit of my colleague, the Minister for the Environment, Climate and Communications, Deputy Ryan, a well-functioning EU electricity market remains crucial for the integration of the internal energy market at EU level and for providing investment signals for the integration of new renewables, which are essential ultimately to break our dependence on fossil fuels. The best long-term approach for Ireland to insulate consumers from volatility on international wholesale energy markets is to invest in energy efficiency and renewable energy. Cutting our dependence on fossil fuels and generating power from our own renewable sources will ensure a cleaner, cheaper energy future in the long term. Electricity and gas retail markets in Ireland operate within a European regulatory regime wherein electricity and gas markets are commercial, liberalised, and competitive. Responsibility for the regulation of the electricity and gas markets is solely a matter for the Commission for Regulation of Utilities, CRU, which is independent of the Minister.

The renewable electricity support scheme, RESS, is Ireland's flagship policy to deliver on the Government's target of up to 80% renewable electricity by the end of the decade. Electricity technologies now compete through regular auctions under the RESS, as well as through other routes to market such as corporate power purchase agreements. The RESS contains strong consumer protection measures, with wholesale market revenues above the auction price returned to electricity consumers through the public service obligation levy. Renewable energy sources, such as wind and solar generation, reduce electricity consumer costs by lowering wholesale electricity prices during periods when they are generating power, highlighting the need to accelerate energy system decarbonisation to reduce reliance on fossil fuels.

The war in Ukraine has dramatically concentrated EU efforts to address European dependence on Russian oil and gas through proposed new measures to diversify fossil fuel imports, enhance security of supply, and accelerate energy system decarbonisation, as set out in the recent REPowerEU communication. The European Commission is working closely with member states to protect the resilience of Europe's gas security of supply through solidarity measures. Both the International Energy Agency and the EU have stressed that the current situation further strengthens collective resolve to accelerate the clean energy transition, in line with the European Green Deal.

I welcome the fact the Government has finally come around at least to evaluating, to use the Minister's word, a windfall tax on extraordinary profits. This is a proposal the Government voted against in January when the Labour Party included it as part of our cost-of-living motion. We know energy companies like the ESB, which are not immediately tied into rising prices, made €679 million in profits last year, as thousands of homeowners struggled to pay soaring energy bills. Next week, ESB's Electric Ireland will go ahead with a near 25% increase in electricity and gas prices. We know that a conservative estimate, based on 2020 figures, suggests this could raise to the tune of €60 million to help pay for cost-of-living supports for households. Will the Minister of State give us a clearer indication as to the timelines for the completion of the evaluation?

There were 35 energy price increases last year alone. We know the price rises are stark. We can see, for example, that Bord Gáis has increased its price by 82% since October 2020 and its electricity price has gone up by 72%, increasing the average energy bill by €1,313. The increases are massive. We understand the driving forces behind this: the price of fossil fuels, the energy spike in the wholesale market last year, several power plants being out of action due to low wind at the time, and the war in Ukraine, but we must ensure shareholders are not profiting from these difficulties. Many suppliers have stated they will not price gouge, but it is not good enough to take them at their word. The Minister of State says the Government is looking at an analysis of the situation. When will the analysis be completed and when will a decision be taken? Is the Government monitoring the financial statements of energy suppliers at this time and will it monitor them in the future? What does the Minister of State believe is a reasonable profit margin for suppliers during this crisis?

I thank the Deputies. Windfall taxes on energy companies require careful consideration. A windfall tax could create unintended consequences. For example, it could disincentivise investment in renewable energy generation, as there would be uncertainty on profits returned for generators entering the market. Interventions such as windfall taxes may have the potential to reduce the energy costs for consumers through redistribution of additional tax revenues, but they may also themselves be a driver of costs to consumers in that, if a company's tax rate changes, it will factor that into its return on its investment and it will potentially add to the amount it will want to charge for its product. I must stress it is a two-way situation.

It is a complex area. I have stressed that our corporation tax, which is 12.5%, is clear and simple, and the more variations we have to it, the more complicated it is. We are working with the European Commissioners and other member states to consider a policy proposal, outlined under REPowerEU, designated to aid consumers and businesses to deal with increasing costs of energy. The best long-term approach for Ireland is to insulate consumers from volatility on the international wholesale market by investing in energy efficiency and renewable energy.

Cutting our dependence on fossil fuels and generating power from our own renewable sources will ensure cleaner, cheaper energy into the future. I believe that is the direction in which we need to travel.

That will not cut the mustard with the businesses and households I deal with in my constituency. The Spanish Government was able to do this. It introduced a windfall tax on energy companies last September, therefore, there is a precedent set in the European Union on this. I want to give some solace to the small businesses and householders in my constituency. The Spanish case is a clear example of how funds generated through the windfall tax are paying for the country's VAT energy tax cut introduced in the same month last year. There is proof of concept and this tax is working in another EU member state. I ask that greater urgency be given to this concept, thereby bringing to fruition a windfall tax on profits.

In March, the European Commission issued a communication to all member states in addressing the energy crisis. Part of that, as the Minister of State may be aware, included the introduction of a windfall tax on energy producers and suppliers. This was echoed by the International Energy Agency, IEA, which warned that, given today's market design, high gas prices in Europe feed through to the wholesale energy markets in ways that can lead to windfall profits for companies. The IEA warned that current wholesale energy markets create the potential for profits that are well in excess of the cost related to operation and capital recovery. The agency estimated that under current conditions, this could lead to excess profits of up to €200 billion. We do not know exactly how this will translate in the Irish context, but we have had a glimpse with the ESB recording operating profits of €679 million. While the ESB is a semi-State body, other suppliers are not, with windfall profits likely to benefit their private shareholders.

Has the Minister considered the design of a windfall tax? Again, I repeat my question, and maybe the Minister of State might answer this one. What does he believe is an appropriate profit margin for energy companies at this time when households are suffering so much from high energy costs?

I again thank the Deputies. I confirm that the Government is working with the European Commission and member states to consider the policy proposal outlined in its REPowerEU document designed to aid consumers and businesses to deal with the increasing cost of energy. A number of potential measures have been set out by the European Commission under that initiative at European level, including introducing a price cap on the wholesale price of electricity, price limits for trading gas in the EU, and negotiating volume and price with international suppliers. Such interventions, including windfall taxes, may have the potential to reduce energy costs for consumers, but they may also become drivers of cost. There is a plus and a minus to that equation. It is a relatively new issue for which there is not a timetable. The matter is being considered in that context.

I wish to put on the record, in the context of people requesting a windfall tax on energy generators, the ESB through Electric Ireland has 47% of the market, so we have to start on that basis. If people want to put a windfall tax on the ESB in regard to Electric Ireland, they might want to consider that case. That is a substantial implication of what is being requested.

Tax Credits

Róisín Shortall

Question:

4. Deputy Róisín Shortall asked the Minister for Finance if he will report on the research that has been carried out in his Department on the introduction of refundable tax credits; his views on the benefits of such a policy as a means of ensuring greater equity in the tax system as well as a means of addressing the widespread issue of low pay; and if he will make a statement on the matter. [21016/22]

At the outset, I extend my condolences to the Minister, Deputy Donohoe, on the passing of his mother.

My question relates to the issue of refundable tax credits. At this point in the year, six months out from the budget for which preparation is underway, it is important that we put this issue on the agenda, because we have been talking about it for quite some time and there are many benefits to it. What research has been done within the Department of Finance, and what is the Minister of State's view on this proposal?

The position is that the matter of refundable tax credits was looked at in some detail in 2002 by the working group established under the programme for prosperity and fairness. The group was chaired by the Department of Finance and included representatives from Irish Congress of Trade Unions, IBEC, various farming organisations, the community and voluntary pillar, relevant Departments and the Office of the Revenue Commissioners.

Notwithstanding the passage of time, many of the findings and conclusions identified by the working group remain relevant and valid today. The working group found that there were significant disadvantages with such a system. These included the potential negative impacts on the incentive to work, which needs to be a priority, as well as the impact on labour supply, labour force participation and overall productivity and output.

The Commission on Taxation and Welfare, in its 2009 report, also did not recommend the introduction of refundable tax credits. Furthermore, the annual cost of providing refundable tax credits would be extremely expensive. There would also be operational and technical issues.

Refundable tax credits can have a negative impact on the incentive to work and may be inconsistent with the objective of encouraging as many people as possible to join or remain in the workforce. In addition, I note the minimum wage increased from €8.65 per hour to €10.50 per hour, between 2016 and 2022, in line with the recommendations of the Low Pay Commission and in an effort to support those on lower incomes.

Furthermore, the income tax and universal social charge, USC, changes that the Government introduced in recent budgets will benefit those who currently pay income tax or USC, while maintaining the breadth of the tax base and the progressive nature of the tax system.

On the issue of equity, it should be noted that Ireland has one of the most progressive personal income tax systems in the world, which plays a crucial role in the process of income redistribution. This has been verified by the Economic and Social Research Institute, the OECD and the International Monetary Fund.

Finally, I reiterate that the Minister has no current plans to introduce a system of refundable tax credits.

That is quite disappointing because the situation has changed considerably since 2002, the year in which the research the Minister of State mentioned was conducted, in addition to the research from 2009. There is a substantial problem in this country in regard to low pay.

Some 22% or 23% of the working population is trying to survive on low pay and there is a significant problem with people in employment who are very poor. It is sometimes suggested that the solution to the problem of poverty is to get a job but we know, for hundreds of thousands of people in this country, getting a job means still being on very low income and struggling to survive. One of the key benefits of refundable tax credits is that they support people on low incomes and keep them out of poverty. On that basis, and given the scale of the problem with low incomes, as well as the lack of progress in moving to a living wage in spite of the commitment in the programme for Government, I ask that the Minister of State reconsiders that.

The Deputy is quite right; much has changed since those reports were produced. The principal change was the introduction of and increase to the minimum wage from €8.65 to €10.50. We would all like if this rate was higher, but that is a significant increase in the context that we had no provision for a minimum wage in legislation when that work was commissioned.

Social Justice Ireland said that the changes in the last two budgets would benefit a one-income married couple by as much as 39 cent a week. That is simply incorrect; it is just not true. The changes alone announced in the budget will benefit a one-income married couple with no children, who earn €20,000 per annum, by €445 per annum or €8.76 per week. In addition to the majority, one-income married earners receive a minimum of €165 per annum or €3.17 per week. This monetary gain will be even greater for married one-earner couples with children. Various changes were announced as part of the overall budget package, which the remark by Social Justice Ireland did not take into consideration, such as the increases in core social-welfare payments, the living alone allowance, the working family payment, the back to school allowance and many other payments.

The Minister of State said we have a progressive tax system. Yes, we do but it is becoming less progressive with tax changes. One of the ways that can be equalised is to introduce refundable tax credits. Ministers have been talking about changes to the tax system in recent times. Changes to the tax system and improvements in tax credits do not assist people who do not pay tax, and that is the difficulty. Unless the Government introduces the measure of refundable tax credits, the gap between those on low incomes and those on middle and higher incomes will widen.

The other issue is that if low-paid work is made to be more beneficial, if there were a refundable tax credit, it would widen the gap between welfare and employment. That is what we should be aiming to do; to make work pay. The work by Social Justice Ireland has shown that and it has produced the figures to support it. There is a strong case there and I ask the Minister of State to reconsider the decision.

I understand what the Deputy is saying. Looking at it strictly, the only benefit the State can confer on people is solely through the taxation system. I understand that point from a very narrow perspective. That point of view may or may not have validity but, looking at it in the broader context of low-income families, the arguments being put forward have to be reviewed in a wider context. For example, the working family payment scheme is very important, especially for people who are at work. If they have one or two children, they get a significant extra enhancement to their weekly income through the working family payment. If those schemes are-----

What if they do not have children?

Yes, it is a matter of prioritisation. We have issues in respect of medical card benefits. There are a number of other benefits-----

Not if you are working and you do not get a medical card.

You will if you are on a low income-----

-----and people on the minimum wage. Many families are entitled to get medical cards.

You do not. Check the income limits.

There are broader issues than that of income tax.

There are. In-work poverty is a broad issue that needs to be addressed.

Energy Prices

Pearse Doherty

Question:

5. Deputy Pearse Doherty asked the Minister for Finance if he has considered reducing excise duty as it applies to home heating oil in accordance with the excise directive; and if he will make a statement on the matter. [21564/22]

Last night, the Minister of State and his colleagues voted on a Sinn Féin amendment that would have removed excise duty from home heating oil on a temporary basis. He and his colleagues in the Government voted against it. It was a major mistake. Removing excise duty from home heating oil would have reduced the cost of a tank fill by more than €100 and cost less than €74 million were it removed until October. The Government's refusal to do so was ideological and nothing else. Will the Government reconsider and commit to examining this measure?

As the Deputy said, we had a discussion on this issue last night. It is no harm to revisit the matter here. It is important to do so on this occasion. Ireland's taxation on fuel is governed by European Union law as set out in Directive 2003/96/ED, commonly known as the energy tax directive, ETD. The ETD prescribes minimum tax rates for fuel with which all member states must comply. ETD provisions on mineral oils are transposed into national law in the Finance Act 1999, as amended. This Act provides for the application of mineral oil tax, MOT, to specified mineral oils, such as petrol, diesel and kerosene, that are used as motor or heating fuels. MOT is comprised of a non-carbon component and a carbon component. The carbon component is commonly referred to as carbon tax and the non-carbon component is often referred to as "excise", "fuel excise" or "fuel duty". In complying with ETD minimum rates, total MOT rates are taken into account.

Kerosene used for heating purposes attracts a reduced rate of MOT which is comprised entirely of a carbon component. The ETD minimum rate of taxation on kerosene used for heating purposes is set at zero. When introducing the ten-year carbon tax trajectory in 2020, the Minister deliberately scheduled rate changes on heating oil to come into effect at the end of the heating season. Therefore, the next scheduled increase in the carbon component of MOT on non-propellant fuels, such as kerosene, will come into effect on 1 May.

As the Deputy will be aware, the carbon tax trajectory is a key element of the Government's decarbonising strategy. The Government remains committed to the important signal that maintaining the carbon tax trajectory sends to society. I note that due to recycling of carbon tax revenue for investment in energy efficiency measures and targeted welfare payments, the carbon tax has been recognised as a progressive policy supporting climate policies. Therefore, the Minister does not intend to reduce the carbon component of MOT applied to kerosene.

The Minister of State might be aware that he and some of his colleagues are involved in a deliberate campaign of misinformation. Indeed, it is right out of the Trump playbook. Fine Gael representatives online, on radio and on television have all claimed no excise duty applies to home heating oil. I suspect this was done to distract households who use home heating oil, and those who are struggling with the price increases they have seen, from Government inaction. It is untrue. Excise duty is applied to home heating oil at a rate of €84.84 for 1,000 l and will rise on Sunday, 1 May, to €103.83 for 1,000 l. Under the European excise directive, this could be reduced to zero. The Minister of State has admitted that. This would reduce the cost of filling a tank by €118 when VAT is included.

Why does the Minister of State believe that we should not reduce the burden on these households when the price has increased by 127% in the past 12 months? Why does he believe that we should actually increase the burden on these very same households on Sunday evening?

Carbon tax is part of Ireland's overall decarbonisation policy. Nobody likes a tax, but we cannot on the one hand support all the climate change measures and on the other oppose the inclusion of carbon tax as part of that programme. While the financing side of it is always the hard bit, people agree with the principle. We cannot implement our principles unless we raise the revenue to do so.

In the context of the increases in consumer prices in recent months, in February the Government approved a package of measures to the value of €505 million, including an energy credit of €200 including VAT, to mitigate the impact of increases in the cost of living. The key drivers of these inflationary pressures are as a result of global energy supplies. Everybody will be aware that the packages announced in the budget earlier this year, and this week, add up to approximately €2 billion in total. These are compensatory measures for the increases that are coming through relating to carbon tax, which will be fully offset by the various measures the Government has introduced.

The price of home heating oil is the single largest increase on goods and services in this State in the past year. That is what is happening. With that information, the wise men and women in Government have said, "You know what we should do? We should increase it further on Sunday. Let us put another €20 on the cost of filling your tank on those hard-pressed workers and families." I am making the point that the Government has the ability under EU law, with no restrictions whatsoever, to reduce the cost of filling a tank by €118 by Sunday. We can do that on Sunday night. We can change direction. Instead of the Government putting it up, we can reduce that cost on a temporary basis. To do that until October would cost us €74 million, which is well affordable.

The second point is that no tax is hypothecated in this State under law. No tax is ring-fenced for any purpose. The Government should stop this nonsense that if a carbon tax on home heating oil is reduced to take the pressure off workers and families, we will somehow be penalised in respect of a just transition, or a retrofitting programme and so on, because it simply does not stack up. This is ideological. This is a Government that is completely out of touch, that has seen the largest price increase in energy in this State on a certain oil and has decided its response will be to increase the cost of that oil further. This is daft stuff and the Government needs to change direction.

I hear what the Deputy is saying, but the collection of carbon taxes is a key ingredient of our climate plan. It is no good having a plan unless we raise some money to cover it. I understand the technical point the Deputy made but, in an overall context, there is no point in having a plan to reduce carbon emissions and then saying we will not have any tax specifically for that purpose. It is important that the people know they are contributing. The majority of people generally support the moves to decarbonise Irish society and the move to renewable energy, especially offshore wind, and solar, but they know it costs money. They know we have to raise taxes. To do everything the Government does we have to raise taxes. I understand the point the Deputy made and that is why we have had a series of measures to mitigate the cost of what is coming in on 1 May.

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