Wednesday, 19 June 2019

Questions (32)

Brian Stanley


32. Deputy Brian Stanley asked the Minister for Finance his plans to refund taxpayers paying the existing level of carbon tax on a progressive basis; and if he will make a statement on the matter. [25533/19]

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Written answers (Question to Finance)

It is a longstanding practice of the Minister for Finance not to comment in advance of the Budget on any tax matters that might be the subject of Budget decisions. Having said that, the Deputy will be aware that the Climate Action Plan 2019, published on Monday last, provided a commitment to assess a Carbon Tax trajectory of at least €80 per tonne by 2030, having regard to considerations on the social and economic impacts. 

The carbon tax is currently set at €20 per tonne of CO2 emitted.  As such, carbon commodities with a heavier carbon content have a higher carbon tax charge.  The carbon tax (VAT inclusive) for commonly used commodities is as follows:


5.64 cent per litre


6.56 cent per litre


€2.40 per 40 kilo bag


52 cents per 12.5 Kilo bale


5.76 cent per litre

Carbon tax receipts in 2018 were €431 million. Carbon tax receipts are remitted to the Exchequer.  Hypothecation is not a feature of the Irish tax system in general as it reduces the flexibility of the Government to prioritise and allocate funds as necessary at a particular time, constraining expenditure decisions and potentially distorting the allocation of resources, which can result in reduced value for money and sub-optimal outcomes.

Nevertheless, the Joint Oireachtas Committee on Climate Action recommended that hypothecation of carbon tax revenues be considered and to this end my Department launched a public consultation on the options for use of revenues raised from increases in the carbon tax. The options include use of revenue to address fuel poverty as well as a so called “tax and dividend” scheme. The consultation is open until the 28 June 2019 and can be accessed on the Department's website. The feedback from the consultation will help to inform future carbon tax policy options. 

As the Deputy will be aware, there are existing schemes in place which help those who may be in fuel poverty. These include the National Fuel Allowance and the provision of home insulation grants and free upgrades from the Sustainable Energy Authority of Ireland. Consideration of all options relating to carbon tax policy, including possible ring-fencing of revenue for specific purposes is ongoing and will be reviewed by the Tax Strategy Group in July.