Dáil Éireann Debate, Thursday - 25 November 2021
74. Deputy Brian Leddin asked the Minister for Social Protection the specific social protection measures that will be funded in 2022 from the increase in the rate of carbon tax; and if she will make a statement on the matter. [57598/21]
View answerThe Programme for Government is committed to ensuring that increases in the carbon tax will be progressive. This means protecting the most vulnerable in society from the impacts of the tax. In 2020; the ESRI examined the options available to offset the impacts of a carbon tax increase on low income households.
In light of this research, the Government has committed to very significant increases in a targeted package of social protection supports in Budget 2022, which will offset the impact of the increased carbon tax on low income households.
The specific measures are:
- An increase to the Qualified Child Payment of €2 per week for children under 12 and €3 per week for children aged 12 and over;
- An increase in the Living Alone Allowance of €3 per week. People living alone are often the elderly or people suffering from a disability who are at higher risk of poverty. These groups are also likely to have higher energy needs than other households;
- An increase to the Fuel Allowance of €5 per week. This will compensate a broad range of lower income households for the additional energy costs they are likely to incur, due to an increase in the carbon tax. This measure will be combined with a broadening of the threshold for Fuel Allowance eligibility and an increase in the income allowed for the means test that is applied to applicants. The increase in the rate of payment was effective from Budget week.
- An increase in the income threshold for the Working Family Payment of €10 per week. Research has found that children in energy poverty have a greater likelihood of respiratory illness. Using carbon tax funds to compensate low paid employees with children, will contribute to improved health outcomes, particularly when combined with the increases in the qualifying child payment.
Analysis undertaken using SWITCH, the ESRI tax and benefit model, to simulate the impact of the carbon tax increase and the compensatory welfare package, estimates that the net impact of the combined measures ensures that households in the bottom four income deciles will see all of the cost of the carbon tax increase offset, with the bottom three deciles being better off as a result of these measures.
The total cost of these interventions is projected at approximately €146m in 2022. This will be funded by the additional carbon tax funds of €105m that have been allocated to the Department of Social Protection, with the remaining €41m cost met by the Exchequer.
