Dáil Éireann Debate, Tuesday - 22 February 2022
24. Deputy Richard Boyd Barrett asked the Minister for Finance his views on whether taxes on energy and heating fuel such as carbon tax and VAT are now directly contributing to fuel poverty and excessive fuel costs for many households; if he plans to take steps to address this; and if he will make a statement on the matter. [9671/22]
View answer60. Deputy Rose Conway-Walsh asked the Minister for Finance if he will consider tax measures in order to reduce the impact of rising energy costs; and if he will make a statement on the matter. [9676/22]
View answer230. Deputy Niamh Smyth asked the Minister for Finance if matters raised in correspondence by a person (details supplied) will be reviewed; if he will provide clarity on this matter; and if he will make a statement on the matter. [9243/22]
View answerPeople Before Profit has been against the carbon tax from the outset, despite what some Members appeared to be suggesting rather bizarrely earlier. We have been very clear in opposing carbon tax as an unfair, regressive tax. There is no evidence that it has any significant impact on the reduction of CO2 emissions. However, even if that was always true, it is simply blatantly self-evident that increasing the carbon tax yet again in the current situation is going to contribute to fuel poverty, hardship and injustice.
I propose to take Questions Nos. 24, 60 and 230 together.
This was the subject of a Private Members' motion today and is the subject of another one tomorrow. I will repeat the key points I made earlier. I believe that carbon taxing is playing and will play an important role in how we can reduce carbon emissions in the future. The challenge we face with regard to the climate is existential. Cognisant of the challenges that many people are already facing with the rising price of energy, we are putting in place additional supports to help those who will be affected by the further increase in carbon taxation that will take place a number of weeks hence. If the Deputy looks at the impact that carbon taxing is having on the rising price of energy, it is but a small share of the total cost of fuel and energy in our economy at present. The increase that is coming up is 2 cent per litre. I know when 2 cent per litre is added up it can be a lot for those who have the least, but the reason we have made changes in the social welfare system, in the fuel payment and in the living alone allowance is to help those who will be badly affected by the rising price of energy at present.
To be clear, what is needed are caps on energy and heating prices. That is what we believe is the necessary action.
While the Minister is clearly not going to do that, although he should, it is unacceptable to add additional hardship to people by further increasing carbon taxes. He is absolutely right that on its own it is not enough. He has control of VAT, the PSO and carbon tax. This is more than €1.2 billion worth of taxes that will be levied on people's energy use, with most of it hitting the least well-off. Does the Minister honestly think he should not reduce this and that he should certainly not even contemplate increasing it when we have excess winter deaths and people not able to pay the bills? They are literally making choices between food and bills and skipping meals. Does he not think it is totally unjust?
The mere fact the issue of the carbon tax has been raised so many times, in our Private Members' motion earlier and in another Private Members' motion tomorrow, should show what an important issue it is. The idea of the tax is that it would change behaviours. We told the Minister at the time it would not do so because we did not have alternatives. We have seen the increase in the prices. The Minister might say it is only small but he does not need it at this particular time. He knows we have overshot the runway on VAT, income tax and corporation tax. People are looking to him. The message he is giving out to people is that he will pile more hardship on top of them. This is just not fair. This is why there is such a backlash against the Government. It really needs to listen. It is not just to the politicians he needs to listen. He needs to listen to the Society of St. Vincent de Paul, which always ends up picking up the pieces, and many other organisations such as Barnardos.
I also need to listen to the Climate Change Advisory Council which, as I reminded Sinn Féin in our debate earlier, has advised us that carbon tax is a key component of transition to a low-carbon, climate-resilient and environmentally-sustainable economy. That is its view on this. Of course, I accept the change that is happening. I was at pains to acknowledge earlier that with regard even to the change coming up in May, which in the total cost of energy overall is €0.02 a litre, for many that is a lot. I acknowledge this. This is the reason the Government has brought forward the energy rebate. It is the reason we brought forward the additional fuel payment of €125. It is also the reason we have made many other changes in our social welfare code to protect those who need help the most.
On a number of occasions I have heard many Deputies make reference to where we are with our tax receipts. We did have a strong November, December and January but much of this was fuelled by a high level of savings going into consumption in our economy. This will come to an end. We cannot, on the one hand, be making the case for people's standard of living going down with them being able to purchase less and, on the other, imply the higher level of VAT receipts we see will continue.
I am speaking about the higher level of VAT receipts specifically on energy and heating. Let us forget about the rest. It is up to €481 million and rising. The State has yielded a big tax bonus from the energy hikes that ordinary people are getting through their doors that they cannot afford. This gives the Minister scope not to impose further hardship on them. In fact, it gives him scope to reduce their energy bills and reduce the hardship, as do the profits of the ESB. The Minister is right that it is a publicly owned company. Its profits should be capped. Tell the company not to increase prices because he would rather not impose further hardship on people to get extra dividends. For that matter, the profits of Energia have increased. Tell that company that it does not need to make extra profits this year because people are suffering and they cannot take any more.
When the Minister lauds the merits of the carbon tax he misses the point that there are no alternatives for people. He misses the point this will be the straw that breaks their backs. The Minister for Finance knows what the equilibrium is. He knows the tipping point. He knows that people cannot bear any more of the hardship he is putting on them right now. The message he is sending them is to suck up some more. It is not right and it is not fair. It is certainly not going to change people's behaviour in terms of the climate. The Minister needs to listen to more than one voice. He needs to listen to the people who are suffering most. He needs to listen to the people in his constituency and other constituencies who are feeling the brunt of the hardship they are going through. They cannot meet the very basic cost of living.
The Minister identified inflation as a particular problem in the budget when he introduced tax reductions, social benefit changes and subsidies to try to address energy prices. It is a huge pressure. What we do not hear acknowledged in the House is the external reality about energy prices generally. I recall a Department of Finance paper from December 2021 about global demand and prices. Events have moved on so much since then. The paper stated wholesale natural gas prices had increased seventeenfold since June 2020 while oil prices more than doubled over the same period. It also stated that at the same time a lower than expected gas supply from Russia, low gas reserves due to the longer winter last year, weather-related disruptions to renewable energy production and an increase in carbon prices put further upward pressure on electricity prices and fuel prices. It stated that governments in many countries, including Ireland, have taken action through a mixture of tax cuts, social benefits and subsidies. The trouble is the tax cuts, the tax changes and widening the bands, which reduced tax for many people in the country, were opposed by Deputies now raising the carbon tax.
We have debated long and hard the impact of carbon taxes and the failure of the Minister to reach out to his colleagues in the European Commission to speak about the potential of reducing VAT. This has not happened, despite the fact I raised it with the Minister in September. Deputy Carroll MacNeill rightly points out the Minister brought forward a tax package. The largest part of that package, which she did not mention, cost €340 million and 80% of earners were left out of it. It was the most expensive part of the Minister's tax package and eight out of ten earners were left out of it. In fairness to the Deputy, they are not the people who are struggling the hardest. They may be struggling but 80% did not benefit from the €340 million package. They could have benefited from other measures that were a lot less costly. The issue is that gas prices are increasing time and again. They are likely to increase further given what is happening in eastern Europe. The Minister and the Government are planning to increase them further.
The reason we introduced the lump sum payment of €125 for those in receipt of the fuel allowance is to ensure that as part of our package we have funding and a payment available to those who need help the most. What we had here was a package that in its breadth and cost of €500 million was looking to respond to the challenges that we accept many are facing due to the rising cost of living. Deputy Boyd Barrett quoted a figure relating to VAT. We have a package that overall cost in excess of €500 million. We have a package that between it and the announcements contained in the budget means a single person in receipt of the old age pension will receive additional support from the State of between €600 and €800 for this year. This will help. We accept that many need more but it is a set of measures we believe will make a difference to those who need the help the most.
