Danny Healy-Rae
Question:239. Deputy Danny Healy-Rae asked the Minister for Finance if he will reverse the decision to increase the carbon tax in Budget 2022. [11767/22]
View answerTuesday, 1 March 2022
Questions (239)
Written answers
In line with the Programme for Government policy approach to Carbon Tax, Finance Act 2020 legislated for a series of annual increments in the carbon tax rate leading to a rate of €100 per tonne of tonne of CO2 emitted in 2030. The rate of €41 per tonne applied to auto fuels from October 2021 but I delayed the increased on home heating fuels until 1st May 2022 to allow for the passage of the winter heating season.
Budget 2022 contained a large range of measures to protect households from the rising cost of living, including a personal income tax package worth €520m and a social welfare package of over €550m. Analysis undertaken using SWITCH, the ESRI tax and benefit model, to simulate the impact of the carbon tax increase and the compensatory welfare package has confirmed that the net impact of the combined measures is progressive. 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.
In addition to the Budget 2022 measures announced in October 2021, in February this year the Government approved a further package of measures to the value of €505m to mitigate the cost of living including an increase in the energy credit to €200 including VAT, estimated to impact just over 2 million households. The package also included a series of targeted measures which will reduce the impact of inflation including ;
— a lump sum payment of €125 on the fuel allowance will be paid to 390,000 recipients;
— a temporary reduction in public transport fares of 20% from the end of April to the end of the year. This will impact approximately 800,000 daily users of Bus Éireann, Iarnród Éireann, Dublin Bus, Go Ahead, Luas, DART and Local Link services;
— a reduction of the Drug Payment Scheme from €144 to €80. This will benefit just over 70,000 families
— the working family payment budget increase will be brought forward from 1 June to 1 April;
— reduced caps for multiple children on school transport fees to €500 per family post primary and €150 for primary school children;
Carbon Tax is a key pillar underpinning the Government’s Climate Action Plan to halve emissions by 2030 and reach net zero no later than 2050. The Programme for Government commits that all revenues raised from additional increases in Carbon Tax will be used for:
- Targeted social welfare measures to prevent fuel poverty and ensure a just transition;
- To part fund a socially progressive national retrofitting programme;
- To encourage and incentivise farmers to farm in a greener and more sustainable way.
It is revenue from carbon tax that will support Ireland in meeting our climate targets in the short and medium terms by protecting against fuel poverty, and in the long term by providing for a more sustainable living environment. In the long run the best way to protect Ireland from the impact of international fossil fuel prices is to reduce our dependence on them. We will achieve this through the progressive decarbonisation of Irish Society and through the steps that will be taken to meet the Government’s commitment to reach net zero greenhouse gas emissions by 2050.