Budget 2019: We have to raise carbon tax, says Leo
Experts predict fines of up to €600m if Ireland’s 2020 target is not reached
Less well-off will be worse affected ‘Going to have to grasp the nettle’
TAOISEACH Leo Varadkar has said next year’s budget must include an increased carbon tax if Ireland is to meet its obligations towards tackling climate change.
Making his summer briefing in Government Buildings, Mr Varadkar said he recognised this would affect those living in poverty.
‘If we’re going to meet our targets we’re going to have to grasp the nettle in pricing carbon and increasing the carbon tax in the next couple of years.
‘We very much recognise that those living in poverty and vulnerable people will be worst affected by that, so we will have to look at compensatory measures for that.’
Discussing the 2019 Budget, Mr Varadkar said it would be similar to that of 2018, but with additional funding for education and welfare, and would lower the standard rate cut-off point.
‘The Budget will be broadly balanced in 2019, moving to a surplus in 2020, allowing the national debt to be reduced,’ he said.
‘Where there are additional resources available, the budget will recognise unmet needs and this will go very heavily to increasing spending and improving public infrastructure over tax reduction. The average person working full time in Ireland earns around €40,000 to €45,000 a year, and those people pay income tax at the highest rate. We will continue the emphasis on raising that threshold and avoiding an increasing income tax credit.’
Mr Varadkar added that the Government plans to restore the carers’ support grant, increase carers’ allowance and disability allowance, and introduce a 12week draw-down period after someone stops being a carer in order for them to adjust.
A policy focus on supporting families will include proposals for two weeks’ paid parental leave, a period that new parents can share between them.
He added the Government’s proposed pension reform will end ‘one of the biggest economic inequalities in Ireland’.
According to Mr Varadkar, twothirds of people working in the private sector do not have a pension other than a state pension.
‘We’re fundamentally changing that so that people will have a pension scheme, people will pay in, their employer will pay in, and the Government will pay in, too.’
He added that a further increase to the National Training Fund of more than 1% will bring another €50million in funding for higher education next year.
Ireland has fallen badly behind on its climate change commitments, and is now set to fall short of its targets for 2020, 2030 and 2050 – leaving us open to massive fines.
In its annual report published last month, the Climate Change Advisory Council found Ireland is in an ‘even worse position’ than the year before, with greenhouse gas emissions increasing by at a rate of two million tonnes per year, when a drop of one million tonnes was targeted.
With experts predicting fines of between €450million and €600million if our 2020 target is not reached, Taoiseach Leo Varadkar is under pressure to take action.
The carbon tax was first introduced in 2013 and is currently charged at a rate of €20 per tonne of CO2, costing the average household an extra €57.96 on its annual natural gas bill, including VAT. Families using coal or peat briquettes are paying an extra €90 each year on average since the tax was introduced.
To help meet our targets, the Climate Change Advisory Council has recommended carbon tax be raised to €30 per tonne in Budget 2019 and should rise again to €80 per tonne by 2030.
The council says the increases would act ‘as an essential component of achieving decarbonisation’.
This would add approximately €29 to a household’s annual natural gas bill, and €45 to a yearly spend on briquettes.
Minister for Climate Action, Denis Naughten said he was ‘deeply disappointed’ by the findings of the Climate Change Advisory Council last month. ‘The projected shortfall to our targets is further exacerbated by both the constrained investment capacity over the past decade due to the economic crisis, and the extremely challenging nature of the target itself,’ he said.
‘The Government is doing everything it can to ensure that we, at an absolute minimum, meet our 2030 target.’
Mr Varadkar’s comments on increasing the carbon tax came during a roundtable interview last week, in which he also outlined some of his other intentions for the next Budget.
One proposal he outlined was a shift away from the 2:1 split between public spending and tax cuts that has been a feature of all of the budgets delivered under the minority Government so far.
Meanwhile, welfare increases will, at a minimum, keep pace with the rate of inflation.
The Government are also working on proposals for a form of jobseekers’ allowance for the self-employed.