Carbon tax to rise but pump price unaffected
CARBON tax is set to rise from €41 per tonne to €48.50 from October 12, but the Government insists costs at the pumps will be unchanged, having been offset by reductions in other levies.
Finance Minister Paschal Donohoe also committed Ireland to pursuing a windfall tax on energy companies making huge profits during a cost-of-living crisis even if the EU fails to move on the issue.
Announcing the Budget in the Dáil yesterday, Minister Donohoe said the effects of climate change are ‘becoming more frequent and more destructive’ and that protecting the environment is ‘the responsibility of us all’.
‘The rate per tonne of carbon dioxide emitted for petrol and diesel will go up from €41 to €48.50
‘This remains a stopgap solution’
from October 12 as per the trajectory set out in the Finance Act 2020,’ he said.
‘This will mean that there will be an increase of just over 2c VAT inclusive per litre of petrol and diesel. However, I also recognise the sharp cost-of-living challenges currently being faced by society, so the Government is therefore proposing to offset this carbon tax increase with a reduction to zero of the National Oil Reserves Agency (NORA) levy.
‘The NORA levy, which is collected at a rate of 2c per litre (VAT exclusive), will help offset the carbon tax increase, which means that the price at the pump will not go up as a result of taxes or levies.’
The levy reduction of 20c on petrol and 15c on diesel announced in March will continue until the end of February.
Fuels For Ireland, which represents fuel distributors, welcomed the decision to lower the NORA levy, a move it had been seeking.
The organisation’s CEO, Kevin McPartlan, said: ‘Any effort to alleviate the burdens which consumers are facing due to rising energy prices globally should be commended, but this minor change remains a stopgap solution.’
Mr Donohoe said the Government is acting to reduce emissions and support cleaner technology.
‘The additional funding needed for measures, such as retrofitting and more sustainable modes of travel, comes in part from carbon taxation and this is appropriate and will continue under this Government,’ he said.
Public Expenditure Minister Michael McGrath said: ‘Every additional euro raised in carbon tax will be returned to the people of Ireland through energy efficiency upgrades, social protection schemes to protect the most vulnerable and measures to incentivise farming in a more environmentally friendly way.
‘An additional €211million will be available in 2023, bringing the total carbon tax revenue available in 2023 for investment to €623million.
‘Almost half of the €623million in funds raised by the carbon tax will be invested in improving the energy efficiency of our homes.’
On the promise of a windfall tax, Mr Donohoe said work is under way in the EU on the matter, and that it is ‘not fair for companies to earn excess profits from the current volatility in the market’.
‘Ireland aims to be part of this EU-wide response to high energy prices. If this is not possible, this Government will bring forward our own measures’ he added. Environment Minister Eamon Ryan said the windfall tax can’t come until after the European Energy Council meeting on Friday.
‘It’s a European scheme and system and it gives us real protection doing it through the European approach – legal protection and also the coordination,’ he said.
He added: ‘I’m confident we will get agreement on the measures to take some of the super-normal profits from the electricity suppliers’ side and also on the fossil fuel industry side.’ Mr McGrath said that he was making an allocation of €850million in capital investment to the Department of the Environment, Climate and Communications in 2023.
Of this, €337million will go towards grants for energy efficiency, funding more than 37,000 home energy upgrades, including households in, or at risk of, energy poverty through the Warmer Homes Scheme.
Junior minister and Green Party TD Malcolm Noonan said the budget for nature and wildlife now exceeds €90million
Under measures announced yesterday, the Environmental Protection Agency will receive €54.4million next year, up by €2.8million.
‘I’m confident we’ll get agreement’