Carbon tax increase will be under ‘further consideration’ in Budget

An increase in the carbon tax will be under “further consideration in the Budget”, the Tanaiste has said.

Earlier this month, the Government decided to postpone a scheduled increase of the carbon tax rate which was due to take effect in May until the Budget in October.

Carbon tax on petrol and diesel is 71 euros per tonne of carbon dioxide emitted.

For other fuels like home heating oil, the current rate of 63.50 euros per tonne – was due to increase to 71 euros next month.

The deferral out to October will cost 22 million euros in revenue.

The move came as part of what has now amounted to a more than 750 million euro suite of measures in response to rising energy costs as a result of the war in Iran.

It was announced following nationwide fuel protests which also involved blockades of critical infrastructure.

Asked on Tuesday about the revenue Government collects from fuel, Mr Harris told reporters: “We’ve made decisions in relation to carbon tax.

“Acknowledging while we believe in the principle of carbon tax – we have a carbon tax – the time wasn’t right to put it up and deferring that decision for further consideration in the Budget.”

The deferral was criticised by Green Party leader Roderic O’Gorman in the Dail, who said the decision “shattered” a coalition across Government and parts of the opposition in support of the carbon tax – for a relatively small amount of value in the overall package.

Mr O’Gorman said the deferral had “pulled the rug” from under Government TDs who had gone out “to bat” for the carbon tax over the last six years.

“Because by deferring the increase, you’ve ceded the ground those who say the carbon tax is the root of all evil, and you’ve lost that case for that constant expansion of that pool of money for the (Agri-Climate Rural Environment Scheme) scheme, for warmer homes, for retrofit and ultimately, it hasn’t won you one iota of thanks for the people who’ve always opposed this particular measure.”

Mr Harris responded by stating he did not look for thanks from political opponents, and said: “I do look for ways of assisting people, deputy, and you’ve got to bring the people with you too.”

He added: “It is an important form of tax revenue but you also do have to look at the reality in terms of the cost of filling the home heating oil, we had to look at the reality in terms of green diesel.

“I think it did not make sense to decide to tell people that we were going to further increase the cost of their home heating oil.

“But I think, I think there also needs to be a sense of perspective in relation to this.

“That decision hasn’t resulted in any reduced amount of money being spent on the Climate Action Fund or on the retrofitting programme or on the fuel amounts, because it’s 22 million euro, it’s 2% of the total amount we expect to take in (from the carbon tax).”

Mr Harris said the carbon tax was legislated before the wars in Ukraine and Iran.

“You can believe in a carbon tax and also believe that actually now might not have been the right time to further increase it.”

Mr O’Gorman argued that suspending the increase will result in expectations and pressures to delay the measure again in October.

He asked the Tanaiste if he was committed to increasing the carbon tax in the Budget.

Mr Harris said: “No matter what taxation measure you ask me about, all taxation measures are a matter of consideration at the Budget.

“The Tax Strategy Group in my Department looks at all things and I’m committed to the carbon tax, committed to the legislation around the carbon tax, I’m committed to the carbon tax growing as part of our climate action in this country.

“But I’m also committed to looking at how we can assist people with their energy costs on the here and now.”