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Dublin: 17 °C Sunday 31 May, 2020

Government considering giving 'carbon cheque' to offset tax hike

Any changes to the carbon tax will not apply until 2020.


TAOISEACH LEO VARADKAR has said the government is looking at two models to increase carbon tax.

Any changes to the carbon tax will not apply until 2020, unless the measures are introduced on the night of the budget this year, said the Taoiseach. However, that will be a decision made nearer the time.

The Taoiseach held a meeting with Finance Minister Paschal Donohoe and Environment Minister Richard Bruton about the two potential models before Christmas.

“I am of the view that carbon tax is there for a reason, it’s an environmental tax designed to change behaviour. It’s not designed to take money out of your pocket that’s why I’m very much of the view that the money raised from carbon tax from households should be given back to households,” Varadkar told reporters.

“There are two ways in which you can do that. You can either give everyone a carbon cheque in the post; you can do that by individual or by household, and you get that upfront. That’s designed to compensate you for the cost of the carbon. Those who use a lot of carbon don’t benefit as much, those who have low-carbon lifestyles benefit more,” he said.

The other option being considered is through the tax and welfare system such as an increase in child benefit funded by the carbon tax or an increase in tax credits and welfare.

“We haven’t decided which to go for. I would like to get an all-party consensus around it so what I propose to do is develop a proposal in the first two months of the New Year and put that out to the other parties to see if they are willing to be supportive of it,” he added.

When asked if the price of fuel at the pump is likely to increase on budget night this year, Varadkar said he would consider carbon tax increase might be better times later in the year due to winter costs.

Varadkar has previously said the increase in carbon taxes will be needed over the next number of years in order for Ireland to meet its international global warming targets.

A recent ESRI report suggests households may need to pay €3,000 a year in carbon taxes, in order for Ireland to avoid EU fines, however, Varadkar said such an estimation is “way off the mark”.

Speaking to in October, Varadkar explained that he felt an increase in VAT and carbon tax this year would be a “double whammy” to householders. He outlined that he wanted a cross-party agreement on rising carbon taxes, something he repeated today.

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