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Dublin: 17 °C Thursday 2 July, 2020

Minister says he's still considering whether to give everyone a 'carbon cheque' to offset tax hike

Paschal Donohoe said any changes to the carbon tax will be “very different” to other tax changes he’s made in the past.

Finance and Public Expenditure Minister Paschal Donohoe at the Fine Gael think-in in Cork.
Finance and Public Expenditure Minister Paschal Donohoe at the Fine Gael think-in in Cork.
Image: Niall Carson

THE GOVERNMENT IS yet to decide on what model it will use to hike up the carbon tax in this year’s budget. 

Carbon tax was up for discussion yesterday at the Fine Gael think-in in Cork, where there was a discussion on Budget 2020 considerations.

Finance Minister Paschal Donohoe told reporters that any changes to the carbon tax he introduces in October will be “very different” to other tax changes he’s made in the past.

There are two ways in which the government can deal with the carbon tax to ensure that people make the lifestyle changes needed – either giving everyone a carbon cheque in the post to offset the cost of the tax, or by using the tax and welfare system, such as with an increase in tax credits and welfare.

“If we decide to make a change in carbon taxation in Budget 2020, that revenue will then be used in a way to either help people cope with the change they have to make to do with climate change and changing their behaviour. Or we will use it in investment in the kinds of funds and the kind of plans that are helpful for families and for businesses making a change,” he said.

“We have not made a decision yet” in relation to whether to go down the cheque or investment route, said Donohoe.

Earlier this week, Fianna Fáil leader Micheál Martin said a climate change dimension will be necessary in the 2020 Budget, stating that there would “need to be” a carbon tax in the upcoming Budget. No such tax was brought in as part of last year’s Budget.

Donohoe included a note in pre-budget submissions last year saying he was “currently minded” to implement a €10 increase on Budget day. 

Martin said this week that this ”could be less than €10, it could be five or six euro”. 

Speaking to last year, Taoiseach Leo Varadkar said that implementing a carbon tax last year would have “hit people with a double whammy” and wiped out any benefits people received through tax cuts elsewhere.  

Donohoe has said the government won’t “make the mistake” of lowering personal taxes in this Budget in case they might have to increase it in future due to the effects of Brexit.

The minister said this week that Budget 2020 will be based on a no-deal Brexit.

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