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Government hints at move to 'offset' the cost of Carbon Tax hike

Taoiseach Micheál Martin said scrapping the planned increase would be a ‘knee-jerk’ reaction.

Fianna Fail leader Micheal Martin speaking ahead of Cabinet meeting in Dublin Castle.
Fianna Fail leader Micheal Martin speaking ahead of Cabinet meeting in Dublin Castle.
Image: Sam Boal/

THE GOVERNMENT HAS said the scheduled increase in Carbon Tax next month will go ahead but ministers are looking at how they may “offset” the burden on households. 

Speaking to reporters today, Taoiseach Micheál Martin and Tánaiste Leo Varadkar both addressed the rising cost of living, with the latter saying the inflation crisis could last “for years”. 

Carbon Tax is set to increase next month from €33.50 to €41.00 per tonne of carbon. It is a charge applied to carbon-emitting fuels such as coal, peat, oil and natural gas. 

Varadkar said today that the government estimates it will add about €20 to the cost of filling a tank of home heating oil and €1.50 a month on gas bills. 

“€30 might not sound like a lot of money but it is a lot of money if someone doesn’t have it,” he said.  

Martin had said yesterday that, in the context of other price rises, the increase in Carbon Tax has garnered an outsized amount of political debate. 

Speaking today, An Taoiseach said the money raised from Carbon Tax is ring-fenced for efforts to tackle the climate emergency. 

“The whole importance of the Carbon Tax is to enable us to have resources to enable people to develop energy efficiency and ultimately reduce costs of energy in their homes.  So we’ve got to avoid a knee-jerk response here and we’ve got to do this in a very considered way,” he said. 

An Taoiseach added that himself, Varadkar and Green Party leader Eamon Ryan met last night to discuss inflation and that they will also be meeting with Finance Minister Paschal Donohoe and Expenditure Minister Michael McGrath in the coming weeks to outline how to help insulate people from inflationary pressures. 

“To create a process that will be inclusive that will cover all elements of this. Budgetary policy right through to how we respond to the immediate pressures. That’s how we see it right now,” Martin said. 

Varadkar added that the Carbon Tax increase was “legislated for” and is contained in the Programme for Government but that the government understands that “even a small increase has an impact on household budgets”.

“So what we’re examining at the moment, working across government, is to see whether there are ways that we can offset that increase so that people aren’t any worse off in the round around as a result,” Varadkar said. 

He added: “There are lots of reasons why you’re seeing the cost of living rise, and that’s to do with monetary policy, it’s to do with the pandemic and supply chains  and it is to do with the war in Ukraine as well. And while we do need to respond to the symptoms, which is price rises, that’s not the solution.”

The Taoiseach was also questioned during Leaders’ Questions today whereby Sinn Féin leader Mary Lou McDonald said the cost of living is a big issue for the public.

She said there is no sense of urgency or agility in dealing with the crisis, adding that the carbon tax hike is coming at the wrong time.

“Your position is wrong and you need to listen. People can’t afford a carbon tax increase, they don’t have the money to give,” she said.

The Taoiseach accused Sinn Féin of “double speak” when it comes to climate action.

Martin and Varadkar are expected to come under pressure at their respective Fianna Fáil and Fine Gael parliamentary party meetings tomorrow on Carbon Tax and cost-of-living concerns. 

Asked about this, Varadkar said his party may have policies that are “different to what’s in the Programme for Government” but that the programme was endorsed by the membership. 

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Echoing Martin’s comments from yesterday that the government “can’t take measures every single week”, Varadkar also said the government “can’t come back every few weeks with a new measure to offset a particular price increase”. 

“We need to see this for what it is, which is an international crisis, an increase in inflation that’s going to be with us for years, more so than months. And then we need to respond to it in the end,” he said.

With reporting by Christina Finn

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Rónán Duffy

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