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Sam Boal
energy costs

Measures to tackle cost of living will 'cushion the blow', says Taoiseach

An increase in the €100 electricity credit is widely expected.

TAOISEACH MICHEÁL MARTIN has said a “range of charges” could be reduced in order to ease the rising cost of living for people.

Speaking in Killarney this afternoon, he said costs that people face “in their ordinary, everyday lives” are being looked at by government. 

Changes to taxation or to social welfare rates are not likely, with the focus instead being placed on energy costs and fees charged for State services in the areas of health, transport and education.

An increase in the €100 electricity credit is widely expected, with one source stating that it is the most obvious and “cleanest” measure.

The Taoiseach said today that “the energy increase has been phenomenal in terms of the price of gas… we want to see what we can do to cushion the blow”.

When asked about deferring the carbon tax this year, Martin said there is a need not to take a short-term view.

He said revenues that the carbon tax will generate will enable homes to be able to permanently reduce their heating costs for years to come.

Carbon tax

“We’ll be making a major announcement this week, providing grant assistance to families to homes, to insulate our homes, with a view to reducing household bills for the longer term.

“So we have to be careful not to get into short-termism here, that we keep our nerve in terms of the more medium term plan of retrofitting homes, retrofitting industry, commercial premises, so that we reduce our dependence on fossil fuels more generally,” he said.

Energy Minister Eamon Ryan is set to announce grants of up to €25,000 to deep retrofit houses, covering between 45% and 51% of the cost of bringing older homes up to a B2 energy rating.

Low-cost-loans will also be on offer and a network of ‘one-stop shops’ for retrofitting are to be set up across the country.

The Taoiseach said the carbon tax legislation was passed last year to allow for it to increase for a number of years. 

“Retrofitting cannot happen without the revenue that has been generated currently,” he said. 

Carbon tax revenue will also enable the government “to cushion people against fuel poverty as well,” he added

“So anything that’s raised goes back to people through retrofitting, through environmentally better farming policies, and through measures to combat fuel poverty. So it’s ring fenced to go back to people,” said the Taoiseach.

How long?

Martin said the “jury is still out” on how long inflationary price hikes will be around for.

“I think there’s a number of schools of thought amongst economists about the inflationary cycle, some believing that it’s a pandemic based sort of cycle, others thinking the there may be a more medium term impact, so the jury is out to some extent, but we have to plan on the basis that it’s more medium term, certainly for the next number of months in this country.

“Therefore, we have to plan accordingly… the priority right now is to see can we bring in a range of measures that would cushion the blow for many, many people out there who clearly are feeling the impact of price rises,” he told reporters in Kerry.

So, what else is on the table?

While the Labour Party in the UK has called for the removal of VAT on domestic energy bills for a whole year, sources here said such a move would not be possible for the Irish government to take due to an EU VAT directive.

One measure that is likely is the extension of the fuel allowance season out to April of this year, with modifications to the criteria to allow more people to avail of the benefit.

As part of the EU’s suggested toolkit for tackling the rising cost of energy, it has suggested that emergency income support for energy-poor consumers, for example through vouchers or partial bill payments, would be allowable.

It has also said the EU member states could authorise temporary deferrals of bill payments.

While the public see the rise in the cost of petrol and diesel as one of the main problems, it is believed that there will be no moves to tackle the level of excise. 

One source pointed out that such a measure would not be palatable to the Green Party adding that there would be “no point in having that row”.

In a bid to take the burden off drivers to some degree, items like a reduction in motor tax charges may be on the cards. 

Minister Ryan only recently managed to get a reduction in some public transport charges, with sources stating that there could be more reductions announced.

Many ideas are set to be one-off measures with government keen to get across that they are emergency measures and are likely to be reversed when inflation falls.

A change in tax rules to allow employers to give employees a tax-free bonus of up to €1,000 per year is also being put forward as a proposal, as is a suggestion to cut fees for the likes of passports and driving licences. 

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