TÁNAISTE SIMON HARRIS has suggested that the government could differentiate home heating oil from any carbon tax trajectory changes in the upcoming budget. 

Carbon tax is levied on fuels: coal, peat, home heating oil, natural gas supplies to consumers and, of course, petrol and diesel.

In April, the government announced that a planned increase due to kick in on 1 May 2026 of €71 per tonne would be postponed until 14 October 2026, a week after the budget.

Speculation has been growing over whether the government will announce another deferral, or if the timeline of increases could be stretched so that people would pay smaller amounts over a longer period of time. 

The Alliance for Zero Carbon Heating has also called for the VAT on heating oil to be cut from 13.5% to 9%, bringing it into line with the temporary rate charged on domestic gas and electricity.

Under the current plans, the planned carbon tax increase would result in a rise in home heating oil, petrol and diesel. 

But speaking on RTÉ’s Morning Ireland programme, Harris said he is “particularly worried” about home heating oil.

He said the government already deferred the carbon tax earlier this year “to try and help people”, saying that they now needed to “try and make a move that gives people certainty beyond next month”.

“We need to look at all of the levers. Carbon is one.”

He said the coalition had to be “very careful” in the decision they took and said the carbon tax brings in €1.1 billion.

We did have a tax strategy group paper this summer that said, ‘Could you differentiate between some products? Could you elongate the timeline?’

“The other option, which may be more impactful for some, is around excise. We’ve got to do this in a sustainable way.”

He added: “A move on home heating oil around carbon could be quite significant in terms of a fill of oil, but none of this is cheap.”

In relation to gas and electricity, Harris said the government had already taken a decision to reduce VAT.

“I have to be very honest with people, and anybody who sits in any studio and isn’t honest is doing a disservice here. There’s no government in the world that can insulate everybody from every cost pressure,” he said. 

“What we can do in this budget is, across all of the levers at our disposal, try and reduce costs in certain areas.”

Childcare

On childcare, Harris said: “There isn’t one size fits all when it comes to childcare and it’s not the government’s job to tell a parent what is the model of childcare.”

He said the Department of Finance was looking at options to see how to support childminders. 

“We do have a tax relief for childminders. I’m going to give serious consideration to expanding that to make it more attractive for somebody to decide, ‘well, I’m happy to become a childminder as well’,” he said. 

When questioned on childcare costs, Harris said he believes the most effective way of making progress on reducing childcare costs is through the National Childcare Scheme, adding that the government has funded an extra 35,000 places this year.

“Hundreds of thousands of children signed up to it. Any parent who uses that scheme knows when the government increases the subsidy, the amount the parent pays goes down,” he said. 

He said the government’s commitment to get childcare costs down to €200 a month is “over the lifetime” of the coalition, but said this budget “needs to be a breakthrough budget to show people the way forward on that”.

The cost of opening a new childcare facility “is still too expensive”, he said, emphasising that an investment in public funding for capital projects “will make a real difference”.

He said the numbers of providers accessing government core funding has increased along with the number of places.

Savings plan ‘not a get-rich-quick scheme’

Harris was also asked about his savings and investment scheme.

He said Middle Ireland are “locked out” of investing in this country. “It’s too expensive, the tax system’s too punitive, it’s too complex, and it’s not fair that only really the wealthy can get involved in investments.”

Plenty of detail has been shared about the scheme in advance of the budget, which Harris said was because the government need industry to be ready to provide accounts and for people to start thinking about how they might utilise the scheme. 

He said Irish people were “amongst the best savers in Europe”, saying that people were putting money into credit union and bank accounts that were not earning them any real return.

“This is about changing that culture. It’s not a light-bulb moment. It’s not an SSIA. It’s not a get-rich-quick scheme. This is a moment that I think if we can get this right, we will build up the economic resilience of people over 10, 15, 20 years, and we have to do that.” 

Harris also said he does not expect the savings accounts to open until next summer in order to leave time to roll out financial literacy programmes and public awareness campaigns, as well as competition from credit unions and banks.

The scheme will be legislated for by the end of the year in the finance bill.

He was challenged on reports that people would still be taxed on any losses they make. 

“You’ll only be taxed on any amount above the tax-free threshold,” he said, which will be “significant”.

“There will be no minimum amount. There will be a maximum amount you can put in in a year. That’s a guardrail, because this is not about making the wealthy wealthier. There will only be one flat rate of tax that will apply.”

He would not confirm if this rate would be 1%, but he said it will be “very low”.

Asked about criticism that people will still be taxed on losses, Harris said: “Let them see the detail, but I’ve got a lot of positive feedback from stakeholders on this.”