Dr. Karina Doorley:

I might make an observation on the carbon tax in the context of the point made by Deputies Durkan and Boyd Barrett. When we think about the impact of carbon tax on rich households versus poor households, the recommendation is that in order to achieve behavioural change, carbon tax must be applied across the board. However, there are obvious distributional impacts. Poorer households spend more of their income on fuel and, as a result, they are disproportionately affected by carbon tax increases.

Poor households are also less able to switch. They do not have the disposable income available to buy an electric car, retrofit their houses or even delay consumption if there is a temporary increase in fuel prices. The idea is to compensate the households who cannot switch and make sure they are at least no worse off. That was done in last year's budget and this year's budget at least for the poorest households but maybe not so much for the middle income households. This year, there has been a slight reduction in the disposable income for middle income households compared with a price index budget, which does not quite compensate them for the carbon tax increase and something similar happened in last year's budget. There are ways to compensate middle income households. They might not receive social welfare but indexing the universal social charge, USC, or PRSI rates can go a long way to alleviating some pressures on those households due to an increase in carbon tax.