Oireachtas Joint and Select Committees

Wednesday, 6 November 2019

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach

Finance Bill 2019: Committee Stage (Resumed)

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Section 39 deals with the increase in the carbon tax rate applicable to mineral oils. Deputies are aware of the changes I have made, with the increase in the rate of carbon pricing from €20 to €26 per tonne of CO2 emissions. The increase applied from midnight on budget day to auto fuels, with a commencement date of 1 May 2020 for all other fuels. The Deputy has acknowledged the effects such a move could have on lower income citizens and families, but that is the reason I increased the fuel allowance payment from €22.50 to €24.50 per week, or by an additional €56 in a full season.

The increase in carbon tax on home heating products will commence on 1 May 2020, but the increase in fuel allowance will apply from 1 January 2020. This will leave the 22% of households in receipt of fuel allowance better off than before the increase in carbon pricing. This ensures the most vulnerable people in society will be protected from the impact of the increase in carbon pricing. Deputy Pearse Doherty's first point concerned the effect a measure like this could have on the most vulnerable members of society and those on the lowest incomes. That is the reason I have changed the fuel allowance payment to ensure those with the least will be protected the most from a change such as this.

On the question of the policy merit of the increase, I have indicated my intention which I hope will be followed up on in future budgets to make a similar change per year to bring us to a carbon tax rate of €80 per tonne of CO2 emissions. This approach is supported by the expert opinion of the Climate Change Advisory Council and the report of the Oireachtas Joint Committee on Climate Change, as well as the recommendations of the Citizens' Assembly on climate change. The sole reason for the changes is to respond to much of the expert opinion in the area.

We have put in place measures within our social policies to ensure the most vulnerable are protected from the effects the Deputy referred to.