Regina Doherty (Meath East, Fine Gael) | Oireachtas source

In budget 2020, we increased the fuel allowance payment by €2 to €24.50 per week. That is an increase of just under 9% and that will increase the annual fuel allowance rate from €630 to €686, which is an increase of €56 for the year. The annual cost of this increase in the fuel allowance is €21 million and that is funded via a ring-fenced allocation from the approximately €90 million that it is expected will be raised from the carbon tax increase. This is the largest single allocation and it is directly aimed at protecting our most vulnerable citizens.

Last year, the Economic and Social Research Institute, ESRI, published its report, "The Economic and Environmental Impacts of Increasing the Irish Carbon Tax". This followed its detailed analysis of the impact of increasing carbon tax at various rates. It included a treatment of the effect on households at each income decile and shows that the increase in the carbon tax of €6 per tonne will cost the poorest households an additional €28.08 per annum, rising to €51.17 per annum for those in the third lowest income decile.

Accordingly, it is intended that the €56 annual increase in fuel allowance that we have announced will more than compensate the three lowest income deciles, the very people toward whom the fuel allowance is targeted. We hope this will ensure that the most vulnerable in society are protected from the increased carbon tax. It is also important to note that while the fuel allowance increases will come into effect from 6 January 2020, the carbon tax increase for home heating fuels will not take effect until May 2020. That will, hopefully, give such households additional headroom while we introduce that increase.

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