Damien English (Meath West, Fine Gael) | Oireachtas source

Going back to the various parts of the motion that relate to fuel tax, it is important to remind the House that the driving forces behind the current energy prices are generally outside of the control of the Government, and most reasonable people understand and accept that. We have to work within that and try to reduce the cost pressures on people. This point has been discussed at length in recent weeks. I have made it clear that there are limitations to what the Government can do in its response, but we will certainly try to channel taxpayers' money to ease the pressure in that regard. We have said many times that the final retail price of fuel is determined by a number of factors, most of which are global phenomena and out of the Government's control. Market dynamics have driven up the pre-tax cost of kerosene dramatically in recent months. No one is denying that. It is clear for anyone to see. It is also clear that taxation of energy products is not behind the current prices and their increase.

As mentioned earlier, kerosene is subject to mineral oil tax, which is comprised of a non-carbon and a carbon component, known as carbon tax. Kerosene for home heating has a non-carbon component rate of €0. The carbon component is currently €84.84 per 1,000 l. Consequently, if we were to temporarily remove excise duty on kerosene, we would in effect undermine our carbon tax measure as the Government would come under pressure to remove carbon tax on all fuels and, before we knew it, there would no longer be a coherent response to probably the biggest medium-term challenge we face, which is climate change. Anybody living in Ireland, rural or urban, wants us to play our part to tackle climate change and save and preserve rural Ireland. Let us be fair and honest about that. We know they do, but they want it done in a just way that is fair to everybody. They want us to play our part to protect rural Ireland the way we know it, live in it and enjoy it, for our generation and many generations ahead. We need to remember that in these discussions.

Carbon tax is fundamental to our achieving our climate change strategy of halving emissions by 2030 and reaching net zero no later than 2050, and it is critical, in the Government's view, that nothing is done to endanger that strategy. This also explains why the Government opposes cancelling the carbon tax increase due to commence on 1 May. However, we have brought in other measures to deal with the consequences of that and to make sure that that carbon tax does not put added financial pressure on anybody who cannot afford it. That is why the measures were announced in recent weeks.

The Government has also made clear the restrictions it faces with VAT on kerosene, which is at a special parked rate of 13.5% and cannot go below 12%. In this regard, the House should also note that the Minister, Deputy Donohoe, wrote to Commissioner Gentiloni on 10 March and outlined the various actions he had taken to mitigate the cost of energy for households and businesses to date. He acknowledged the importance of the energy and tax and VAT directives, in particular the framework they provide for a consistent application of these taxes across all member states. However, he outlined the limitations of the changes to annexe III to the VAT directive insofar as they specify that reduced rates may be applied only to gas and electricity and, therefore, that other fuels remain outside the scope of the reduced rates. In this context the Minister asked the Commission to consider allowing member states to respond to the crisis with greater flexibility than is permitted under the current directives.

On 23 April, the Commissioner wrote to all finance ministers regarding the energy crisis, responding to points the Minister, Deputy Donohoe, and his European counterparts had raised. The Commissioner highlighted the current flexibility provided by EU directives, including the newly agreed amendment to VAT rates. The Commissioner also indicated that the Commission does not envisage any further revisions of the EU taxation framework to respond to the current crisis. Therefore, there is very little room for significant changes on the VAT side regarding kerosene.

In summary, it is necessary to respond to the current energy price dynamics, and in this regard the Minister, Deputy Michael McGrath, outlined earlier what has been done to date to try to deal with those dynamics and alleviate the pressures. However, our response cannot be at the expense of climate action policy, and I think most people would agree with that. It is a matter of taking away some of the financial pressure. In the long run the best way to protect Ireland from the impact of international fossil fuel prices is to reduce our dependence on them and to develop and to create our own energy not only for ourselves but also for export. We will achieve this through the progressive decarbonisation of Irish society and through the steps that will be taken to meet the Government's commitment to reach net-zero greenhouse gas emissions by 2050.

As for other actions, we heard earlier the list of measures the Government has taken to mitigate the impact of increased fuel prices from the Minister, Deputy Michael McGrath. I remind Deputies that the measures taken by the Government have been proven to more than offset the May increase in carbon tax, and they do so in a progressive manner that reaches those most in need. Significant enhancements of the fuel allowance will protect those most vulnerable to energy poverty, while the reduced excise rates on auto fuels, reduced VAT on energy bills and the €200 utility credit will mitigate impacts across society.

As for turf, as Members of the House heard earlier, the Government recognises that turf cutting by citizens for use in their own homes is a traditional activity across many peatlands. The burning of large quantities of turf, however, is associated with harmful levels of particulate matter emissions. These emissions can have a considerable public health impact. Therefore, Government policy will look to address these public health concerns while respecting local traditions in personal use of turf for home heating. That involves cutting and saving of turf. To be very clear, no ban on the burning of peat is proposed, but instead a regulatory provision will be made to reduce and prohibit the sale of sod peat in larger clusters of urban settings while allowing the traditional sale in rural areas and use by families there. That is respected. It is a matter of finding a way to plot a course through this. The Minister, Deputy Eamon Ryan, wants to work with us all to guide us through that and to reduce the harmful effects where such fuels are used in large urban centres. We can all see the benefits of the reduction in the burning of coal in many of our urban centres. We all know and recognise that. The question is how we can build on that initiative to protect the greater public health for us all.

I assure the House that the current energy price crisis remains an immediate priority for the Government. Our response to date has been comprehensive and immediate. While many of the forces dictating the current situation are outside of our control, the Government will continue to use the policy responses we have to mitigate the impacts on businesses and consumers and to take the pressure off many people living in both rural and urban Ireland. We must, however, remain committed to the policies which are critical to meeting our obligations on climate action. The carbon tax is a key pillar of Government policy to transition to a decarbonised society. The policy of ring-fencing carbon tax receipts for welfare supports for those at risk of energy poverty also ensures that this transition is done in a just and progressive manner. Similarly, the policies proposed on turf cutting are part of our broader commitments on climate action and to improve air quality for everybody. Accordingly, I do not accept the motion before the House and present the Government countermotion for consideration.

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