Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

As the Deputy said, we had a discussion on this issue last night. It is no harm to revisit the matter here. It is important to do so on this occasion. Ireland's taxation on fuel is governed by European Union law as set out in Directive 2003/96/ED, commonly known as the energy tax directive, ETD. The ETD prescribes minimum tax rates for fuel with which all member states must comply. ETD provisions on mineral oils are transposed into national law in the Finance Act 1999, as amended. This Act provides for the application of mineral oil tax, MOT, to specified mineral oils, such as petrol, diesel and kerosene, that are used as motor or heating fuels. MOT is comprised of a non-carbon component and a carbon component. The carbon component is commonly referred to as carbon tax and the non-carbon component is often referred to as "excise", "fuel excise" or "fuel duty". In complying with ETD minimum rates, total MOT rates are taken into account.

Kerosene used for heating purposes attracts a reduced rate of MOT which is comprised entirely of a carbon component. The ETD minimum rate of taxation on kerosene used for heating purposes is set at zero. When introducing the ten-year carbon tax trajectory in 2020, the Minister deliberately scheduled rate changes on heating oil to come into effect at the end of the heating season. Therefore, the next scheduled increase in the carbon component of MOT on non-propellant fuels, such as kerosene, will come into effect on 1 May.

As the Deputy will be aware, the carbon tax trajectory is a key element of the Government's decarbonising strategy. The Government remains committed to the important signal that maintaining the carbon tax trajectory sends to society. I note that due to recycling of carbon tax revenue for investment in energy efficiency measures and targeted welfare payments, the carbon tax has been recognised as a progressive policy supporting climate policies. Therefore, the Minister does not intend to reduce the carbon component of MOT applied to kerosene.

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