Jack Chambers (Dublin West, Fianna Fail) | Oireachtas source

I move amendment No. 1:

To delete all the words after "Dáil Éireann" and substitute the following:

"notes that:

— the volatility in fuel prices being experienced now, and over the last 18 months, is due to a variety of geopolitical issues including the Ukraine war, none of which the Government has any control or influence over;

— crude oil is an internationally traded commodity, and its price is determined by changing global demand and supply factors, and has had a divergence of $100 (US) over the period from July 2020 to May 2023;

— within the above constraints, the Government has recognised the struggles many people and businesses have faced with increasing fuel prices, and has been very pro-active in responding to these fuel cost challenges over the last 18 months;

— in particular, the provision of temporary reductions in the rate of non-carbon excise applying to diesel, petrol and Marked Gas Oil (MGO) amounting to 21, 16 and 5.4 cent per litre for petrol, diesel and MGO respectively, which in last year's Budget were extended to end February 2023;

— the further extension of these measures to 31st May, 2023, and the phased restoration of these excise rate reductions in three steps to 31st October, 2023;

— to date, the reductions are estimated to have cost over €1 billion, in terms of revenue foregone between 10th March, 2022, and 31st July, 2023; and

— the excise reductions to date are designed to strike the balance between passing a significant benefit to consumers, while managing the tax base and respecting the minimum rates allowable under the Energy Tax Directive;

recalls that:

— in addition to its fuel excise reductions, the Government has made substantial fiscal support available to assist with the cost-of-living challenges, amounting thus far to some €12 billion;

— €3 billion of cost-of-living measures were introduced prior to Budget 2023;

— Budget 2023 was a 'cost-of-living' Budget, focussed on addressing inflationary pressures, and the budget package amounted to €6.9 billion, which included over €3 billion in direct measures to address the cost-of-living challenges, such as adjustments to income tax bands and increases in social welfare payments;

— this was complemented by a set of one-off cost-of-living supports introduced in the final quarter of last year, worth over €4 billion; and

— the Government has continued to act to respond to the rising cost of living, and in February of this year a further package of supports worth €1.3 billion was introduced;

recognises that:

— carbon tax is a key pillar underpinning the Government's Climate Action Plan to halve emissions by 2030, and reach net zero no later than 2050;

— the Programme for Government: Our Shared Future committed to increasing the carbon tax, and the Finance Act 2020 provides for a 10-year trajectory for carbon tax increases to reach €100 per tonne of CO2 by 2030;

— a significant portion of carbon tax revenue is allocated for expenditure on targeted welfare measures and energy efficiency measures, which not only support the most vulnerable households in society but also, in the long term, provide support against fuel price impacts by reducing our reliance on fossil fuels;

— previous analysis, undertaken using SWITCH: Simulating Welfare, Income Tax, Childcare and Health Policies, the Economic and Social Research Institute tax and benefit model, to simulate the impact of the carbon tax increase and the compensatory welfare package, has confirmed that the net impact of the combined measures is progressive, and households in the bottom four income deciles will see all of the cost of the carbon tax increase offset, with the bottom three deciles being better off as a result of these measures; and

— 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 this will be achieved 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; and further recognises that Budget 2024 is the appropriate time for the Government to set out its taxation and expenditure decisions in response to the cost-of-living pressures currently being faced by many households.".

I welcome the opportunity to discuss the Sinn Féin Private Members' motion on the reversal of scheduled increases in carbon and non-carbon fuel taxation, and in particular its view that the 11 October carbon tax increase and the 31 October 2023 fuel excise restoration should be cancelled. I will speak to the Government's countermotion and, in particular, set out that the budgetary context is the appropriate place for discussions around this to be addressed.

The Government is acutely aware of the impacts of energy price inflation and the broader cost-of-living crisis on households and business across Ireland, and has acted decisively to lessen the financial impacts across the economy and society as a whole. The drivers of inflation are global in nature and, accordingly, it is not possible for any one government to fully absorb the costs. Therefore, Government policy has focused on temporary and targeted measures aimed at the most vulnerable. The policy response has also been designed to avoid generating second round effects that could lead to an inflationary spiral.

The final retail price of fuel is determined by a number of factors, including the costs of production, distribution, global market factors, international exchange rates, taxation, wholesale market contracts as well as individual retail pricing policies. In this regard, the volatility in the market which we have faced in recent times is best illustrated in the price of crude oil, which has had a divergence in price of $IOO over the period July 2020 to May 2023. The Government is very aware of the severity of the financial impact that fuel price increases have on Irish households, and I will shortly outline how we have responded. It is clear however, that many of the factors influencing the current price of fuels are out of the Government's direct control, in particular the market volatility. This is demonstrated by the fact that while the price of crude oil fell back for a period earlier this year, market dynamics have once again began to drive up its price again in recent months.

Let me now turn to the Government's response to the increase in energy prices over the past 18 months. Notwithstanding the restrictions of the energy tax directive and the need to manage the public finances, the Government has acted decisively on the energy crisis. We have recognised the impacts of fuel price increases. While these trends are driven primarily by global factors, the Government made the decision to alleviate some of these impacts through the domestic taxation of fuel. In particular, in March 2022 the Government provided for temporary reductions in the rate of non-carbon excise applying to diesel, petrol and marked gas oil, MGO. Following extensions and amendments, cumulatively these reductions amounted to 21 cents, 16 cents and 5.4 cents per litre for petrol, diesel and MGO, respectively. Following the Government decision of 21 February 2023, a phased restoration of these excise rate reductions was legislated for, which provided for reintroduction of full rates as follows: a VAT-inclusive increase of 6 cent on petrol, 5 cent on diesel and 1 cent on MGO on 1 June; a VAT-inclusive increase of 7 cent on petrol, 5 cent on diesel and 1 cent on MGO on 1 Sept; and a VAT-inclusive increase of 8 cent on petrol, 6 cent on diesel and 3.4 cent on MGO on 31 Oct . The excise reductions to date are designed to strike the balance between passing a significant benefit to consumers while managing the tax base and respecting the minimum rates allowable under the energy tax directive. They are estimated to have cost over €1 billion in terms of revenue foregone to the Exchequer between 10 March 2022 and 31 July 2023.

In addition to the fuel excise reductions, the Government has made substantial fiscal support available to assist with the cost-of-living challenges amounting thus far to some €12 billion. Prior to budget 2023, €3 billion of cost-of-living measures were introduced, with budget 2023 reflecting a cost-of-living budget focused on addressing inflationary pressures. I reject some of the remarks that have been made by others, as if this Government has stood idly by and done nothing for households. Can they not recognise the significant intervention that was made, some of which was proposed by Sinn Féin in the context of the overall cost-of-living crisis? There has not been an ounce of credit or acknowledgement of that in any of the contributions made thus far. The budget 2023 package amounted to €6.9 billion, which included more than €3 billion in direct measures to address the cost-of-living challenges, such as adjustments to income tax bands and increases in social welfare payments. This was complemented by a set of one-off cost-of-living supports introduced in the final quarter of last year worth more than €4 billion.

The Government recognises that there continues to be upward pressure in fuel prices due to a variety of geopolitical issues. However, it does not believe it is appropriate to respond to this situation simply by accepting this motion. Instead, it is of the view that budget 2024 is the appropriate place for it to strategically set out its taxation and expenditure decisions in response to the cost-of-living crisis currently being faced by many households.

Simply accepting Dáil motions on any given week is not the way to set out the wider fiscal parameters, wider certainly for households and the supports we will be giving in responding to the cost-of-living crisis that many households face. These will be set out on budget day.

Deputies will be aware that the 2020 programme for Government committed to increasing the amount charged per tonne of carbon dioxide emissions from fuels to €100 by 2030. The Government followed through on this commitment by introducing legislation in the Finance Act 2020 to provide for a ten-year trajectory for carbon tax increases to reach €100 per tonne of carbon dioxide by 2030. This measure is a key pillar underpinning the Government's climate action plan to halve emissions by 2030 and reach net zero no later than 2050.

A further key component of the Government's carbon taxation policy is the hypothecation of revenues raised from the rate increases to fund important just transition measures. It is important to note that a significant portion of carbon tax revenue is allocated for expenditure on targeted welfare measures and energy efficiency measures, which not only support the most vulnerable households but also, in the long term, will mitigate fuel price impacts by reducing our reliance on fossil fuels. In the long run, the best way to protect Ireland from the impact of international fossil fuel prices is to reduce our dependency on them. We will achieve this through the progressive decarbonisation of Irish society and the steps that will be taken to meet the Government's commitment to reaching net zero greenhouse gas emissions by 2050.

For context, it must also be noted that changes to carbon tax rates are having a relatively small impact on current energy prices. The 2023 carbon tax increase, which came into effect in October last year for auto fuels, added approximately 2 cent per litre in tax to petrol and diesel. The increase in rates for home heating fuels such as kerosene, gas, and solid fuel was delayed until 1 May 2023 to mitigate impacts during the winter heating season. The May 2023 increase added approximately €21.56 to a 1,000 l fill of kerosene and 20 cent – VAT inclusive – to a 12.5 kg bale of briquettes. It is clear, therefore, that carbon tax is not the cause of current energy price inflation.

The Government is very conscious of the negative impact that the sustained rise in consumer prices is having on society. Everybody in this House is aware that the reason for this significant inflationary pattern is matters completely outside our control and that are global in nature. The Government is satisfied that it is responding in a proactive manner and in line with policies taken in other jurisdictions, and within the constraints of the EU energy and VAT directives.

The Government believes its comprehensive response to the energy crisis and other areas will put us in a good position to recover when, hopefully, the current price pressures on fuel begin to ease. The Government's countermotion is on the reversal of the planned increases. We believe it is best to address all these matters, which will receive appropriate attention, and set out the strategic fiscal parameters of the State in the context of budget 2024 as part of overall taxation and expenditure decisions in response to the cost-of-living pressures faced by society as a whole. We have been very clear in the summer economic statement that there will be a cost-of-living package for families and significant decisions on expenditure and tax to help households and support them through the winter period. That package is the appropriate way to intervene and provide support for families.

I have outlined why the Government believes the carbon tax is important in helping to reduce our dependence on fossil fuels. I am reminded of the Sinn Féin manifesto in which it outlined its opposition to carbon tax but also its ability to spend revenue from tax increases that were occurring. I would encourage the party to provide a bit of clarity on that. Consequent to what I have outlined about the carbon tax, we cannot support a proposal to reverse the increase of 11 October, which forms part of the long-term policy trajectory of increases and the policy approach agreed by the Government. If the Government were to do this, it would undermine the rationale of this important measure to mitigate climate change.

I have moved a countermotion on the matters raised. The appropriate time to provide the important supports and cost-of-living measures that families, society and businesses will expect in budget 2024 is budget day. We appreciate Sinn Féin's input but the appropriate time is budget day, not during the taking of a Dáil motion.

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