Seanad debates

Thursday, 22 March 2012

Finance Bill 2012 (Certified Money Bill): Committee and Remaining Stages

 

1:00 am

Photo of Michael NoonanMichael Noonan (Minister, Department of Finance; Limerick City, Fine Gael)

Section 68 confirms the increase introduced in the budget in the carbon tax component of mineral oil tax on petrol and auto diesel. The effect of the budget change was to increase the carbon tax for those fuels from €15 per tonne of carbon dioxide emitted to €20 per tonne. When VAT is included the increase on petrol amounts to just under 1.5 cent per litre and just over 1.5 cent per centilitre for auto diesel. The increase also applies to fuels whose mineral oil tax rates are aligned with those of petrol and auto diesel. The section also provides for the same increase from €15 to €20 per tonne of carbon dioxide emitted to be extended to all of the categories of mineral oils with effect from 1 May 2012.

Senators are aware that due to the current budgetary constraints there is a requirement to raise revenue to provide for essential public services. Furthermore, there is a commitment in the EU and IMF memorandum of understanding to consider increases in the carbon tax. However, increasing the carbon tax by €5 means a relatively small increase spread across all mineral oils and natural gas rather than larger increases in the excise rates on specific fuels such as petrol and diesel.

The carbon tax increase announced in the budget will not be applied to home heating fuels or natural gas until after the winter has passed and will take effect from 1 May 2012. The yield from the carbon tax increases across all fuels is expected to be approximately €80 million in 2012 and €109 million, inclusive of VAT, in a full year. The impact on the consumer price index is estimated at 0.09% in a full year. The section serves essential purposes and I cannot accept the Senator’s recommendation.

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