Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank Senator Gavan for this recommendation, which proposes a reduction in the current rate of mineral oil tax applied to kerosene used for non-propellant purposes, as well as further deviations from the proposed rates of mineral oil tax applying to other fuels. I acknowledge the impact of fuel prices on the current cost-of-living crisis and welcome the discussion of this important matter today. I am happy to address the recommendation that has been made by the Senator.

The Government is very aware of the impact of increased fuel prices on households and businesses, which are driven by volatility in global energy markets. It is not possible for the Government to fully insulate consumers against these price impacts. However, a number of very important steps have been taken to lessen the impact of increased fuel prices. As the Senators will be aware, in my budget speech I announced a deferral of the final tranche of the fuel excise restoration, which was due to take place on 31 October 2023. The temporary rate reductions amount to 8 cent per litre on petrol, 6 cent on auto diesel and 3.4 cent on marked gas oil, MGO. These rate reductions are now being extended until 31 March 2024, with phased restorations taking place in two stages in April and August 2024.

The programme for Government committed to multi-annual increases in the carbon tax out to 2030. This measure is a key pillar underpinning the Government’s climate action plan to halve emissions by 2030 and reach net zero not later than 2050. In line with Government policy, the additional revenues raised from increases in carbon tax are allocated to expenditure measures, which ensure a just transition through targeted social welfare measures, investment in energy efficiency and funding for the agricultural sector.

As the Senator will be aware, in the budget carbon tax was increased by €7.50 per tonne of CO2, with the estimated revenues raised from this increase allocated to climate action and just transition measures in line with the programme for Government commitment. In 2024, this allocation is €788 million from the carbon tax. That is up €165 million on 2023. On budget day, we published a paper called Budget 2024: The Use of Carbon Tax Funds and we provided a detailed breakdown of exactly where that €788 million is being spent. The carbon tax is going up in a phased and gradual manner, but all the proceeds from those increases are ring-fenced and we set out in an open and transparent way on budget day every year how those revenues are being spent on helping farmers in the transition to low-carbon farming, measures to tackle fuel poverty and, indeed, on supporting the investment in energy efficiency in homes all over the country.