Written answers

Tuesday, 28 January 2014

Department of Finance

Carbon Tax Implementation

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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222. To ask the Minister for Finance if he will consider reviewing the imposition of the carbon tax, which sees a significant increase in charges for solid fuel resulting in the addition of €1.20 per 40 Kgs of solid fuel and 26 cent per bale of briquettes and which will impact severely upon those on low incomes; and if he will make a statement on the matter. [4299/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The application of the carbon tax to solid fuels remained subject to a Ministerial commencement order since 2010. This approach was primarily adopted to delay the application of the carbon tax to solid fuel in the residential sector to allow for the development of a robust mechanism to counter the large scale sourcing of coal from Northern Ireland where lower sulphur standards apply.  Such a mechanism is in place since June 2011.

The application of the carbon tax to solid fuels was further postponed in 2012 given the overall tax increases in Budget 2012 including in the standard rate of VAT.

The introduction of Carbon Tax was about sending a price signal that there is a cost associated with the consumption of fossil fuels to the detriment of the environment.  It should also be noted that solid fuels have the highest carbon content of all fossil fuels. As a result they are considered the dirtiest fuels and given the environmental impact it is important that they are taxed. 

As I was aware of the potential impact on lower income households, I chose not to introduce the carbon tax on solid fuels until after the 2012/2103 winter period and I opted to introduce the tax in two phases i.e. €10 per tonne of CO2 from 1st May 2013 and a further €10 per tonne of CO2 from 1st May 2014 thus bringing the carbon tax on solid fuels in line with that on all other fossil fuels i.e. at €20 per tonne of CO2.  The net effect of the €10 carbon tax from 1 May 2014 will be, as the Deputy has stated, approximately €1.20 on a 40kg bag of coal and 26 cents on a bale of briquettes.

While tax increases are unpopular, where Member States are under fiscal pressure, it makes sense to increase taxes in areas where some benefits can arise, in this instance a carbon tax promotes energy efficiency, reduces emissions and reduces our dependence on imported fossil fuels.

Accordingly I do not intend to defer the further increase of €10 per tonne of CO2 emissions from 1 May 2014.

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