Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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381. To ask the Minister for Finance the distributional impact of increases in the carbon tax from budgets prior to 2021 had on different income groups; and the compensation measures taken to protect the most vulnerable. [32443/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Carbon Tax was introduced in Ireland in 2009 on a phased basis applying initially to auto fuels, subsequently to other liquid fuels in 2010 and to solid fuels in 2013. The carbon tax was first implemented at a rate of €15 per tonne of Carbon Dioxide (CO₂) emission, the rate increased to €20 in Budget 2012 and remained at that rate until it was increased to €26 per tonne in Budget 2020. In line with the Programme for Government commitment, Budget 2021 increased the rate to €33.50 per tonne of CO₂ applying immediately to auto fuels with a delayed implementation date of 1^stMay 2021 on all other fuels.

Several studies have examined the distributional impacts of carbon taxation In Ireland. In particular in relation to the most recent tax rate increases, research conducted by the Economic and Social Research Institute of Ireland (ESRI) between 2018 and 2020 examined the distributional impacts of potential carbon tax rate increases as well as revenue recycling and compensation options. These research papers are published and available to access on the website of the ESRI (www.esri.ie).

In recognition of the fact that this research points to carbon tax increases disproportionately impacting low income households, the Government has taken steps to minimise the impact of the increase on heating costs. I have delayed the increase on home heating fuels until 1st May in each year following the Budget announcement. Both Budget 2020 and Budget 2021 also committed to ringfencing of all additional revenue arising from the increase for expenditure measures related to fuel poverty prevention, the Just Transition and investment in a low carbon economy. Full details of this expenditure are available on the Budget website of the relevant year (www.budget.gov.ie).