Jennifer Whitmore (Wicklow, Social Democrats)
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408. To ask the Minister for Finance the estimated additional VAT exclusive yield from a €7.50 increase in the carbon charge in 2025 and 2026; and if he will make a statement on the matter. [30050/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware the current legislation underpinning carbon tax policy is Finance Act 2020, which sets out a multi annual trajectory of increases to 2030. As per the trajectory, increases of €7.50 per tonne of Carbon Dioxide emitted will apply to all affected fuels until 2029 with a final increment of €6.50 bringing the rate to €100 per tonne of carbon dioxide in 2030.

As per Finance Act 2020, increases apply to auto diesel and petrol with effect from October (traditionally Budget night) while increases to other fuels take effect from 1 May 2025. This delayed commencement allows for the passage of the winter heating season. Therefore, the yield arising from a carbon tax increase within any given calendar year will not be representative of an increase if it were in place for the full year. For example, the increases which applied from 9 October 2024 for road transport fuels and from 1 May 2025 for all other affected fuels increased the headline rate of carbon tax from €56.00 per tonne of carbon dioxide to €63.50 reflecting an overall increase of €7.50. The full year yield from this increase will be realised in 2026.

The Deputy has requested estimates of the additional VAT-exclusive yield arising from legislated carbon tax increases across two years, these changes would be legislated for across three budget cycles. For example: Budget 2025 (applies increases on all other fuels in May 2025), Budget 2026 (applies increases to auto diesel and petrol in October 2025 and to all other fuels in May 2026), and Budget 2027 (applies increases to auto diesel and petrol October 2026). In this regard, I propose to set out the estimated VAT exclusive yield from one budget cycle on a €7.50 per tonne increase in the carbon tax.

• First year: The yield from budget night onward is estimated at €12 million.
• Second Year: The carbon yield arising from the previous year increases on auto-diesel and petrol plus the May increase on other fuels is estimated at €110 million.
• Full-Year Yield: If the €7.50 increase were applied for a full calendar year, the yield would total approximately €143 million.

The Department is currently working on updated analysis which will be published in the coming months.