Carbon tax fact and fiction - What should we make of the criticisms?

Smart Money: Will it work? Is it fair? Will the money be wasted?

Is acceptance of the carbon tax all about trusting the Government to use the money wisely? Photograph: PA

Is acceptance of the carbon tax all about trusting the Government to use the money wisely? Photograph: PA

There were reports of some motorists queueing to fill up their tanks ahead of the imposition of the additional carbon tax at midnight on Budget night. If so, many will have spent more on driving to the station than they will have saved in tax. Even if they had a diesel car, they will have saved less than €2 on a 60-litre fill. Yet the carbon tax debate is now hot and heavy between those who say the Government should be moving faster – and other who say this is just yet another tax and won’t make any difference So what, are the facts and how does criticism of the carbon tax stand up to scrutiny?

What is the plan?

The Minister for Finance Paschal Donohoe announced an increase of €6 per tonne in the carbon tax to €26 per tonne. The extra tax on motor fuels came in immediately, though as carbon tax is a relatively small part of the overall tax burden on diesel and petrol, the increases at the pumps were limited. The application of the additional tax to other fuels such as coal, peat and home heating oil, is to be delayed until next May, after the winter.This means an additional €90 million will be raised. The Minister also clearly committed the Government to continuing to move towards the target agreed by a a majority of the Joint Oireachtas Committee earlier this year to increase the tax to €80 per tonne by 2030.

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