Carbon tax rise to be offset to stop households facing extra costs, Taoiseach says

Tánaiste notes changes to healthcare, childcare, transport and housing costs as possible solutions

Any increase to the carbon tax is to be offset in order to avoid housholds facing further pressures amid the ongoing cost of living crisis, the Taoiseach has said.

Micheál Martin and Tánaiste Leo Varadkar on Tuesday said the Government was examining ways to offset the impact of next month's carbon tax increase in an attempt to ensure nobody is worse off after it kicks in.

Mr Varadkar said pay policy, welfare and pensions, reducing the burden of taxation and examining costs to households that can be impacted by Government measures were part of the solution. He referenced the cost of healthcare, childcare, public transport, housing and higher education as examples.

“The best thing we can do for people is to try and make sure that they have more disposable income and that the cost of things that we have influence over comes down,” he said, adding that adjusting Vat rates could help to “treat the symptoms but doesn’t deal with the underlying cause”.


‘Wrong decision’

Speaking in the Dáil, Sinn Féin leader Mary Lou McDonald told Mr Martin that raising the tax rise was “the wrong decision at the wrong time”.

She said it was “neither intelligent nor sensible to add any level of additional cost” to people’s home heating expenses at a time of soaring inflation when workers and families “are already struggling to keep on top of their soaring energy bills”.

“Instead of supporting households, your Government will ratchet up pressure on families with a tax hike that adds to the already unaffordable price of home heating fuels,” she said.

Mr Martin said Ms McDonald’s response was “political and electoral and nothing more”.

“Any increase in the carbon tax will be offset, so there will be no additional cost to people,” he said.

The Taoiseach said there needed to be “an inclusive process” which involved climate change related considerations. He noted this week’s report from the UN intergovernmental panel on climate change which warned “it’s now or never to avoid climate catastrophe”.

“The United Nations chief António Guterres called out double speak on climate and he said some governments and business leaders are saying one thing but doing another. Simply put they are lying and the results would be catastrophic,” Mr Martin told the Sinn Féin leader.

“I think that is the view of a number of people in this House, including the Sinn Féin party, they double speak on climate. It seems to me that it is very much the St Augustine approach you’re taking to climate change; ‘Oh Lord make me chaste, but not yet’, that is your approach.”

‘A lot of money’

Earlier, Mr Varadkar had said that while the increase associated with the carbon tax hike was not large - around €20 to the cost of filling a tank of home heating oil or €1.50 to a monthly gas bill - it was “a lot of money if you don’t have it, and of course that comes on top of increases that have happened to date”.

Mr Martin said that the Government cannot deal with the fallout from post-pandemic inflationary cycles, exacerbated by the war in Ukraine, on a "week to week basis".

“As a Government, and as a society more importantly, we have to stand back and assess the enormity of all that, acknowledging uncertainty from now until the end of the year at a minimum and take a considered and inclusive approach to how we respond to all of this,” he said.

Jack Horgan-Jones

Jack Horgan-Jones

Jack Horgan-Jones is a Political Correspondent with The Irish Times

Sarah Burns

Sarah Burns

Sarah Burns is a reporter for The Irish Times