€1,500 a head carbon tax forecast ‘way off the mark’, says Taoiseach

Leo Varadkar concedes carbon tax increases but not to extent projected by the ESRI

 Taoiseach Leo Varadkar said the Government had to get tax increases right to avoid public backlash. Photograph: Gareth Chaney Collins

Taoiseach Leo Varadkar said the Government had to get tax increases right to avoid public backlash. Photograph: Gareth Chaney Collins

 

Taoiseach Leo Varadkar has claimed that ESRI projections of dramatic increases in carbon taxes are “way off the mark”.

The Economic and Social Research Institute which provides analysis on national policy issues predicted that carbon taxes will have to increase from €100 currently to €1,500 per person if Ireland is to meet its climate action targets on emissions by 2030.

But Mr Varadkar rejected the institute’s projections and said that the Government did not intend to raise carbon taxes to the kind of levels suggested by the ESRI.

He said they had not worked out the trajectory of carbon tax increases yet. “That is something we’re going to have to work out in the years ahead.”

But he acknowledged to Green party leader Eamon Ryan that there would have to be increases.

Mr Varadkar added that “the best way to get it done is on a cross party basis which would take the politics out of it”.

He said it would mean running a car would be more expensive. Public transport costs would also increases along with electricity and gas prices.

The Taoiseach had been challenged in the Dáil by Fianna Fáil leader Micheál Martin to give a precise trajectory of carbon tax increases each year with the same precision he had given on tax reductions.

Mr Varadkar at his party’s ardfheis had pledged to increase the rate at which people started paying the higher rate of tax from €35,000 to €50,000 over five years.

Mr Martin asked Mr Varadkar: “Can you give us a trajectory on how much carbon tax will rise each year over the next five years?”

He asked for the “same precision” as the Taoiseach had given on income tax reduction.

Mr Varadkar said that “in terms of carbon tax, the ESRI is way off the mark”.

He said they would have to work out the trajectory of increases “in the years ahead”.

He insisted that it was “entirely reasonable for a political party to set out its policy on income tax for five years”.

Fianna Fáil policy

He asked Mr Martin where was Fianna Fáil’s policy on income tax and carbon tax.

“And a time will come when we’re ready to bring forward a carbon tax” trajectory, he said.

But the Green party leader criticised the Taoiseach for delaying decisions on carbon tax. He said the time to decide the tax was today.

“We cannot put if off any longer,” he said.

Mr Ryan compared the projected increases in carbon tax to “going from climbing the Sugar Loaf to climbing Mount Everest in one huge step and it won’t work”.

He also challenged the leaders of Fianna Fáil, Sinn Féin and Labour about their carbon tax and climate change policies.

But the Taoiseach said the changes would be a mix of tax and regulation.

It would also involve investments in renewable energy, retrofitting homes, electric vehicles, big changes in agriculture, reductions in peat production and the closure of Moneypoint power station.

He said they had to get tax increases right. He was conscious of what happened in Australia which he said tried to introduce a carbon tax and it failed, and set that country back 20 years.

He said President Macron in France was facing massive protests over fuel increases.

He agreed with something similar to Mr Ryan’s proposals of a tax increases trajectory over a number of years but putting the tax collected back into investments in climate change mitigation.

Mr Varadkar added that “the best way to get it done is on a cross party basis which would take the politics out of it”.