Taoiseach Micheál Martin has defended plans to increase Carbon Tax in the face of a call from Sinn Féin leader Mary Lou McDonald to abandon rises due to kick in this May and criticisms of the Government’s efforts to alleviate the cost-of-living.
The Government has committed to increasing Carbon Tax every year while using the proceeds for environmental initiatives and to alleviate fuel poverty as part of efforts to fight climate change.
While Carbon Tax increases on diesel and petrol began last October a planned increase in the tax on gas, home heating oil and solid fuels due to take place from May 1st.
During Leaders’ Questions in the Dáil on Tuesday Ms McDonald said that households have been “hammered by a cost-of-living crisis that is out of control” and are being “crucified by the extortionate cost of housing, of energy, of fuel, of groceries, of insurance.”
She highlighted remarks by Fianna Fáil Minister of State Seán Fleming - who advised people to shop around to make savings - and claimed they were "callous and indifferent remarks from a minster who's paid €140,000".
Ms McDonald argued that the remarks “reflect the attitude of a Government that is utterly out of touch with the struggles of ordinary people”.
She said Sinn Féin has suggested that VAT be removed from energy bill but the Government has not worked with the European Commission to do this.
She also said her party has proposed cutting rents, banning rent increases, cutting childcare costs, expanding eligibility for the fuel allowance and scrapping the planned increase in Carbon Tax which she said would “add to the cost of everything”.
Ms McDonald called on Mr Martin to drop the planned increase in the tax.
Mr Martin defended the Government’s record to support people’s incomes highlighting measures put in place during the Covid-19 pandemic.
He also spoke of the international factors causing an increase in energy costs saying: “This time last year indeed a barrel of oil on international markets traded at $61. Today it’s at $91 a barrel. That wasn’t caused by Carbon Tax, that is a global phenomenon.”
On Sinn Féin’s proposal to cut the VAT rate he said that Ireland currently has a derogation from the EU to have a lower VAT rate of 13.5 per cent.
He said a temporary reduction would mean losing the derogation and the VAT rate could return to 23 per cent “which we do not want to do”.
Mr Martin insisted the Government understands that “people are under significant pressure arising from this inflationary cycle”.
He told the Dáil of more than €1 billion of support of people’s incomes through tax cuts and social protection measures were announced in the Budget.
He said: “Since coming into office the Government has raised fuel allowance from €630 to €914 and if you couple that with the €113.50 electricity payment the Government support for those on low incomes has increased by 63 per cent to €1,027and we’re going to do more.”
Mr Martin cautioned that the Government “can’t chase inflation” as that hasn’t worked previously.
But he said: “We’ve got to cushion the blow... for those most in hardship, those most at risk.
“We’ve got to target the measures and the Government is currently examining ways to do just that. That’s what we intend to do and to alleviate people more generally in terms of these pressures.”
He said the the Government has a number of measures under consideration and indicated that they would be announced later this week.
Ms McDonald accused the Government of “mañana, mañana” and “dither and delay” and reiterated her call for the increase in Carbon Tax to be scrapped.
Mr Martin said that around €146 million in measures to help families in the last Budget was funded by raising Carbon Tax and that around €200 million this year will come from those receipts to fund the retrofitting of homes for energy efficiency.
He said the receipts from Carbon Tax are “going back to the people in terms of better environmental farming practices... retrofitting their houses so that they’re more efficient energy wise and ultimately to reduce costs.
“And they’ll also go towards fuel poverty and that’s why we allocated it towards fuel poverty in the Budget.”
Earlier, opposition parties had demanded a mini-budget and an increase in the minimum wage to ease the pressure of the cost-of-living crisis.
The Social Democrats, Labour and Solidarity-People Before Profit also criticised remarks by Mr Fleming where he advised people to shop around to get better deals on electricity, insurance and the weekly grocery shop.
Senior Government figures, including Mr Martin, had ruled out a mini-budget as the Government prepares its package of measures to help households with rising bills, particularly for energy.
Social Democrats co-leader Catherine Murphy said: “Tinkering at the edges is not going to deal with this.
‘Targeted and meaningful’
“If you’re going to do something that is targeted and meaningful, I think it is probably going to be in the area of a mini-budget.”
She suggested measures, such as an increased minimum wage and extending the fuel allowance for people on the working family payment scheme, were needed to help workers on lower incomes.
She claimed Mr Fleming's comments were "insulting" and they "really fall into the Marie Antoinette category".
Labour TD Ged Nash claimed that to date the Government "has only introduced two proposals".
He said the first is €113 off electricity bills and he labelled this as a “gimmick” and the second was Mr Fleming’s suggestion that people should “stop complaining and they should shop around”.
Mr Nash argued that this is "very telling and reveals a poverty of imagination from Government in respect of how they plan to deal with this unprecedented crisis for working families across the country."
Mr Nash said comprehensive changes are needed to the social welfare and finance Bills and he gave the example of a VAT cut on fuel and energy costs.
He said a mini-budget should be implemented “if the package that is to be presented is going to be meaningful”.
Solidarity TD Mick Barry said he will be introducing a Dáil motion on Wednesday calling for an increase in the minimum wage to €15 per hour.
He said it must fully compensate low-paid workers not just taking into account rate of inflation “but how it impacts on them disproportionately”.
Mr Barry also claimed that Mr Fleming’s remarks shows that Government Ministers are “out of touch with the reality for working people in this cost-of-living crisis”.
Mr Fleming has apologised for his comments on RTÉ Radio's Drivetime show.
During an interview in which he sought to reign in expectations about the package of measures the Government is preparing he also said: “So rather than just complaining and saying, ‘What’s the Government going to do for me?’ You could actually have a serious impact on your own finances.”
When challenged by Drivetime presenter Sarah McInerney, Mr Fleming argued the targets of his criticism were opposition TDs, and that it “would be more practical” to give people suggestions.
Mr Fleming released a statement late last night saying: “I did not intend to imply people shouldn’t complain about the cost of living, that wasn’t my intention and for that I apologise. I was urging people to also shop around for best value, in addition to the measures being taken by the Government.”
He insisted: “The Government and Fianna Fáil take the issues around the cost of living very seriously.”