2026-04-21

232. Deputy Roderic O'Gorman asked the Tánaiste and Minister for Finance if his Department has assessed the predicted shortfall in revenue from the recent cuts to the carbon tax; and if he will make a statement on the matter. [28778/26]

Will the Tánaiste give us an account of his Department's assessment of the shortfall in revenue from the deferral of the carbon tax increase?

The estimated cost of delaying the carbon tax increase on home heating fuels until October is €22 million. This represents approximately 2% of the overall carbon tax revenue allocated for expenditure in the last budget, which was over €1.1 billion. While there will be different views and perspectives on the carbon tax - I know the Deputy's view - I will be very clear that the carbon tax remains a core part of Ireland's climate policy, which aims to reach net-zero. The Deputy will agree that the need for society and the economy to decouple from fossil fuel dependence is even more apparent now, given the volatility in the international fuel markets. However, you also have to apply a degree of common sense. I am not suggesting the Deputy would not; I am just saying I had to. When we were limited in what we could do on the likes of home heating oil, allowing a carbon tax increase to proceed would have pushed up costs further. I did not believe that to be the right thing to do at this moment in time. While we are not discussing it enough, the best way to insulate our economy and society from fuel price shocks is to reduce our dependence on fossil fuels. Carbon tax funds are allocated for expenditure on measures that will achieve this such as the continuation of the national retrofitting programme, investment in community energy efficiency measures and funding for greener farming practices. I reassure the Deputy that the full amount allocated from that sum of just over €1.1 billion in budget 2026 will still be spent on the intended measures. In other words, the €22 million deferral will not come off the climate action fund or other climate measures. It will be met from running a smaller budget surplus. The allocations set out in budget 2026, which were approved by this Oireachtas, remain the voted amounts for the year. This includes carbon tax funding commitments incorporated into the national development plan, which provides medium-term certainty for sectors and communities supported by these measures.

On the evening we voted on the financial resolutions, I noted that the Tánaiste's decision to defer that increase shattered that coalition that had existed in this House across Government and some parts of the Opposition where difficult votes to support the carbon tax had been taken. I genuinely have to ask why. As the Tánaiste pointed out, the value forgone is actually very small in terms of the overall package, €22 million out of €505 million. It is 4.3%. I spoke to a number of Fianna Fáil backbenchers the next day and they made the point that for six years, they had gone out and batted for the carbon tax and the Tánaiste's action had really pulled the rug out from underneath them in terms of the case they were making. By deferring the increase, the Tánaiste has ceded the ground to those who say the carbon tax is the root of all evil, and he has lost that case for that constant expansion of that pool of money for ACRES, the warmer homes scheme and retrofits, and ultimately it has not won the Tánaiste one iota of thanks from the people who have always opposed this particular measure. Again, I have to ask the Tánaiste why he did it.

I do not look for thanks in politics and I certainly do not look for thanks from political opponents. It is not why I do this job. I do look for ways of assisting people and you have to bring the people with you too. While the Deputy obviously supports the carbon tax, I appreciate that many in opposition stand by the carbon tax too and do not engage in populism on this. It is an important form of tax revenue. However, we do have to look at the reality in terms of the cost of a fill of home heating. We had to look at the reality in terms of green diesel. It did not make sense to decide to tell people that we were going to further increase the cost of their home heating oil. There also needs to be a sense of perspective in relation to this. That decision has not resulted in any reduced amount of money being spent on the climate action fund or on the retrofitting programme or on the fuel allowance because it is €22 million. It is 2% of the total amount that we expect to take in. I would also make the broader point that when the carbon tax was legislated for, I think, in 2020, the war in Ukraine had not happened and the war in Iran had not happened. I support the carbon tax. Some in the Opposition do not and some in the Opposition do; that is fine. However, these are realities in terms of the impact on the energy market and you can believe in a carbon tax and also believe that now might not have been the right time to further increase it.

The Tánaiste has spoken about common sense and it not making sense now to allow these increases to take place but he has to recognise the precedent that he set he it suspended the carbon tax increase because of the blockades in our streets. The Tánaiste has to understand that the people who have seen him bend and break now will anticipate that he will do it again and will look to put that same level pressure on it when it comes to the next set of decisions coming in October of this year. When it comes to October of this year, can the Tánaiste set out what his starting point is in respect of the carbon tax? Is he committed to continuing to grow that pot of money that is available for ACRES to support farmers, to support the further roll out of the warmer homes scheme and other retrofit schemes, and to have additional money so social protection payments like the fuel allowance can be increased, or is it a wait and see matter? Are we just going to wait and see until October and see what level of pressure is going to deployed against him? Will his common sense mean that he will actually duck the decision again?

I do not think that is a fair portrayal. We have managed as a country to introduce a carbon tax. We have managed to bring in over €1 billion in it. We have managed to legislate for it on a multi-annual basis. We did not bomb Iran. We did not disrupt 20% of the world's energy supply. The Government has to use the levers at its disposal. If we want to engage in real and meaningful climate action, we have to try to bring people with us, and the centre of Irish politics has to try to bring people with it as well. This measure needs to be seen in the round. It is 2% of the total amount we are expecting to take in carbon tax this year. It does not have an impact in reducing the climate action fund, and all taxation measures - and I say the same no matter what taxation measure I am asked about - are a matter of consideration at the budget. The tax strategy group in my Department looks at all things and I am committed to the carbon tax. I am committed to the legislation behind the carbon tax and committed to the carbon tax growing as part of our climate action in this country. However, I am also committed to looking at how we can assist people with their energy costs in the here and now, and there are some areas where there are limited tools available because there are no other excises on the fuels. Deputy Doherty and I had this debate. Carbon tax was on the kerosene. Some wanted me to reduce it. Instead, I just did not proceed with the increase, and I thought that was a balanced approach.