Paschal Donohoe admits prospect of no-deal Brexit limited carbon tax increase

Paschal Donohoe admits prospect of no-deal Brexit limited carbon tax increase
Minister for Finance Pascal Donohoe during the traditional budget phone-in programme on RTÉ Radio 1’s Today with Sean O’Rourke. Pic: Kinlan Photography.

Carbon tax hikes would have been higher in the budget if there was no prospect of a hard Brexit, Finance Minister Paschal Donohoe has signalled.

He also confirmed that the €1.2bn to Brexit-proof the country if there no-deal could be revised upwards and result in the Government actually borrowing more-depending on the economy.

Speaking on RTE's Today Show with Sean O'Rourke, the minister faced tough questions from workers, carers, parents and vulnerable families about his budget decisions for next year.

He defended the decision not to ease workers taxes and the higher carbon taxes, insisting that the "squeezed middle" needed a strong economy.

The Finance Minister said: “The thing that can make a difference to the squeezed middle is having an economy that is able to meet their needs.”

Mr Donohoe confirmed that he was willing to borrow and use more funds at a later stage for the country's no-deal Brexit contingency fund, on top of the proposed €1.2bn.

And the situation would be kept under review, he told reporters after the RTE show.

But the opposite will not be true. Workers and the public will not benefit more with reliefs and services if an orderly Brexit deal is secured and the €1.2bn contingency fund is not needed.

Mr Donohoe said: “If we end up in a deal scenario and do get an agreement, the money that I indicated yesterday that would be needed for no-deal support measures will not be available for other purposes.

"We have to borrow that money and I will not be in a position if we get into a deal scenario of borrowing that money for other reasons.”

Minister for Finance Pascal Donohoe during the traditional budget phone-in programme on RTÉ Radio 1’s Today with Sean O’Rourke. Pic: Kinlan Photography.
Minister for Finance Pascal Donohoe during the traditional budget phone-in programme on RTÉ Radio 1’s Today with Sean O’Rourke. Pic: Kinlan Photography.

The minister also conceded that the prospect of a no-deal Brexit had been an influencing factor in restricting the carbon tax rise to just €6, bringing the levy to €26 per tonne of carbon used.

The actual amount could have been higher for taxpayers if an orderly Brexit seemed likely.

He said: “If I did end up in a situation in the early part of next year, that we see further downward moves on sterling and we see shopping and the purchase of fuel and other things become more attractive in Northern Ireland, so it was a factor."

He said he believed every budget between now and 2030 would see carbon increases to bring carbon taxes up to €80 a tonne.

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