FG: Tax on energy giants would boost incomes

A WINDFALL tax on energy giants would boost family incomes by about €200 a year and help ease the credit crunch, Fine Gael last night insisted.

Party leader Enda Kenny said the levy would pay for a 1% cut in the 13.5% VAT rate and stimulate the economy.

Fine Gael said the Government had handed energy firms €300m a year until 2012 by letting them hike-up prices to cover the cost of carbon allowances which they are getting for free until 2012.

Mr Kenny said the windfall move would boost business and the economy as well as putting extra money into people’s pockets.

However, he denied the move — which he estimated would give the average household back about €4 a week — was too modest to have any impact on the economic downturn.

“Power generators will make about €300 million a year in unearned profits on the backs of businesses and consumers,” Mr Kenny said as he accused the Government of ignoring the strain on household finances as prices continued to rise across a range of goods and services.

Fine Gael energy spokesperson Simon Coveney said it was not fair for consumers to bear the brunt of the green tax.

“This carbon tax has been passed onto customers, but the companies themselves are not having to pay it,” said Mr Coveney.

“Energy generators are getting, essentially, money for nothing and we do not think that is fair.

“The new all Ireland electricity regulatory system requires power generators to charge for carbon allowances in producing electricity fossil fuels, even though nearly all these allowances have been provided for free.

“These proposals will help rebalance the scales and give the consumer a well deserved break,” he said.

Mr Coveney said power companies stand to make an extra €1.6 billion over the next four years by charging customers for the carbon allowances they will get for nothing.

The Government is also looking into the possibility of changing the regime controlling carbon payments.

The ESB said the issue was “a matter for Government” and had no view on a windfall tax.