Carbon tax hike leaves people with 'impossible choice' between food and heat

As the prices of consumer goods and utilities continue to surge, an increasing number of people in Ireland are having to choose between food and heating, charities have warned.  Stock picture

The increase in carbon tax which came into effect today will impact those on the lowest incomes the most and will leave some tasked with an “impossible choice” between food and heat, charities have warned.

The carbon tax saw a rise of €7.50 to €41 per tonne of CO2 in last October’s budget but was postponed until this month on home heating fuels such as coal, peat, natural gas, and home heating oil.

The move has been deemed necessary for Ireland to reach its climate goals. As a countermeasure, Vat is being temporarily reduced from 13.5% to 9% on gas and electricity bills from today until the end of October.

Tricia Keilthy, SVP's social policy development officer, pointed out that inflation is higher for poorer people. File picture: Gareth Chaney/Collins

However, due to already rocketing energy prices, the widening of carbon taxes will likely put additional strain on many lower-income households, charities have said.

Tricia Keilthy, SVP's head of social justice and policy, said people are cutting back on essential energy use for fear of the next bill, and are having to make the impossible choice between buying food or turning the heat on.

“We have to remember that inflation is actually higher for people on the lowest incomes, who spend more of their budget on essentials like energy, food, housing and transport — all of which are getting more expensive,” she added.

Speaking on Newstalk, Seán Moynihan, CEO of ALONE said older people below the poverty line have already used up the wriggle room they have. He added: 

We don’t want anyone going without the heating they need but on top of that we don’t want anyone going without the basics of life and fuel security.

According to Bonkers.ie the average Irish household uses 11,000 kWh of gas each year, meaning the increase will add around another €17 a year to people’s bills.

However, those in homes with three or more bedrooms or with a poor BER are likely to end up paying more.

The increase will also add approximately €19 more to the fill of a 900l home heating oil tank, and around €4.30 in total to a 40kg bag of coal.

The tax already adds around 10.5c to every litre of petrol and diesel, and the carbon tax doesn’t apply to electricity, where the PSO levy has been applied.

Speaking on Newstalk, John FitzGerald, adjunct professor of economics at Trinity College Dublin, said the rise in the carbon tax is necessary: 

You need to tell people that prices are going to rise and if you invest in retrofitting your house, or buying an electric car, you'll make savings. 

He also said that while there will be an increase in bills in the bills over the summer, customers can expect to see savings of €6 to €8 every two months in October, as a result of wind produced electricity, which will no longer need to be supported by a subsidy due to the rising costs.

“The price of gas and coal has gone through the roof. So the price of electricity has gone up. And the wind will actually be making money without a subsidy,” he added.

In a bid to mitigate the pressure felt by consumers, the government has issued a €200 rebate on energy bills, while also moving to cut public transport fares and increasing the fuel allowance for those who avail of the scheme.

However, with the cost of living still sharply increasing, it has come in for criticism that such measures do not go far enough, including calls for the carbon tax hike to be dropped.