October's carbon tax increases could be paused, hints Simon Harris

Simon Harris: 'I’m really conscious of the fact that fuel costs, energy costs are a real burden on families and on individuals.' Picture: PA

Tánaiste Simon Harris has hinted that the Government could pause carbon tax increases in October, as he says everything will be kept “under review”.

Mr Harris said no decision on carbon tax increases have been taken, saying that the budget on October 6 will come in advance of planned hikes.

He highlighted that options were provided by the Tax Strategy Group earlier in the summer, including the trajectory of carbon tax increases which are out to 2030.

“We need to consider all this,” Mr Harris said.

“Obviously any changes to [the carbon tax] would have a cost, so all of this needs to be looked at in the round.

“But I’m really conscious of the fact that fuel costs, energy costs are a real burden on families and on individuals. I would like to get to a point that we’re having a more informed and sophisticated conversation than just one-off measures.” 

In April, the Government pushed back planned increases to carbon tax from 1 May to 14 October.

Currently, carbon tax on petrol and diesel is charged at €71 per tonne of carbon dioxide emitted, while for other fuels it is charged at €63.50 per tonne. The proposed increase would have increased carbon tax on other fuels to €71 per tonne of carbon.

However, Mr Harris said the programme for Government commits to retaining carbon tax.

“I support carbon tax. Carbon tax was brought about, though, and the trajectory was set before there was a war in Ukraine, before there was the situation in the Middle East,” Mr Harris said.

“So there are policy options for governments to consider, and government will consider all of them in the round.” 

The finance minister said none of the options available were free, but the Government is being honest with the public by saying everything is being kept “under review”.

“That's why we’re recalling the Dáil this Friday. When the Dáil went into recess in July, diesel and petrol prices were in a very different place.

“You can see how quickly the global environment can change in four to six weeks. So we have to be humble, agile, and nimble enough to respond to things.” Mr Harris said the Government will continue to monitor the price of fuel on a daily and weekly basis, but he would not predict “where the energy market is going to be in six months time”.

He said Cabinet would meet on Wednesday to agree a financial resolution to extend the excise cuts on petrol and diesel until November.

The Tánaiste said the estimated cost to maintain the cuts were around €100m each month, with the Government funding the expense by running a smaller budget surplus this year.