In his speech the Minister commented on climate change and the increasing frequency and destructiveness of climate events. Finance Act 2020 set out the trajectory for increases in carbon tax, a key measure in combating climate change, with the pre-committed increases confirmed today. Carbon tax, calculated on the rate of carbon dioxide per tonne, will increase to €48.50 per tonne (previously €41 per tonne).
Motor fuel
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The carbon tax increase will result in additional 2 cent per litre to the cost of petrol and diesel. This means that a 60-litre tank of diesel will increase by an estimated €1.48 and a similar tank of petrol will cost an estimated extra €1.28. Carbon tax will rise by the same amount in every Budget until 2029, further increasing the cost of petrol, diesel and home heating fuels.
Home heating
- The price of home heating oil, coal and peat will all increase from 1 May 2023. A 900-litre tank of home heating oil will cost €19.41 more while a 40kg bag of coal will cost 90 cents extra and a 12.5kg bale of peat briquettes will go up by 19 cents. The cost of annual natural gas usage will increase by an average of €16.98.
Funds raised from these increases are intended to go towards funding an increase in the fuel allowance in addition to programmes aimed at reducing the State’s overall carbon footprint, including the better insulation of homes.
In recognition of the impact the increase in carbon tax will have on the cost-of-living, the impact of the increases will be offset by a reduction in the National Oil Reserves Agency (NORA) levy to 0 cent per litre.
Carbon tax is estimated to raise an additional €114 million in 2023 and €151 million in 2024. The Government has committed the additional revenues to the Just Transition, fuel poverty prevention and funding to encourage greener and more sustainable farming.
Windfall Energy Tax
Ireland aims to be part of the EU-wide response to high energy prices which could see excess profits of energy taxes subject to a windfall tax. If agreement is not achieved at EU level, the Government will bring forward its own measures to capture excess profits of energy companies.