Dáil Éireann Debate, Wednesday - 11 February 2026
90. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance the estimated cost in 2026 of reversing the carbon tax increase in October 2025 and not proceeding with the increase in May; and if he will make a statement on the matter. [11057/26]
View answer91. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance the estimated cost in 2026 of reversing all the carbon tax increases since October 2024 and not proceeding with the increase in May 2026; and if he will make a statement on the matter. [11058/26]
View answerI propose to take Questions Nos. 90 and 91 together.
The application of carbon tax to fossil fuels is provided for in three separate legislative frameworks. Carbon taxation of liquid fuels and vehicle gas is applied as a component of Mineral Oil Tax (MOT). Natural Gas Carbon Tax (NGCT) applies to natural gas used for non-propellant purposes, such as domestic and industrial heating, and Solid Fuel Carbon Tax (SFCT) applies to coal and peat. Current and historical MOT, NGCT, and SFCT rates are published in Revenue’s Energy Products and Electricity Taxes Excise Duty Rates Tax and Duty Manual available at https://www.revenue.ie/en/tax-professionals/tdm/excise/excise-duty-rates/energy-excise-duty-rates.pdf.
Legislation providing for annual carbon tax rate increases was introduced in Finance Act 2020. This fulfilled the 2020 Programme for Government commitment to increase the basis of carbon tax rates from €26 to €100 per tonne of carbon dioxide by 2030. Carbon tax rates on petrol and auto-diesel are legislated to increase at Budget time each October up to and including 2029. To allow for the passage of the winter heating season the increase on other fuels, such as heating kerosene, natural gas and coal, is delayed until 1 May annually up to 2030 when the final rate increase is legislated to occur. The additional revenue generated from increases in carbon tax rates since 2020 are used in targeted expenditure programmes.
Exclusive of VAT, each MOT carbon component rate increase has added 1.7 cent to a litre of petrol and approximately 2 cents per litre to auto-diesel, heating kerosene and marked gas oil. Each NGCT rate increase has added, exclusive of VAT, just under €15 annually to the average domestic gas bill, based on usage of 11,000 kilowatt hours. Annual SFCT rate increases have added, exclusive of VAT, just under 80 cents to the cost of a 40kg bag of coal.
I am advised by Revenue that the estimated costs in 2026 of reversing certain carbon tax increases are shown in the following table. This assumes the reversal of previous increases with effect from 1 March this year, that rate increases legislated to come into effect on 1 May 2026 would not proceed but that increases legislated for 14 October 2026 would be implemented.
|
Revert to rates pre |
Carbon Tax €m |
VAT €m |
Total €m |
|
8 Oct 2025 |
90 |
9 |
99 |
|
9 Oct 2024 |
191 |
19 |
210 |
