Tax Code

Tuesday, 21 April 2026

Ceisteanna (255, 260, 263, 316)

Mairéad Farrell

Ceist:

255. Deputy Mairéad Farrell asked the Tánaiste and Minister for Finance if he will scrap the planned increases in carbon taxes; and if he will make a statement on the matter. [26735/26]

Amharc ar fhreagra

260. Deputy Brendan Smith asked the Tánaiste and Minister for Finance if he plans to review the excise rates on green diesel to help farmers and agri-contractors; and if he will make a statement on the matter. [26887/26]

Amharc ar fhreagra

Pa Daly

Ceist:

263. Deputy Pa Daly asked the Tánaiste and Minister for Finance if he will remove excise duty on home heating oil as an emergency response to the ongoing conflict in the middle east. [26731/26]

Amharc ar fhreagra

Paula Butterly

Ceist:

316. Deputy Paula Butterly asked the Tánaiste and Minister for Finance if he has considered the impact that the scheduled increase in carbon tax and current levels of excise duty are having on farm businesses; if he will consider seeking a postponement of the upcoming carbon tax rise; and if he will make a statement on the matter. [20110/26]

Amharc ar fhreagra

Freagraí scríofa

Tánaiste and Minister for Finance

I propose to take Questions Nos. 255, 260, 263 and 316 together.

In recognition of the significant increases in energy costs owing to the conflict in the Middle East, the Government has implemented additional measures that will benefit both households and businesses.

This has been done in consultation and positive engagement with recognised stakeholder groups over the past number of weeks.

As part of these measures, Government has reduced the excise on marked gas oil (green diesel) by a further 2.4 cent (VAT inclusive), bringing the total reduction on green diesel to 7.4 cent (VAT inclusive, and including the 2 cent per litre reduction in the NORA levy). This reduction will now remain in place until 31 July 2026.

In addition, Government has deferred the planned increase in carbon tax, scheduled for 1 May, until 14 October. This will impact green diesel and other relevant fuels such as kerosene heating oil, natural gas and solid fuels. The estimated cost of delaying the carbon tax increase until 14 October is €22 million.

Green diesel is subject to a reduced MOT rate, €172.14 per 1,000 litres as of 15 April. This is significantly lower than the standard rate of €371.85 per 1,000 litres which applies to auto-diesel as of 15 April.

In addition to the reduced MOT rate on green diesel, section 664A of the Taxes Consolidation Act 1997 provides relief for expenditure relating to carbon tax on farm diesel incurred by any person carrying on a trade of farming. In computing profits of a farming trade, a farmer may claim an income tax or corporation tax deduction that is equal to the difference between the amount of carbon tax paid and the amount that would have been paid if calculated at the rate in place on 30 April 2012, i.e. €41.30 per 1,000 litres. This, in effect, keeps Carbon Tax on marked diesel fixed at a rate of just above 4 cent per litre for farmers availing of this relief. This is the rate that applied in 2012. The farmer is also entitled to claim a deduction for expenditure on the farm diesel. Further information on the carbon tax relief is available on Revenue’s website.

I am informed by Revenue that the number of claimants and the estimated tax cost of the relief for the deduction of carbon tax on farm diesel for farmers for the period 2021 to 2023 can be found on the Revenue website at https://www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/costs-tax-expenditures.pdf.

Further relief is provided for heavy oil (i.e. farm diesel, kerosene and fuel oil) and liquefied petroleum gas used for qualifying purposes in horticultural production and in the cultivation of mushrooms. Such fuel is relieved from the carbon component of MOT. Where farm diesel is used for such purposes the effective MOT rate after relief is currently €20.92 per 1,000 litres. Inclusive of VAT this equates to just under 2.4 cents per litre.

Furthermore, the Minister for Agriculture, Food and the Marine has announced comprehensive €100 million Fuel Subsidy Support Scheme to assist farmers, agricultural contractors and fishers facing unprecedented increases in fuel costs. The payments will cover the months of March up to the end of July which coincides with peak fuel usage on farms.

The scheme will provide €20 million per month in supports, with funding directly linked to fuel usage last year to ensure those most impacted by the fuel price increase receive the greatest assistance.

Farmers and agricultural contractors will benefit from a support rate equivalent to approximately 20 cents per litre of MGO (marked gas oil) used based on verified fuel consumption in 2025. The funding will be distributed proportionally a point that was strongly emphasised in ongoing engagements with the representative farm and farm contractor groups.

This targeted and practical support package ensures that those most exposed to these increases will receive meaningful assistance at the most critical time of year.

With regard to Kerosene (used for heating), there is no non-carbon component of Mineral Oil Tax. The Mineral Oil Tax applying to Kerosene heating oil is fully comprised of the carbon charge (carbon tax). The carbon tax is a key component of the Government’s overall climate action policy which includes ringfencing of funds towards investment in climate action and the Just Transition.

The Government is fully aware that Kerosene prices have increased considerably. In order to protect those most at risk of fuel poverty, Government extended the fuel allowance season by four weeks which will result in payments totalling €152 to eligible households who need it the most. The cost of this measure is in the region of €70 million.

As noted, carbon tax funds are ring-fenced for expenditure on measures which will reduce our dependence on fossil fuels; such as the continuation of a national retrofitting programme, investment in community energy efficiency measures and funding for greener farming practices.

As of Budget 2026, the Government has allocated over €4.2 billion in carbon tax revenue for these purposes since 2020. ESRI analysis consistently shows the lower income deciles are better off as a result of the social protection measures funded by the increased carbon tax.