Coalition leaders have played down tensions between Fianna Fáil and Fine Gael over potential delays to the carbon tax in Budget 2027.
Finance officials advised the Government earlier this summer that it could examine delaying the annual carbon tax hikes beyond 2030, as well as applying the tax differently to certain products.
“There are no tensions, but the reality is that the revenues from the carbon tax trajectory, as provided for in legislation, have been baked into the National Development Plan expenditure profile,” Taoiseach Micheál Martin said on Wednesday.
“Also, then, in terms of fuel poverty and in terms of support for farmers. So the carbon tax revenue goes to farmers, in terms of environmentally friendly farming initiatives.
“It underpins a lot of the fuel poverty allocation in terms of the fuel loans and so on, and then of course the retrofitting agenda that has been so transformative and continues to be transformative.
“That all has to be worked out if there was to be consideration of a delay. Those are the issues that have to be reconciled, because one of the purposes of the retrofitting and solar and all of that is to actually make things cheaper for people, energy-wise.”
His comments come after the Irish Independent reported that a slowdown of carbon tax hikes for the rest of the Coalition’s lifetime is on the table in budget talks.
This summer’s hike in carbon tax was postponed until autumn due to the Middle East crisis and the fuel protests. That increase is now expected to be pushed out in the budget.
Planned annual carbon tax increases will add €53.50 to a fill of home-heating oil, €4.86 to a tank of petrol and €5.76 to a tank of diesel by 2030.
Carbon tax is the only tax or excise on fuels that is ringfenced to fund climate measures.
However, Fine Gael leader and Tánaiste Simon Harris questioned “a situation where, on the one hand, the Government is trying to temporarily reduce the cost of energy, while on the other hand, there’s other measures that the Government pursues that increase the cost of energy too”.
Mr Harris said he was “a supporter of carbon tax” and that the Coalition backed the tax in principle.
Speaking on his way into a cabinet meeting, he said “the trajectory for the carbon tax was set before there was a war in Ukraine, before President Trump and Iran were involved in this conflict”.
“In other words, the trajectory for the carbon tax was set before there were two massive global shocks,” he added.
“The Government needs to consider all of these things. None of these things are free. All of them have this sort of limitation. You can’t do everything in a budget.”
Mr Harris also played down disagreement between the two parties over a potential delay.
“Not only is there no tension, we’ve yet to have detailed discussions on all of this, and I have an open mind on this,” he said.
“The money that we generate from the carbon tax goes into really good initiatives around retrofitting, really good initiatives around the Fuel Allowance. So all of this needs to be looked at in the round.”