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The trajectory of Ireland’s carbon tax was “locked in” before wars broke out in Ukraine and the Middle East, Finance Minister Simon Harris has acknowledged.
Speaking to reporters as the Tax Strategy Group prepares to publish its latest policy papers, the Fine Gael Minister confirmed that officials are “taking stock” of the state’s carbon tax system ahead of the upcoming Budget.
The Tánaiste told the press that the government remains highly committed to the policy, but noted that recent international events must be taken into consideration.
“So firstly, the government is very committed to a carbon tax,” Harris said.
“And the carbon tax plays an important part in providing funding, quite frankly, but also in helping with the climate ambitions of the government and the people of Ireland.”
He added that the Tax Strategy Group is currently examining Ireland’s approach in comparison to other nations.
“What the Tax Strategy Group is doing is taking stock of where we’re at in terms of the trajectory of the carbon tax, what other countries do as well,” he continued.
“And I expect those papers to be published in the coming days.”
Harris noted that the resulting information would help inform public discourse in the future.
“It is the view of officials in terms of evidence and information that will help inform political and public discourse in the time ahead,” he stated.
“We haven’t discussed this or considered it as a government yet, so it’d be premature to comment on it further.”
Despite this, the Tánaiste pointed out that the current trajectory was decided prior to recent geopolitical instability.
“I suppose the trajectory of the carbon tax was locked in at a time before there was a war in Ukraine and before there was a war in the Middle East,” he remarked.
“And we need to consider all of these things in the round, but we’re not there yet.”
The carbon tax has been automatically increased on an annual basis in recent budgets as part of the Government’s climate policy, with revenues earmarked for measures such as retrofitting schemes and supports for households facing energy poverty.
However, rising energy costs in recent years have led to repeated calls for delays or adjustments to planned increases, particularly in the lead-up to winter periods when household energy demand is highest.
In an exchange with Gript in April of this year, Harris refused to rule out postponing further carbon tax increases if energy prices remain high.
“So I don’t think any finance minister would rule out any taxation measure in the month of April,” he said.
“So we look at all of this in the round.”
At the time, the Minister defended a decision to defer a planned increase in response to the ongoing cost of living difficulties.
“But what we did last week, which I think was a sensible thing to do in the midst of an energy crisis, was we deferred the increase,” he noted.
“And that allows the government look at all of these issues in the round.”
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