THE CARBON tax for home heating oil comes into force today, leading to increases of 6 per cent for natural gas and 8.4 per cent in household fuel bills. From today, the levy will apply to kerosene, natural gas, marked gas oil, liquid petroleum gas and fuel oil.
The tax was criticised by business and farming groups yesterday on the grounds that it would increase costs, affect competitiveness and lead to job losses. Groups campaigning for elderly people also claimed that it would lead to fuel poverty.
However, Minister for the Environment John Gormley’s spokesman defended the tax yesterday, saying the money it raised – €330 million in a full year – was used to reduce taxes in other areas. He claimed it would increase competitiveness.
He said €40 million was being spent on insulation in social housing this year, with a further €90 million of the income allotted to the national home retrofit programme. Some €36 million of that was earmarked for households vulnerable to fuel poverty.
The spokesman also said a €36 million PRSI exemption for employers who take unemployed people off the dole was funded by the tax, as was the reduction in VAT rates. He said both measures had helped to create jobs. The tax was introduced in the December budget at a rate of €15 per tonne of carbon emissions. It was applied immediately to petrol and diesel, with taxes for most other fuels deferred until today.
The exceptions are coal and peat briquettes. The new tax on the solid fuels is subject to a commencement order. No date has been announced for the order, which will be introduced only after the issue of cheap imports of those fuels from Northern Ireland is dealt with.
Yesterday the group representing small and medium-sized business, Isme, warned that the new tax would undermine competitiveness and called on the Government to reverse the decision.
Isme chief executive Mark Fielding said there was no justification in a 6 per cent increase in gas costs. “The very idea of a carbon tax in the current environment is utter madness,” he said.
The farming sector also criticised the new levy. IFA president John Bryan said it would cost jobs and undermine efforts to improve competitiveness. He said the Government should follow the lead of the French and abandon the tax.
“Export growth will be central to our recovery, but this will not be achieved if the carbon tax is imposed,” said Mr Bryan.
The organisation for older people, Active Retirement, also called on Minister for Social Protection Éamon Ó Cuív to ensure that the tax did not exacerbate fuel poverty among the elderly.