Ireland’s planned increase in carbon tax came into effect yesterday as homeowners up their household budgets in line with the rising cost of living.
A carbon tax is a tax on the use of fossil fuels such as oil, gas, petrol, diesel, coal and peat in line with plans of reaching Ireland’s climate targets by 2030.
The Carbon Tax rate of €33.50 a tonne was increased by €7.50 a tonne to around €41 a tonne in October last year.
READ MORE: Tax hike many forgot about to hit most Irish homes from today with bills set to jump even further
That has so far resulted in a 2.5 cent increase in the cost of one litre of diesel and an additional 2 cents on a litre of petrol.
The Carbon Tax on other fuels used by Irish households and businesses then rose from May 1, 2022.
Carbon Tax Increases on fuels this month include:
- Kerosene: This has risen by around €19.40 per 900 L tank
- Natural gas: The average annual cost for usage has increased by €16.95
- Coal: a 40kg bag of coal will now be 89c more
- Peat briquettes: a 12.5kg baleof briquettes has risen 20c
Although these increases are now in effect, the carbon tax increase itself will be temporarily cancelled out by the recent announcement of the reduction of VAT on electricity and gas.
Therefore from May 1 to October 31 this year, the VAT rate on gas and electricity is being reduced from 13.5% to 9%.
As the 2022/2023 Budget rolls around, the government will be reviewing the tax rate and will either extend the lower rate or resume the higher - depending on the situation at that time.
The current VAT reduction should see homeowners save on their energy bills to the tune of around €49 a year on gas and €61 a year on electricity - however, this is all down to the amount of energy consumed by each household.
For those who think they will struggle to afford to heat their homes later this year, the Fuel Allowance remains open for applications and will resume weekly and lump sum payments in September.
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