Varadkar signals increased carbon tax to meet climate change goals

Mr Varadkar acknowledged that poorer people would be affected by the carbon tax plans (Brian Lawless/PA) Credit: PA Wire/PA Images

Taoiseach Leo Varadkar has announced next year’s budget must include an increased carbon tax if Ireland is to meet its obligations to tackling climate change.

Making his summer briefing in Government Buildings, Mr Varadkar said he recognised this would affect those living in poverty.

“If we’re going to meet our targets we’re going to have to grasp the nettle in pricing carbon and increasing the carbon tax in the next couple of years.

“We very much recognise that those living in poverty and vulnerable people will be worst affected by that, so we will have to look at compensatory measures for that.

“However, we will be working on a set of proposals for setting a price on carbon to bring the tax up as part of our climate change obligations.”

Discussing the 2019 budget, Mr Varadkar said it would be similar to that of 2018, but with additional funding for education and welfare, and lowering the standard rate cut-off point.

“The budget will be broadly balanced in 2019, moving to a surplus in 2020, allowing the national debt to be reduced.

“Where there are additional resources available, the budget will recognise unmet needs and this will go very heavily to increasing spending and improving public infrastructure over tax reduction.

“The tax package will be similar to last year – modest, with a real focus on raising the standard rate cut-off point, the point where people start paying more income tax.

“The average person working full time in Ireland earns around 40-45,000 euro a year, and those people pay income tax at the highest rate.

“We will continue the emphasis on raising that threshold and avoiding an increasing income tax credit,” he said.

Mr Varadkar added the Government plans to restore the carers’ support grant, increase carers’ allowance and disability allowance, and introduce a 12-week draw-down period after someone stops being a carer in order for them to adjust.

Focus on supporting families will include proposals for two weeks’ paid parental leave, a period that new parents can share between them.

He added the Government’s proposed pension reform will end “one of the biggest economic inequalities in Ireland”.

According to Mr Varadkar, two thirds of people working in the private sector do not have a pension other than a state pension.

“We’re fundamentally changing that so that people will have a pension scheme, people will pay in, their employer will pay in, and the Government will pay in, too.

“People will be able to opt out, but in other countries people tend not to opt out once they’re enrolled.”

He added that a further increase to the National Training Fund of more than 1% will bring another 50 million euro in funding for higher education next year.