The yield from Carbon Tax soared in 2021 though environment taxes overall fell as a proportion of total tax revenues.
The Carbon Tax yield last year was €660m, up from €500m in 2020, due to motoring activity recovering from pandemic lockdowns and the rate of Carbon Tax increasing, according to CSO data.
Environment taxes are categorised as:
+ Energy taxes, which includes taxes on energy production and energy products, including taxes on fuels for transport. Carbon taxes are included as an Energy tax rather than a Pollution tax, largely to aid international comparability.
+ Transport taxes includes taxes related to the ownership and use of motor vehicles. This mainly relates to Vehicle Registration Tax (VRT) and Motor Tax.
In Association with
The two other environment taxes are Pollution taxes and Resource taxes, which are insignificant relative to Energy and Transport taxes.
Carbon tax was introduced by the Fianna Fáil/Green Party government in 2010 and initially applied to liquid and gaseous fuels at the rate of €15 per tonne of carbon dioxide (CO2).
The tax was extended to solid fuels in 2013 under the Fine Gael/Labour Party government, and there were phased increases of the tax to reach €26 per tonne in 2020.
Budget 2021 further raised the tax to €33.50 per tonne of CO2 on automotive fuels in October 2020, and on all fuels as of May 2021.
Finance Act 2020 legislated for annual increases in the rate of carbon tax out to 2030, which will bring the tax rate to €100 per tonne.
The 2022 hike is €7.50, bringing the overall rate of carbon tax to €41 per tonne, with this increase being applied from October 2021 for diesel and petrol and from May 2022 for all other fuels.
The estimated additional yield from the current €7.50 increase in the carbon tax is €108m in 2022, and €147m in 2023.
The carbon tax currently adds €7 to a 60-litre fill of petrol, and this will increase by an additional €1.28 each year to 2030.
Carbon tax currently adds €8.10 to a 60-litre fill of diesel, and this will increase by €1.48 each year to 2030. On a 900-litre fill of home heating oil, the carbon tax element is €106 from May.
Carbon tax makes up €4.90 of the cost of a 40kg bag of coal and to €1.07 per bale of peat briquettes.
Carbon tax has been consistently opposed by the Rural Independent Group of TDs, who claim that the tax hits rural dwellers the hardest.
Total environment taxes increased by 6.6% in 2021 to €4.8bn, a total that is well short of the peak for this taxation category recorded in 2017.
The Motor Tax tends in recent years has been downwards, as tax policy has nudged motorists to vehicles with lower CO2 emissions.
