Tax Yield
Dail Éireann — 2026-09-29
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Simon Harris (FG), Wicklow

I thank the Deputy for his question. The carbon tax has been a central pillar of Ireland's climate policy framework. It has provided a clear and credible long-term signal in terms of our work as a country to transition away from fossil fuels and move towards a low-carbon economy.
Provision was introduced in the Finance Act 2020 to provide for annual increases in carbon tax rates up to May 2030. Carbon tax rates on petrol and auto-diesel are generally legislated to increase at budget time each year up to 2029, with the increase delayed until 1 May for all other fuels up to 2030. In April, the Government deferred the 1 May 2026 carbon tax increase on home heating fuels and marked gas oil, MGO, until October in light of the extraordinary circumstances and increased fuel prices created by the conflict in the Middle East. I am advised by Revenue that the amount of carbon tax collected was €1.067 billion in 2024 and €1.176 billion in 2025. The provisional figure to the end of August this year was €866 million.
Revenues raised from the carbon tax are allocated for expenditure on just transition and climate-positive measures, including funding social welfare measures, agri-environmental schemes and retrofitting programmes. The net impact of the combined measures funded by the carbon tax has consistently been shown to be progressive. As of budget 2026, the Government has allocated over €4.2 billion in carbon tax revenue for those purposes since 2020. Economic and Social Research Institute, ESRI, analysis consistently shows that the lower income deciles are better off as a result of the social protection measures funded by the increased carbon tax.
The Government remains committed to our climate action policy, which includes the carbon tax. However, we took the decision to pause the 1 May increase to help alleviate fuel price pressures being faced by households and businesses. In budget 2026, €1.114 billion was allocated to climate action measures and to ensure the most vulnerable were protected from the unintended impacts of the increase.
I will make one further point in the interests of fully informing the House.
As the Deputy has heard me say before, we published a tax strategy group paper over the summer. It outlined different ways one could consider the carbon tax reforms that could be made. We are considering that in the round and I have particularly signalled that changes be considered for kerosene and gas.

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Retrieved: 2026-10-05T01:00:59+00:00
Sitting date: 2026-09-29