No decision made on October carbon tax hike as government weighs policy options

NO DECISION HAS been reached around the postponed carbon tax measure that was pushed out to October, according to Tánaiste Simon Harris. 

The deferral of the planned carbon tax measures was announced in April, following the fuel protests. 

The government announced that a planned increase due to kick in on 1 May 2026 of €71 per tonne would be postponed until 14 October 2026.

Carbon tax is levied on fuels: coal, peat, home heating oil, natural gas supplies to consumers and, of course, petrol and diesel.

The Tánaiste said today no decision has been made in relation to October and the carbon tax increases, stating that there are things the government must consider. 

He pointed to the recent tax strategy papers which propose a range of policy options regarding the carbon tax, such as differentiating on fuel types.

Speaking to reporters in Dublin today, he said times have changed since the carbon tax measures were first introduced. 

“So let me be crystal clear: the Programme for Government supports carbon tax, I support carbon tax… the trajectory was set before there was a war in Ukraine, before there was the situation in the Middle East. So there are policy options for government to consider, and government will consider all of them in the round,” he added, stating:

None of them are free; all of them have fiscal implications. But we will obviously, as a government, consider that in the round.

Fuel supports costing €100 million per month

Speaking about the Dáil being recalled to continue excise cuts that are in place, Harris said the cost of continuing with the excise reductions on petrol and diesel is around €100 million per month.

Harris said it is being funded by running a smaller budget surplus this year.

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The government will revisit the matter ahead of November, he added.  

It was confirmed last week that the government will not cease fuel supports in September as had previously been planned.

The planned increases on 1 September and 1 October will not now go ahead, with the Dáil being recalled on Friday to amend legislation to push the supports out for longer.

Harris said when the Dáil rose in July, diesel and petrol prices were in a vastly different position to where they are now.

Pushing out the fuel supports for longer is a “considered approach”, he said, stating that the government will continue to monitor the global markets and the impact it’s having at the pumps on a daily basis.

He said no one can predict where the energy markets are going in the next few months, but he will take the best economic advice available to make decisions at the right moment in time.

“What we’ve been very clear on is that September and October will remain without change. In other words, the excise situation will remain at the current level. We also intend to continue the diesel rebate scheme too, and we will then, in advance of November, take stock of the situation,” he said.

“It’s impossible to predict where things will be in November. If we were having this conversation in July, there’s no doubt we would have been able to proceed with the excise changes. So that that is literally the fluidity of the world we’re living in,” added Harris.

In terms of October’s budget, he said the cost-of-living is a priority, stating that he is very conscious that fuel costs and energy costs are a real burden on families and on individuals.

“There’s people in this country who are playing by the rules, working their backside off, and still find at the end of the week or the end of the month they look at the payslip and go, is that it? And they need a bit of assistance, too. And the only assistance can’t be through the social welfare system. That’s not fair. That’s not right.

“Work has to pay as well. And that’s why things like an income tax package matter. It’s why childcare matters,” added Harris.