Coalition parties are on a collision course over post-budget carbon tax hikes on petrol and diesel.
Ine Gael wants the planned tax hikes to be postponed or offset before they go into effect next month.
However, the Greens insist that climate action should go ahead as planned.
While Fianna Fáil would also welcome a delay in tax increases, the party believes postponing the increases will reduce the funds available for other budgetary measures.
There are also signs that the excise tax cuts will be extended to household petrol and diesel and that a reduction in the charges for people who pay motor vehicle tax in installments is also being considered.
The CO2 tax increases are due to go into law on October 12, increasing the price of a 60-litre tank of diesel by €1.48 and a similar tank of petrol by €1.28.
A law agreed by the coalition parties provides for an increase in CO2 taxes to €48.50 per tonne on fuel and heating oil.
However, increases in household heating oil have been postponed until May so that households are not negatively affected by the measures during the colder winter months.
Fine Gael now wants increases in fuel and diesel to be postponed until May as well, as costs for motorists at pumps have risen since the Russian invasion of Ukraine.
“With petrol and diesel prices currently high, this needs to be postponed or offset,” a senior Fine Gael source said.
There is even some debate within the government about postponing the increase entirely next year and instead adding the planned 2023 percentage increase in subsequent years.
However, Greens will insist that the increase in the carbon tax on fuel costs should be implemented next month, despite the impact it will have on prices as the climate crisis has not gone away.
The party will argue that the tax will lead to minimal hikes in petrol and diesel prices, insisting that the real impact on fuel costs stems from the war in Ukraine.
Greens will also insist that the money raised by the tax be used to fund cost-of-living measures aimed at offsetting price increases resulting from the introduction of road taxes.
Fianna Fáil is relatively agnostic about raising the tax again this year, with senior party officials pointing out that the tax is already enshrined in law.
Party sources also pointed out that if increases in gasoline and diesel are delayed by another seven months, revenue from the tax is substantial and further budget adjustments would need to be made.
However, the coalition parties appear to agree that the fuel excise duty cuts will remain in place after the budget to be announced on Tuesday 27 September.
The government cut excise duties on gasoline by 15 cents and diesel by 10 cents earlier this year amid record inflation and a global energy crisis.
All three coalition parties agree that the cuts should be maintained for the coming months, but there is still debate over when they should end.
Sources have also said there are discussions about lowering fees for people who pay road tax in installments.
People who pay their vehicle tax over several months and not in one payment currently have to pay an additional 11 percent.
It is considering reducing this penalty to allow motorists struggling with household finances to pay off their road tax later in the year.
Discussions on this issue are expected to continue next week.
https://www.independent.ie/news/budget-2023-coalition-split-over-budget-hike-in-carbon-tax-on-fuel-41996052.html Budget 2023: Coalition split over budget increase on CO2 tax on fuel