‘You can’t keep going’: How the Government will spend a £300m windfall
On Monday the Taoiseach confirmed that the Government is going to get the full value of the €2.4bn ($2.8bn) windfall from a new carbon tax, which was announced last year.
This will be made available in 2019, and the Government has now released the details of the first phase of the package, which will see the State paying off €2bn of the tax over four years.
The first phase, which began in January 2019, will see an increase in the minimum tax rate from 6.9 per cent to 9 per cent.
This is paid by the State, and will not affect income tax.
However, it is not a tax for employers, who pay their own rates.
The State has already committed to pay its share of the cost, which is expected to be between €400m and €500m, with the remaining amount coming from the Treasury.
The new carbon price will go into effect in March 2019, with a two-year transition period.
This means that the State will have to pay up to €400 million in additional taxes over the next two years, which has already caused a number of companies to take advantage of the new tax relief.
This could result in a number more companies opting to stay in the Irish economy for the long term.
In addition, the Government intends to reduce the rate of return on corporate bonds, which have been on the rise due to the impact of the carbon tax.
These bonds are a key part of the Irish Government’s debt management, which means that if the Government doesn’t cut the rates, companies may need to pay the extra debt interest.
The Minister for Finance, Michael Noonan, told The Irish News on Monday that the package will also benefit other sectors.
It will give firms more incentive to invest in new plants and equipment and to hire more workers, he said.
In particular, the government intends to encourage companies to move into the digital economy, such as by providing a further boost to the digital infrastructure, he added.
The plan has been praised by the industry, and a number companies are already looking at the carbon price as a way to boost their bottom lines.
However some are worried that the additional tax relief won’t be enough to ensure that companies are able to reinvest in their operations, which could make them more vulnerable to the recession.
However if this happens, it would not be the first time that the carbon pricing plan has caused a significant increase in corporate debt.
In May 2015, the Irish Stock Exchange reported that the value of a company’s stock had increased by more than €40m in the two months after the introduction of the Carbon Tax.
The government has said that the new carbon prices will not impact on its ability to borrow, and that it will continue to support banks in the run-up to the next financial year.
It is also planning to provide €5bn in additional funding for infrastructure projects.
The carbon tax was introduced in response to the global financial crisis and has helped cut CO2 emissions by around 40 per cent since the beginning of the year.
The Irish economy has been hit hard by the crisis, with exports falling by almost 80 per cent in the first half of 2019, as the European economy suffered the most devastating downturn in its history.