WEALTH April 22, 2026 0 Comments

Is Harris’s latest move a game-changer or a ticking time bomb for your wallet?

Could the carbon tax take a breather this budget season? The Tánaiste seems to think so, hinting that an increase might be off the table for now — all while leaving the door wide open for extending those excise duty cuts set to expire later this year. It’s a balancing act, isn’t it? Juggling the urgent need to support folks grappling with soaring fuel costs against the government’s commitment to fight climate change with tools like carbon tax. Meanwhile, Ireland’s chief economist, John McCarthy, assures us we’re not tiptoeing into recession territory despite a potentially hefty inflation spike — the kind that could reach 6.7% under some grim scenarios tied to global turmoil and energy disruptions. And with the Exchequer forecasted to dip into the red, the pressure’s on to strike the right chord between economic relief and fiscal responsibility. Plus, the promise of a personal income tax package adds another layer to this unfolding story. As we all wonder: can the government keep everything under review without dropping the ball? Let’s dig into what’s next on the horizon. LEARN MORE

Carbon tax may not be increased at budget time, the Tánaiste has hinted, as he refused to rule out extending the excise duty cuts when they expire later in the year, writes Brian Mahon.

It comes as the chief economist in the Department of Finance, John McCarthy, said that Ireland was “not in recession” territory.

It also comes as the annual progress report (APR), one of the first documents produced as part of the budgetary process, showed that inflation could reach as high as 6.7% in less than a year, according to a “severe” scenario forecast by the Department of Finance.

The forecast is the worst scenario included in a range of projections published yesterday, which examined potential impacts of the war in the Middle East.

The report also projects an Exchequer deficit of €1.2bn for this year, and €3.4bn in 2027.

The “severe” scenario is modelled on the event of “pronounced and prolonged disruption to energy supply” with oil at $130 a barrel in 2026, and averaging $125 a barrel in 2027.

As part of a €500m package to help people affected by the fuel crisis, the Government committed to not increasing the carbon tax, which was due to come into place this month.

However, when asked about the carbon tax and the decision to pause its increase, Simon Harris said: “There was a balance to this. And we also have to help people with the transition away from fossil fuels… help in terms of, for example, purchasing EVs [electric vehicles], and we see a very, very significant surge in recent times too.”

The Tánaiste, who is also Minister for Finance, added: “And you know, we’ve made decisions, but we made decisions in relation to carbon tax, acknowledging that we believe in the principle of carbon tax, we have a carbon tax that the time wasn’t right to put it up, and deferring that decision for further consideration at Budget.”

Mr Harris also said the Government remained committed to a “personal income tax package” in this year’s Budget.

“I really do believe that a personal income tax package is actually important. It’s important in terms of assisting people, in terms of keeping a little bit of their own money, and also making sure that work always pays,” he said.

On extending the excise duty cuts when they are due to come to an end, Mr Harris said: “I’m ruling nothing in or nothing out.

“The genuine position of the Government is we have to keep everything under review.”

carbon tax — John McCarthy, Chief Economist at the Department of Finance. Photograph: Leah Farrell / © RollingNews.ie

Meanwhile, asked what the likelihood was of a recession hitting Ireland, Mr McCarthy said: “In the current environment, you can never say never, and we draw out some of the risks, as I put there, but under the three scenarios that we’ve presented, we are not in recession territory.”

Mr McCarthy also said that the State’s surplus is set to grow from €5bn to €9bn this year, driven by higher-than-expected corporation tax, stronger social insurance revenues, and lower spending by bodies outside central government.