‘Unfair’ jet fuel is exempt from carbon tax while households suffer, says expert

Persistent and “well-organised lobbying” by airlines has been blamed for the situation where households and motorists in this country are hit hard by carbon taxes but people flying off on holiday to Spain or Australia escape the tax.

It was unfair that a family in the midlands using kerosene to heat their home was subject to the tax, but carbon tax does not apply to kerosene used to fuel aeroplanes, said energy scientist Paul Deane, of University College Cork (UCC).

Dr Deane’s comments came days after householders were told this month’s carbon tax rises would mean they would have to pay more for their home-heating oil, coal and gas.

The May 1 rise in carbon tax will add €17 to the annual cost of an average bill for the 600,000 households that use natural gas. The average gas customer will now be paying around €122 a year in total in carbon tax.

The increase in the carbon tax will add around €19 to the fill of a 900-litre home-heating oil tank.

It means filling a 900-litre tank will now cost households around €140 in carbon tax in total, calculations by price-comparison site Bonkers.ie show.

The carbon tax on coal and briquettes went up this month, also.

Carbon tax hikes on petrol and diesel were imposed just after October’s Budget.

The tax adds €1.04 to the cost of 60 litres of petrol and €1.20 to 60 litres of diesel, according to calculations by the Dáil’s Parliamentary Budget Office.

But heavy aviation fuel is exempt from the carbon tax and from excise duty.

The Central Statistics Office (CSO) has calculated that the excise duty exemption alone amounted to €273m in 2021, at a time of heavy restrictions on movements due to Covid.

In 2019, before the pandemic, the CSO said the revenue foregone to the State amounted to €634m.

Dr Deane said the fact that households and motorists were hit with carbon tax when airline fuel was exempt was “really unfair”.

“It is testament to the power of the well-organised aviation industry lobby, not just in Europe, but across the globe,” he said.

“Over the last 10 years, the aviation industry has vehemently resisted carbon taxes, with pressure coming in particular from India, China and the USA.”

Last week it emerged that sales of jet fuel in this country grew to record levels last year, wiping out some of the progress made in weaning the country off fossil fuels.

Overall greenhouse gas emissions from oil, gas and other fossil fuels were at their lowest in Ireland for 30 years.

But they still did not fall fast enough to meet climate targets.

Efforts on emissions were stymied partly by an increase in Irish people taking to the skies.

Dr Deane said the kerosene used by aeroplanes was similar to the kerosene used in home-heating oil systems.

“We use kerosene for heating our homes. If a family in Mullingar put on their oil-fired heating, they pay excise duty and carbon tax on that,” he said.

“Similar fuel is used on a Ryanair flight but there is no excise duty or carbon tax on that.”

However, there is a small levy on light oil used for commercial air navigation.

A Department of Finance spokesperson confirmed that there is no mineral oil tax on jet kerosene. This is because it is exempt from tax as per the European Union Energy Tax Directive.

She said this is the case for all EU member states.

In July 2021 the EU Commission published a proposal to revise the Energy Tax Directive. The taxation of intra-community flights forms part of this proposal.

“Ireland has been actively engaged in negotiations of this proposal, which are ongoing,” the department said.

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