Over the past number of years, budgets have reduced income tax and the universal social charge, USC, modestly by approximately €300 million per year. To do that and maintain increased spending, there had to be increases in taxes elsewhere. Last year, for example, commercial stamp duty went from 2% to 6%. That yielded approximately €400 million, which paid for the tax reductions on that occasion. In this year's budget, income tax and USC reductions of approximately €300 million, or €350 million in a full year, were paid for by a significant increase in VAT on food, accommodation and hotels, raising about €560 million from the hotel and food sector in a full year.

Last weekend, the Taoiseach promised to raise the income threshold at which people paid the higher rate from €35,000 to €50,000 over the next five years, amounting to approximately €3 billion in that time or anything from €500 million to €600 million per year. That is double the tax packages of the past two or three years. Clearly, other taxes will have to increase just like this year and last year.

We know that carbon tax was on the agenda this year, but the Government decided not to increase it. The ESRI in its study has stated that there will have to be dramatic increases in carbon tax to make up for our failure in terms of our climate change agenda. Currently, households are paying about €200 in carbon tax. According to the ESRI, that could go to €3,000 per year per household by 2024. That will happen over the next five or six years as income tax is reduced. All of the scenarios in the ESRI's study are stringent ones, with the figure I cited at the bottom end of the scale. There could potentially be higher carbon tax increases.

On 5 August, the Taoiseach said that, if we were going to meet our 2020 climate change targets, which we clearly will not, we would have to grasp the nettle in pricing carbon and increasing the carbon tax in the next couple of years. He stated that next year's budget, which is the one we have just passed, had to include an increased carbon tax - it did not for some reason - if Ireland was to meet its obligations on tackling climate change and that the Government was working on a set of proposals. The Minister for Finance, Deputy Donohoe, has also stated that carbon tax would have to be increased.

Can the Taoiseach give us the trajectory of how much carbon tax will rise each year over the next five years? Can he give the House the same precision on annual carbon tax increases over that time as he has given us regarding income tax reductions over the next five years?

Thanks very much, Deputy. I am a very strong supporter of reducing taxes on income and taxes on work. I know some people believe that, when one reduces income tax or USC, one is somehow giving people money. I do not see it that way. I believe it is allowing people to hold onto more of the money that they earned in the first place.

We know at the moment, when we need to continue to attract jobs and investment from overseas and so many people are getting increments and pay rises and are now able to work extra hours, that we want to incentivise people. That means reducing the amount of income taxes that they pay. Over the last couple of years since we have managed to get the economy working for people again, we have been able to reduce income taxes. We took hundreds of thousands of people out of the USC net entirely when we were in government with Labour. Now, one third of people who work do not pay any income tax at all. In more recent years, we have really focused on reducing the USC and reducing the point at which people pay that highest rate of income tax. Just in the past three budgets, including the one just gone by, for the average person earning about €45,000, those cuts in income tax and USC are worth about €750 in a full year. For a couple on an average income, those tax and USC reductions are worth about €1,500 in a full year. That is not a huge amount of money, but €1,500 a year is probably a month's rent, probably a month's mortgage, probably a month's childcare, or perhaps a bit more than that. I think we can do better in the years ahead if we keep the economy growing, if we make sure that we manage the public finances prudently.

The Deputy's assessment that income tax reductions have to be paid for by tax rises elsewhere is not entirely true. I would argue that most of the money that we are going to get from VAT next year and most of the money that we are getting from stamp duty this year is going into additional public spending. If one looks at the entire budget package of €2 billion to €3 billion, the amount of that that comes from tax increases or discretionary revenue measures is a couple of hundred million euro. It is not as straightforward as just offsetting one from the other. Someone could equally argue that that money is going into health or that money is going into housing, for example.

Pseudo-economics.

We have set out our projections in the years ahead. We are able to afford a tax package of about €620 million per year and still increase public spending from €66.5 billion next year to €68.7 billion the year after to €70.8 billion the year after that, €72.6 billion the year after that and €74.6 billion the year after that. I am happy to provide those costings, which indicate how we can continue to increase public spending and also afford modest tax reductions. That is, of course, contingent on managing the economy well, managing the public finances, making sure that people have jobs to go to and doing all of the things that are fundamental to having an economy working well.

Why did the Taoiseach not answer the question I asked? I asked whether he could give me a precise trajectory of the annual increases in carbon tax that will happen year by year over the next five years. The Minister for Finance has said that there will be carbon tax increases. The Taoiseach said in August that there will be carbon tax increases. It is all very well to make a specific pledge on one aspect of a budgetary package, that being income tax, but that has to be paid for. Explicitly, the Taoiseach came to us last year and said the Government would pay for last year's tax package via commercial stamp duty, a one-off windfall owing to an increase from 2% to 6%. This year, there is no question but that the Government could not have provided a €300 million tax package without deciding to increase VAT on the hotel and food sectors back to 13%. That is what paid for it. Otherwise, there would have been drastic cuts in services, for example, health and education, which the Taoiseach has not suggested will happen.

The bottom line is that we are failing abysmally in terms of our climate change targets. There is no question or dispute about that. The ESRI has said that this will be the reality over the next number of years and that it will have to be paid for.

My question was simple. The Taoiseach has said on the record that carbon tax will and should be increased. Can he give me a precise trajectory as to how much it will increase by, or is the ESRI completely off the mark with the figure of €3,000 per household by 2024? It is a fair question. The Government will not be able to reduce-----

Time is up, Deputy, please.

-----income tax by €600 million per year without increasing taxes elsewhere. That is an honest position I am putting to the Taoiseach, and he needs to be honest with people and say that is what will have to happen in the coming years. He owes it to us to give us the same precision as he gave us on income tax reductions.

He is a straight talker.

Deputy Martin is actually wrong on that point. We could have done what Sinn Féin and the left wanted to do - we could have borrowed more. We decided, instead of borrowing, that we should balance the books.

And the Taoiseach calls us "fake news".

We could have had a €700 million increase-----

There could be more done for the health service.

-----in spending on health rather than a €1 billion increase in spending on health. The VAT increase-----

Will there be a carbon tax increase?

-----was as much about funding health and housing or balancing the books as it was about finding money for a tax package. Deputy Martin knows how budgets are done. There are always a number of moving parts. In terms of carbon tax, the ESRI is way off the mark. Certainly, this Government of Fine Gael and Independents does not intend to raise carbon tax to the kinds of level suggested in that report.

At what level will it be?

The Taoiseach would prefer to buy carbon credits.

In terms of the trajectory, we have not worked one out yet. That is something-----

Of course the Government has.

Come on.

No, we have not. That is something that we are going to need to work on in the years ahead.

Has the Government not worked out the income tax reductions?

Deputy, please let the Taoiseach respond.

We have.

Why can the Government not work out the carbon tax increase?

It is entirely reasonable for a political party-----

The mask of the straight talker is starting to slip.

It is entirely reasonable for a political party to set out its policy on income tax over five years.

The Taoiseach said in August-----

Where is the policy on income tax and carbon tax from Fianna Fáil? I have not seen one. Where is the five year policy on income tax and carbon tax from Sinn Féin? It is entirely reasonable-----

The Government said in August it would increase carbon tax-----

We are probably the only party that is actually ahead in terms of setting out the trajectory.

Thank you, Taoiseach. Your time is up.

We are working on that at the moment and a time will come when we are willing-----

There is a lot less straight talking now.

-----and ready to put forward a trajectory for increases in carbon tax. As I said at the weekend, if we are going to increase carbon taxes, which we need to do if we are serious about reducing emissions, we should follow the model being pursued in Canada, where the money is given back to people in the form of tax credits and welfare.

The Taoiseach is more Trump than Trudeau now.

Please Deputies. Deputy McDonald is next.