Cuirim fáilte roimh an Aire Stáit, an Teachta Dillon, chuig an Teach seo inniu. I thank the Cathaoirleach for selecting this Commencement matter for debate this afternoon. Liquefied petroleum gas, LPG, was excluded from the reduced carbon tax rate announced in the recent budget. Over 50,000 households and tens of thousands of businesses rely on LPG for heating, hot water and cooking, many of them in rural areas beyond the national gas grid in counties such as Cavan and Monaghan. In fact, several hundred poultry producers located in counties Monaghan and Cavan rely on LPG for reliable and consistent heat for growth and laying conditions on their farms. As the Minister of State is probably aware, approximately 70% of the national poultry flock is concentrated in the Border region, in particular in counties Cavan and Monaghan.

LPG's nationwide distribution infrastructure also forms an important part of our energy reliance, serving critical sectors including healthcare, food production, manufacturing, hospitality and vulnerable households. Rural households and small business would seem therefore to have been unfairly penalised by the omission of liquid gas cylinders from the reduced carbon rate announced for heating fuels in the budget. These rural hotels, restaurants, farms, tourism operators and food businesses could now face higher operating costs than competitors who are connected to the natural gas network. The exclusion of these products from the carbon tax reduction could now place an additional financial burden on off-gas grid households and businesses at a time when many are already facing significant energy cost pressures. This anomaly could exacerbate fuel poverty among customers who have limited practical alternatives available or are unable to make the substantial upfront investment required to switch heating systems. The situation creates a clear affordability and fairness issue for thousands of households and businesses that live and operate beyond the natural gas network and depend on LPG for heating, hot water and cooking. As I say, many of these are located in rural Ireland.

Many customers have already transitioned to a lower carbon and cleaner fuel and have limited practical alternatives available to them. For many homes and businesses, the use of liquid gas is not simply a choice but an essential energy source. As it stands, this budget approach risks increasing costs for consumers who cannot really switch to another heating fuel, while at the same time providing relief to users of more carbon-intensive alternatives. Despite producing fewer carbon emissions than heating oil, LPG users will now face double the carbon tax rate of kerosene by 2030.

LPG produces around 11% less CO2 than heating oil yet LPG users face a higher carbon tax rate under budget 2027 measures, penalising those who have already switched to a lower carbon alternative. Apparently, this would also be the first time since the introduction of the carbon tax mechanism that LPG is treated differently. The current proposal would mean that urban gas consumers would be supported while rural gas consumers would face a rising carbon tax cost to 2030, despite the same end-of-use applications – heating, hot water, cooking, industrial process heat, etc.

I am informed that while natural gas customers will now remain subject to a carbon tax rate of €48.50 per tonne of CO2 for the lifetime of the Government, LPG gas customers will continue to face a trajectory towards €100 per tonne of CO2 by 2030. Given the significance of this proposal for rural communities and businesses across Ireland, including the poultry sector, I call on the Government to amend this oversight in the Finance Bill by including LPG and carbon tax measures and supporting emissions reduction while ensuring that the transition remains affordable and fair to all energy users.

I thank Senator Gallagher for raising this important Commencement matter this morning.

I am taking this Commencement matter on behalf of the Tánaiste and Minister for Finance.

The Government has implemented a range of supports due to the increased energy prices as a result of the conflict in the Middle East. It is one of the largest support packages in the EU per capita, now totalling over €1.7 billion targeted at households and businesses. The Government paused the 1 May carbon tax increase on heating fuel, including non-propellant liquefied petroleum gas, at 2025 levels; reduced the National Oil Reserves Agency, NORA, levy; and extended the winter home heating period by four weeks to ensure that those in receipt of the fuel allowance were protected. This built on measures introduced last year to shield households from rising energy costs.

Budget 2026 also provided an extension until 2030 of the 9% VAT rate for natural gas and electricity bills, as well as non-propellant LPG, which is supporting both businesses and households. It enhanced the social protection payments, including an increase in the fuel allowance rate and also included an expansion in the fuel allowance eligibility rates, benefiting over 50,000 additional households. The €400 income tax disregard for households involved in microgeneration was also extended for a further three years.

The Government recognises that it is those on low and middle incomes who can often feel the squeeze, earning too much to qualify for State support and too little to not notice the rising cost of living. Through budget 2027 and further budgets, we wanted to change that.

For 2027, the Government implemented a range of supports easing the pressures of increased energy prices caused by the conflict in the Middle East. It introduced a pause, on 14 October 2026, on carbon tax increases on other fuels, and that included liquefied petroleum gas. It reduced the carbon tax rate to 2023 levels on two main home heating fuels at a cost of over €130 million. It also expanded the temporary excise reduction in petrol, diesel and green diesel in full until the end of February 2027. It increased the fuel allowance rate by over 13% to protect those most at risk of fuel poverty. It introduced a €1.3 billion personal tax package to put money back into people's pockets. It also provided an extension of enhanced arrangements under the diesel rebate scheme until the end of 2026, and an extension to the road transportation support scheme to help commercial transport operators offset high diesel costs.

The Senator should also note that as per the most recent Central Statistics Office, CSO, energy use survey, around three in every five households use natural gas or heating oil-kerosene as their main home heating fuel. Conversely, only 1% of households are identified as using liquefied petroleum gas as their main heating fuel, according to the survey. As I said, the decision was taken to pause the scheduled 14 October carbon tax increase on other fuel products, including LPG, to provide some relief to LPG users.

LPG used as a propellant does not attract the non-carbon component of mineral oil tax. Only the carbon component of mineral oil tax applies. The carbon tax on LPG used other than as a propellant is currently paused at €63.50 per tonne of CO2 emitted, and it is the same rate as applied on 1 May 2025.

To answer the Senator's question, rural gas users who have switched from oil were not omitted from the carbon tax change in budget 2027 and, as previously mentioned, LPG used other than as a propellant also attracts a 9% VAT rate. This is a lower VAT rate that applies to kerosene-home heating oil, which attracts a rate of 13.5%. Kerosene-home heating oil cannot be reduced to 9% due to restrictions under EU VAT laws. I will read the rest into the record.

I thank the Minister of State. Before the Senator gets up, I welcome the Midleton GAA Monday Club, who are guests of Deputy James O'Connor. They are very welcome. I hope they enjoy their tour. It is a really interesting place and I think Deputy O'Connor will be asking them questions afterwards to make sure they have been listening during the day.

I thank the Minister of State for his response.

Carbon tax is a huge issue, especially for people in rural Ireland, and they welcome the fact that the Government has paused it in that regard. Unfortunately, there seems to be an oversight in relation to LPG. It is a huge issue for the poultry sector in counties Monaghan and Cavan, where I come from. The poultry sector is a hugely important employer and a lot of jobs depend on it. Those in the sector are now caught by the fact that the carbon tax will not be paused on LPG. I ask that the Minister of State bring back to the Minister of Finance my grave concerns in relation to this and ask him to have another look at this in the Finance Act, which is a vehicle where this hugely important issue can be addressed.

I recognise Senator Gallagher for raising these important matters and the merits of their review. Certainly, I will take the Senator's concerns back to the Tánaiste and Minister for Finance. In summary, there is a non-carbon excise levied already on LPG. The carbon tax on LPG remains at May 2025 rates and LPG attracts a 9% VAT rate, unlike some other heating fuels. Those reductions are very much targeted to provide a cost reduction which we have seen in the two predominant home heating fuels in the country, taking into account the extraordinary market-driven price increases on the likes of kerosene since March of last year. There is the anticipated price increase in natural gas and the inflation that will arise in recent increases in unit rates by major suppliers. No Government can insulate the full price increases across many households, but in budget 2027 we have continued to target measures.