Electricity tax hike to cost business €2.5m

Government plans to increase electricity tax will add €2.5 million to businesses’ energy bills.

Businesses pay an electricity tax of 50 cent a unit – one megawatt hour – while organisations such as Government departments and local councils pay €1 a unit.

Paschal Donohoe, Minister for Finance, said in his Budget 2020 speech that he would "equalise" the rate between business and non-business.

His department confirmed that this meant that business would begin paying the increased €1 per mega watt hour charge, which will raise €2.5 million for Government coffers.

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Neil Walker, head of infrastructure, energy, environment and transport with employers' group Ibec, acknowledged that the sums involved were small but questioned whether the move would help cut greenhouse gas emissions.

He pointed that businesses would pay the tax irrespective of whether the electricity they used was generated by burning coal or on a wind farm. “It won’t necessarily change behaviour,” Mr Walker said.