Excise duty cuts on fuel are set to continue over the winter and remain in place until the end of next February.

The announcement came as Tánaiste and Minister for Finance Simon Harris today (Tuesday, October 6) unveiled Budget 2027 in the Dáil.

The temporary reduced fuel excise rates, put in place in response to the impact of the conflict in the Middle East on fuel costs, had due to be in place until November.

However, the Tánaiste said these reductions will now remain fully in place until February 28, 2027.

"From that point, we will begin a gradual and responsible restoration in four phases, with full restoration not occurring until June 30, 2027," he said.

The reduced National Oil Reserves Agency (NORA) levy will also be extended until December 31.

The enhanced diesel rebate scheme will also remain in place until the end of the year.

"The extension of these measures will continue to lower inflation, reduce the cost of doing business, and keep more money in people's pockets," Harris said.

The government is also engaging with the European Commission to establish a more favorable tax treatment for hydro-treated vegetable oil or HVO "to assist people transitioning to a greener alternative".

Carbon tax

The Tánaiste also confirmed that carbon tax on home heating oil (kerosene) and gas is being reduced and "will not increase again in the lifetime of this government".

Rates on these products were scheduled to increase twice between now and May 2027, from €63.50 per tonne of carbon dioxide (CO2) today to €78.50 by May 1 next year.

Instead, the rates will both be reduced back to where they were in 2023 to €48 and €50 per tonne respectively.

The Tánaiste noted that the carbon tax, which was due to raise about €1.3 billion this year, is "a fundamental response to the energy transition".

He said the tax helps with measures such as agri-environmental schemes, residential retrofitting and fuel poverty interventions.

While Harris said the government is "committed to using this tool to speed up the energy transition", he said "the extraordinary circumstances we find ourselves in do call now for extraordinary measures".

"While no government can fully absorb the impact of the Middle East conflict, we must act.

"Therefore, today we want to be clear: carbon tax on home heating oil and gas is being reduced and I want to be very clear: there will be no increase in any form of tax at the pump or in your home during this winter period. "Importantly, to give certainty to households and businesses, and to embed this real reduction in the cost of living and in doing business, we are announcing that these rates will be maintained for the lifetime of the government," he said.

The Dáil heard the decision not to proceed with future increases in these products will ultimately result in the carbon tax rate being less than half of what was originally set out in the original trajectory.

The Tánaiste emphasised that the changes being introducing today "do not in any way signal a weakening of our resolve to decarbonise our economy".

"Quite the opposite. The two recent energy shocks have offered further proof, if any were needed, that we do need to wean ourselves off fossil fuels," he said.