By Juno McEnroe and Eamon Quinn

Increases in carbon taxes should help fund energy- efficient grants for houses and greener transport options, the public and businesses have advised ahead of the budget.

Tax policy papers released last night also reveal that Taoiseach Leo Varadkar’s promise to increase the point of paying the top rate of tax to €50,000 would cost some €2.3bn if done in one year.

The findings are among several papers which will help inform decisions for October’s Budget.

A key paper this year examines what could be done with increases in carbon taxes. This looked at energy taxes, motor taxes, carbon taxation and house renovation incentives.

Results of a public consultation, including with individuals, businesses, parties and academic bodies, by the Department of Finance concluded that the biggest preference was for extra revenue to go towards better energy house grants.

The second biggest preference for using of funds was for sustainable transport, including cycling infrastructure and public transport.

The largest opposition from all groups was for the extra money to go back into a central fund or to pay EU fines.

Increasing the national fuel allowance to support those at risk of fuel poverty also received a mixed response among all respondents. Furthermore, returning the proceeds by way of dividend to households through the welfare and/ or tax system received a negative response overall.

In the event of increases to the carbon tax rate, officials have recommended that it should be applied to house heating fuels from May 1, 2020. Increasing carbon taxes to €40 for every tonne of CO2 would generate an extra €430m.

On income taxes, the officials estimate the cost in a full year of increasing the income band to €50,000 at which the higher rate tax of 40% kicks in, would cost €2.3bn if it were brought in immediately and not phased in over five years.

The tax group notes that Mr Varadkar and Finance Minister Paschal Donohoe last year “committed” to raising the level to €50,000 over five years.

Increasing all standard rate bands by €3,000 would cost the exchequer €610m in a full year, the officials say.

Any income tax changes in October’s budget will be closely watched.

The Help-to-Buy scheme, which is due to expire at the end of the year, “will be looked at”, the officials say.

Other measures examined include the home carer credit: The officials estimate around 10% of the up to 85,000 taxpayers claiming the credit earn over €100,000 a year, but 25% of claimants earn less than €30,000.

Meanwhile, the officials warn about the uncertainty over international changes in global corporation tax.

On Vat rates, the officials say the levels of the tax are the fourth highest in the EU.

Cutting or increasing the standard Vat rate of 23% by 1 percentage point would cost or raise funds for the exchequer of €450m.