ESRI: Government Energy Measures Benefit High-Income Households Twice as Much

A new report from the Economic and Social Research Institute (ESRI) reveals that government measures to mitigate surging energy prices disproportionately benefit higher-income households. The analysis, covering two packages introduced in March and April costing €440 million, found that while the measures are «progressive in relative terms»—benefiting the lowest income households by 1.7 per cent of disposable income versus 0.6 per cent for the highest—in absolute terms, higher-income households gain almost twice as much.

This disparity stems from the untargeted nature of excise cuts, which lower prices for all consumers, with the largest benefits going to those who use more energy. The report raises concerns about cost-effectiveness and the erosion of the tax base. It also notes that indirect tax cuts are often politically difficult to reverse, suggesting current cuts may be extended. The ESRI indicates these measures will only «somewhat» ease short-term energy inflation, leaving lower-income households vulnerable to the shock.

Overall, the government's actions reduce immediate energy cost increases by about half but do not fully offset the «regressive nature» of energy inflation. Energy inflation is particularly regressive, with the lowest income households facing increases of 3 per cent of disposable income (€15 per week) compared to 1 per cent (€28 per week) for the highest income households. Average diesel and petrol prices in Ireland have exceeded €2 and €1.80 per litre, respectively, and home heating oil prices rose over 63 per cent year-on-year in March.