Vol. 414 No. 6
9 Mr. R. Bruton asked the Minister for Finance if he will outline the present position on the proposals to introduce an EC energy tax, with reference to the likely scope, rate, yield and economic effect of the proposed tax; and its effect on existing Irish taxes.
20 Mr. Boylan asked the Minister for Finance if he will outline the present position on the proposals to introduce an EC energy tax, with reference to the likely scope, rate, yield and economic effect of the proposed tax; and its effect on existing Irish taxes.
26 Mr. Lowry asked the Minister for Finance if he will outline the present position on the proposals to introduce an EC energy tax, with reference to the likely scope, rate, yield and economic effect of the proposed tax; and its effect on existing Irish taxes.
28 Mr. Crowley asked the Minister for Finance if he will outline the present position on the proposals to introduce an EC energy tax, with reference to the likely scope, rate, yield and economic effect of the proposed tax; and its effect on existing Irish taxes.
32 Mr. D'Arcy asked the Minister for Finance if he will outline the present position on the proposals to introduce an EC energy tax, with reference to the likely scope, rate, yield and economic effect of the proposed tax; and its effect on existing Irish taxes.
74 Mr. Bradford asked the Minister for Finance if he will outline the present position on the proposals to introduce an EC energy tax, with reference to the likely scope, rate, yield and economic effect of the proposed tax; and its effect on existing Irish taxes.
I propose to take Questions Nos. 9, 20, 26, 28, 32 and 74 together.
At this stage, there is little I can add to the comprehensive reply of my colleague, the Minister for Energy, to parliamentary questions on this topic on 20 November 1991. The up-to-date position is that the Commission's proposals for a carbon-energy tax, which is only one element of wider proposals to stabilise, by the year 2000, carbon dioxide emissions in the EC at the 1990 level, have been discussed by the EC Economic Policy Committee and by a special fiscal aspects group set up under the ECOFIN Council. A progress report will be made to the ECOFIN Council itself next week. The Commission's proposals generally will also be discussed in the Joint Energy-Environment Council tomorrow.
The Commission's communication envisages that the carbon-energy tax would apply to all fuels and also to large-scale hydroelectric generating plants; the precise treatment of nuclear energy within the scope of the proposed tax is not entirely clear. The intention is that industrial sectors using energy intensive production processes and engaged in international trade would be exempt, at least for a transitional period.
The Commission envisages that the tax would be a 50:50 carbon-energy tax; the rate would be the equivalent of US $3 per barrel of oil in 1993, rising by one US$ per barrel a year until 2000, when the rate would be US $10 per barrel. For the EC as a whole, the Commission estimate that the yield from such a tax is likely to be 50 billion ECU. No comparable figure is available for the yield from this tax if it applied in Ireland. However, it must be remembered that a crucial element in the Commission's proposals is that the tax should be revenue neutral, although precisely how this would be achieved has not been spelled out.
At present, there is simply insufficient detail about the potential economic, and wider, impact of the Commission's proposal. The information which has been provided is vague and appears to underplay what could prove to be significant adverse repercussions on inflation and growth in the Community, as well as on national budgets. More work is needed to ensure that the overall economic costs of any Community strategy would be reasonable and that the costs would be shared out in a way which would be consistent with the Community's obligations in the area of cohesion. We also need to know what are the implications of the proposal for the excise harmonisation agreements being developed in the context of the Single Market. I should add that the Irish reservations on these matters are shared by a number of member states.
Our approach to discussions will continue to reflect the need for a thorough evaluation of all aspects of the proposal before any definitive decisions are taken on whether or not to proceed with the tax. We have no intention of being stampeded into a hastily and ill-considered decision in this matter.
(Limerick East): Would the Minister agree that a tax such as this on carbon fuels used in the generation of electricity would bias electricity production in favour of nuclear energy? Would the Minister say whether the Government have a view on that? Have the Government costed in any way the extra disadvantage arising from our peripherality which would argue if carbon-based fuels were loaded in the manner suggested by the Commission?
Yes, the Government would be very concerned about how it would affect our overall energy policy. I do not think we would consider the concept of moving to nuclear generation. In the initial approach to this matter the Government, and the Minister for Energy in particular made it very clear in this House on 20 November, that there would have to be exemptions one way or the other in so far as such would affect the ESB, or any other industry incurring large energy input costs. The ESRI have done some research on what the tax would bring in but not on the economic downturn which it would create. It would have horrendous effects on the economy. There is a number of other aspects. The report on Community strategy to limit carbon dioxide emissions and to improve energy efficiency has many good elements in regard to convincing people to move from industries and implements which have high emissions. The Government will have a neutral view at the outset. Tomorrow the Government's views will be outlined by the Minister for Energy. I will be doing the same on Monday at ECOFIN.
(Limerick East): Within ECOFIN and the Council of Ministers has the issue of excise on fuels been taken out of the harmonisation talks or are the talks on tax harmonisation continuing with the fuel component in the discussion?
That issue has to be resolved. As far as ECOFIN Ministers are concerned, the fuel element will have to be considered within the overall harmonisation costs. The fiscal committee are looking at it separately. That committee and another committee are reporting back to ECOFIN on Monday and I hope the matter will be taken within the overall harmonisation of taxes.
The Minister is no doubt aware of the initial reaction of the Minister for Energy, who is very unenamoured of the energy tax. Is this Government policy? Does the Minister feel that we should be very cautious about introducing an energy tax? I hope he will agree that an energy tax would be immensely beneficial in that it would encourage less energy-intensive industry and perhaps help to reduce our high level of unemployment.
We are all environmentally conscious and a number of aspects of the report are worthy of examination. I am not sure I could agree with the Deputy's second conclusion that a high energy tax, yielding perhaps £750 million, would be beneficial to employment, particularly as most of our firms who would be affected are labour-intensive industries.
