Written Answers. - Taxes and the Environment.

David Andrews

Question:

31 Mr. Andrews asked the Minister for Finance the plans, if any, he has to impose fiscal instruments such as eco-taxes on certain imports as a means of improving the environment. [7445/96]

I would like to point to a number of initiatives in this area. Last year, I introduced the £1,000 scrap car scheme which has been very successful in removing older, more polluting cars, from roads and replacing them with new less polluting ones. I am also providing in this year's Finance Bill for the ending of the application of the favourable unleaded petrol excise rate to superplus unleaded petrol and making it subject to the same excise rate as leaded petrol. Furthermore, in my Budget Statement I indicated that the tax system can clearly play a key role in environmental policy and in eliminating activities which destroy our environment and deplete natural resources. I have therefore directed my Department, in conjunction with other relevant Departments and Agencies, to examine the strategic impact of taxation on environmental policy and to bring forward specific tax measures for the 1997 budget which will have due regard to competitiveness considerations and work in this regard is continuing.

EU and other Treaty obligations have a bearing on the scope for future action here. Imports cannot be singled out for taxation as against domestically produced products. Obligations arising from EU membership prohibiting discriminatory tax treatment against imports must be respected, as must obligations arising from Ireland's membership of the World Trade Organisation. EU Directive obligations relating to Excise and VAT may also impose constraints.

Since the creation of the Single Market, the use of frontier controls to policy tax measures has been eliminated. If tax rates for products are substantially higher in Ireland than those in neighbouring states, recourse to personal importation on a wide scale may arise and this also acts as a constraint on the freedom of action. The working group will undoubtedly have to have regard to this in its deliberations as well as having to examine carefully the impact on competitiveness of any measures being considered for introduction.
At the EU level, the ECOFIN Council recently requested the EU Commission to bring forward revised proposals dealing with carbon/energy taxation; it is expected that these will be presented by the Commission later in the year.