John Gormley
Ceist:331 Mr. Gormley asked the Minister for Finance the progress, if any, made to date in relation to green taxation; and if he will make a statement on the matter. [1789/00]
Written Answers. - Carbon Taxes.
John Gormley
Ceist:333 Mr. Gormley asked the Minister for Finance his views on whether it is unlikely that Ireland will unilaterally introduce a carbon tax within the EU; and if he will make a statement on the matter. [1793/00]
John Gormley
Ceist:334 Mr. Gormley asked the Minister for Finance his views on whether it is unlikely that a carbon tax will be introduced within the EU due to the fact that this decision requires unanimity; and if he will make a statement on the matter. [1794/00]
I propose to take Questions Nos. 331, 333 and 334 together.
As the Deputy will be aware, in my December 1998 budget, I introduced a new rate of vehicle registration tax – 30% – for larger motor vehicles. I said, at the time, that I believed that it was appropriate to seek to recoup revenue in this way from a sector that was experiencing record sales, to meet the additional road use and environmental damage arising from the unprecedented growth in private car usage. I also reduced the excise duty on automotive liquid petroleum gas.
In my most recent budget, I announced that it is proposed that the existing tax concession given to the CIE group of companies and to certain other operators in respect of the diesel used in public transport operations would, in future, be confined to the use of ultra low sulphur diesel. Provision for this will be made in the forthcoming Finance Bill and the relevant sections will be implemented by way of a ministerial order. This is being done to give operators an opportunity to set up the necessary operational arrangements and I hope that this significantly cleaner product will soon be in use by public transport operators.
I have also said that it was intended to take up the issue of green tax policy with the social partners in the context of the successor to Partnership 2000 with a view to putting in place an agreed policy in this area in view of the impact of tax increases on inflation and those on low incomes. As the Deputy is aware, discussions on a successor to Partnership 2000 are ongoing.
With regard to carbon tax, I assume that the Deputy is actually referring to the proposals on the Taxation of Energy Products which the EU Commission published in March 1997 and not to the earlier EU proposals relating to carbon energy tax. The latter are not being actively pursued by the EU Commission, but have not been formally withdrawn either. The proposed energy tax directive suggested both increased taxes on items such as petrol and proposes new taxes on coal, gas and electricity. There were also complex arrangements to assist energy intensive industries with both obligatory and optional provisions for relief from the tax suggested. EU Excise Directives already require minimum rates for taxes on mineral oils, but taxes on electricity, natural gas or on coal etc. are not required. Ireland does not impose any additional excise taxes on natural gas, electricity, coal or turf. The Commission proposal provided for a three phased increase in existing mineral oil tax minima, the first of which was to have come into effect on 1 January 1998, the second on 1 January 2000. EU excises are expressed as minima and no upper limit is generally specified.
Ireland's concerns, with regard to the energy tax directive, relate to our peripheral status, the greater dispersal of population which adds to transport costs and the need to maintain competitiveness in the EU versus third countries. My particular concern as Minister for Finance is to ensure that any measures advanced to promote energy saving do not adversely affect Ireland's international competitiveness, particularly in relation to non-EU countries which compete with us and which may have very low taxes on energy. I am also concerned about the effect the imposition of any such energy tax would have on the Consumer Price Index and how increased tax and new taxes would impact on the less well off members of the community. I have indicated, however, that I am prepared to participate in discussion in a positive way.
At the European Council summit in Cologne in June 1999, direction was given for a continuation of work on the framework proposals, bearing in mind the impact any agreement may have on the environment. While little progress on the issue was made during the Finnish Presidency, my officials and I look forward to working with the Portuguese Presidency during its term of office.
Given the implications for international competitiveness, it is more likely that any major changes in the area of carbon taxes will be taken in the context of international initiatives rather than on the basis of unilateral action by individual member states.